Higher Prices Inflate Hopes for Republicans

By SAM URETSKY

The following quotation does not constitute an endorsement of any product, past present or future. Prices subject to change:

Pepsi-Cola hits the spot,
Twelve full ounces, that’s a lot,
Twice as much for a nickel, too,
Pepsi-Cola is the drink for you!

Inflation is bad, made worse by the successes of modern medicine. As we get older our memories go back further. Notably, there is no cents symbol (¢) on a computer keyboard – there’s no more penny candy, comic books stopped being “all in color for a dime,” and the days of going to the Post Office with a dollar bill, buying 33 stamps and getting change are long gone. Worse, inflation shows itself when prices for everyday expenses go up and never go back down.

To some extent inflation is built into our economy. A “high yield savings account” might bring in 0.60% per year while the interest rate on a credit card can be 23% per year. CNN reported “Dollar Tree is throwing away those green “Everything’s $1” signs at stores, ditching the brand identity it created and stuck to devotedly for 35 years.”

Some of the inflation may be transient, but some parts of it are permanent. The transient part is due to the supply chain problems that have been well reported. The COVID-19 pandemic, at its worst, caused factories to shut down, so that essential supplies weren’t available, and finished products weren’t on store shelves, or in automobile showrooms. This produced the traditional model of too much money chasing too few goods, so that every trip to the mall became a visit to an auction house.

People who were shut in by the pandemic received stimulus checks and now want to spend them. Paul Krugman (New York Times, Dec. 16) wrote “... large retailers have found ways to get the goods they need, and they say they’re fully stocked for the holiday season. And measures of supply-chain stress such as freight rates have started to improve.” The White House announced a series of actions to clear the container logjam at the port of Los Angeles. As more goods reach markets, the economy would be expected to stabilize.”

Of course, Prof. Krugman was writing before the omicron mutation was fully understood, as well as the implications of further shutdowns. The Republicans are enjoying the spectacle, but the realities of the situation are that there’s very little that a President can do about inflation, particularly this one, which is international in scope. Higher gasoline prices are primarily a result of a decision by the OPEC oil cartel to reduce production at a time of rising demand. Higher prices for new and used vehicles, which have been one of the biggest drivers of the rise in the Consumer Price Index, is due to a shortage of new cars caused by a lack of computer chips imported from Asia. Rising prices have been reported in Europe and Asia – due to the globalization of industrial production and the global reach of COVID-19.

Generally, inflation is measured by core inflation, the measure of inflation excluding food and energy prices, because these prices are considered to be transitory and likely to be reversed. Even so, rising costs in these areas may result in the need for compensatory demands for higher wages which can lead to longer price increases than would be the result of a transient shortage.

While price increases for food are omitted from the formal definition of core inflation, they tend to assume that shortages will be temporary, that crops which are poor one year will be better the following year. This was before the impact of global warming, a.k.a. climate change, became undeniable to all but the witless. The impact of droughts and storms must be factored into production estimates for the future. A 2019 report “Climate Change and Food Security: A Test of US Leadership in a Fragile World” makes this point with a focus on world hunger

While Republicans are looking at inflation as one of the factors that will assure them of a victory in the next election, their policies will only worsen climate change, raising prices in the United States and worsening hunger for millions of people worldwide. this is not an us-or-them political rivalry, it’s an existential crisis, and has to be understood that way. Thomas Paine said it: “These are the times that try men’s souls,” and more now than ever before.

Sam Uretsky is a writer and pharmacist living in Louisville, Ky. Email sdu01@outlook.com.

From The Progressive Populist, February 1, 2022

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