Politicians on both sides are at odds to explain the root cause of inflation

Politicians on both sides are at odds to explain the root cause of inflation

Newspaper headlines scream that inflation is here to stay. American consumer prices rose an average of 6.2 percent last year, the largest increase since 1991. Although it is assumed — in the words of the New York Times — that Americans are “flush with money and jobs,” they are also deeply unhappy with the state of the economy. .

No wonder Republicans are happy and drawing a line between inflation and public concern about the economy and the presidency of Joe Biden.

Surprisingly, President Biden himself helps them by citing his administration’s accomplishments in pumping more money into people’s pockets as part of the explanation for the current rise in inflation. “You all got $1,400 in checks. I got checks for a whole bunch of things,” Biden said in a November 10 speech, and with the academic patience of teaching an Economics 101 class, he went on to explain, “Okay, with more The people who have money buy the product and the few that they buy, what happens? The prices are going up.”

The conservative-leaning New York Post jumped to the letter, claiming that the president “admits that his stimulus testing for COVID is fueling [the] high rates of inflation.

The newspaper played down Biden’s assertion that “the supply chain is to blame.” In fact, the president led his audience by explaining fairly clearly how the globalization of the economy works, artificially lowering the cost of goods for decades and vulnerable to disruptions like those caused by the COVID-19 pandemic.

“Products such as smartphones often assemble parts from France and Italy; chips from the Netherlands; touch screens from New York State; and camera components from Japan — a supply chain across dozens of countries,” Biden said.

He then concluded that “this is only the nature of the modern economy – the global economy”, as if the gigantic network of consumer manufacturing was a fact of nature and not a systematically disorganized system designed by multinational corporations to reduce the cost of materials and labor. and maximize their profits.

Remember that this is exactly what the anti-globalization movements of the 1990s were protesting against. According to a 2007 article by Mark Engler, protesters included “unionists, environmental activists, anarchists, land and indigenous rights activists, organizations promoting human rights and sustainable development, opponents of privatization, and anti-hard labor activists” from around the world. who claimed that “the policies of corporate globalization have exacerbated global poverty and increased inequality.”

When Biden explained in his speech that “you have to use wood from Brazil, and graphite from India before they come together in a factory in the United States to get a pencil,” he did not reveal that pencil manufacturers are getting wood from Brazil because it probably depends on illegal logging In the Amazon that leads to lower wood prices. Nor did he mention that the cost of transporting goods from the far corners of the globe generates massive carbon pollution that leads to climate change.

Rather than blaming globalization for inflation, he concluded that it is “the nature of the modern economy” on which we depend. Most of the media has missed this contact as well. Instead, the blame is on the increasingly rare cases of the US government ensuring people have enough money to live on.

Why are Americans dissatisfied with the state of the economy? Apparently, according to Bloomberg’s Ramesh Ponoro, the “consistently recurring” pattern is that when wages rise there is widespread pessimism. He rightly points out that “wages and benefits have been rising smartly, but only in nominal terms,” and that “positive trends must continue before people begin to score their satisfaction.”

Go back to the polls taken even before the pandemic (like this one in 2018, this one in 2019) and one can find widespread concern about the state of the economy. In other words, Americans have spent decades frustrated with the ongoing suppression of wages and the trend of increasingly insecure jobs in the so-called “job economy.”

This may be the reason why record numbers of people continue to quit despite their desperation for the economy. The latest Bureau of Labor Statistics report found that 4.4 million workers quit their jobs in September alone, continuing the trend from August.

In addition to workers looking for better-paying jobs, the Washington Post concluded that the quitting trend was also linked to “problems finding childcare.”

But if conservative Republicans have their way, you’ll see assurances that Americans are very unhappy about the government spending money on them and that childcare subsidies and stimulus checks are the root cause of the collective gloom — all talking points ready for policy recapture. power in the next election cycle in order to rein in spending.

This type of conservative message includes allegations that Biden “just doesn’t understand how much inflation is doing Americans” and “[i]If congressional Democrats don’t stop the Biden and Pelosi plan, many Americans won’t be able to pay their heating bills this winter,” said an announcement from the Conservative Growth Club, which targets weak House Democrats.

Conservative Democratic Senator Joe Manchin of West Virginia is making similar calls to justify his frustration with Biden’s proposals to expand government aid.

The Liberal Democrats’ response to the current economic crisis is not much better, advising people to either wait for inflation, or claiming that the demand for better wages is fueling inflation.

“Rising minimum wages, strengthening unions, increasing employee benefits, and strengthening regulations are all desirable, but they all raise business costs and prices,” Larry Summers, a former economic adviser to the Obama administration, wrote earlier this year. Echoing a Republican assertion that unemployment benefits have been bad for the economy, Summers said, “The unemployment benefits that enable workers to earn more by not working instead of working should certainly be allowed to run out in September.”

The dominant message to Americans from political elites across the spectrum is the same as Biden made clear in his speech: “This is just the nature of the modern economy,” and we have to deal with it.

The best benefit of our current economic situation is that there is nothing natural about being at the mercy and whims of an economy designed by corporate profiteers.

Sonali Kolhatkar is the founder, host and executive producer of “Rising Up With Sonali”, a radio and television program broadcast on Free Speech TV and Pacifica stations. She is a writing fellow for the Economy for All project at the Independent Media Institute.

Source: Independent Media Institute

This article was produced by Economy for All, a project of the Independent Media Institute.

Leave a Reply

Your email address will not be published. Required fields are marked *