I read up on the economy as much as I can without being obsessive about it. I've been reading about inflation mostly via The Economist, but also through political and social commentators and activists like Gaslit Nation.
The Economist does good coverage on a lot of issues, but mostly they make me chuckle when I read these pieces. I picture a lot of people scratching their heads, thinking, "All things being equal, raising interest rates really should work, so why are we still stuck?" Sarah Kendzior and Andrea Chalupa are not economists, but when it comes up, they are focused on one aspect -- labor -- and frankly I think they've called it: unemployment is so low because the population of people who would have been working before have been disproportionately affected by COVID. In other words, a number of the COVID dead or disabled were those removed from the workforce.
They don't say this, but I do: economists are willfully blind if they're ignoring that fact, and they are bordering on monstrous if they want to suggest that the stimulus money so many governments spent is what's keeping people out of work. For some bizarre reason, my family got those benefits too, even though my husband was able to work the whole time. I have a sense of how much those benefits were worth, and it's laughable to suggest that as rents are going up and the cost of food is going up that somehow people are able to justify staying out of work because of, at most, a couple of thousand dollars they received a year and a half ago. There were some people who were able to pay down debts with that money, and that probably gave them a little breathing room, but we're past that.
If people aren't applying for jobs, it's because the people aren't there to do so. The fact that we are doubling down on reducing immigration in the midst of that is only going to make the problem worse.
It should also be said that the benefits wage earners are getting now are, frankly, long overdue. The average wage has not kept up with the cost of living for decades, and if people are feeling the pinch of having to make up (some of) the difference now, this is part of what labor activists were warning about.
But let's not pretend that economics is a science. It is at best a description of "the market", and the market is filled with human beings. On average they're making rational decisions, but please define "rationality" when we live through a deadly pandemic, massive political instability on a global scale (January 2021 insurrection in the US, Russia's vicious war of aggression against Ukraine, growing aggression by North Korea, an increasingly unpredictable and genocidal China, an absolutely erratic wannabe dictator in Turkey, a chauvinistic, bigoted populist leader in India, the environmental and humanitarian depredations of former Brazilian strongman Bolsanaro...someone needs to explain to me why Africa gets all of the ink for problems with dictators and corruption), and the continuing state aggression against BIPOC people all over the world.
It's a lot to expect that people are going to be logical actors making rational decisions if their time scale is surviving the present, unknown moment and tomorrow seems like a luxury. And it shouldn't be a surprise at all that people are going to treat money and goods like the bricks of a protective fortress, either hoarding it so they'll never have to worry about deprivation, or spending it to prove that everything is the Normal they idealized before disaster struck.
Which is all to say: of course economists don't know what the hell is going on and how to end inflation, because we are in uncharted territory.
I'll echo Kendzior and Chalupa and advise people to be decent to each other -- sharing what we have could mean the difference for someone else's prospects for survival -- and read up on historical analogues. What were they doing during the 1918 Spanish Flu oubreak? How did people survive the initial onslaughts of smallpox? What mistakes were made when the bubonic plague first spread? Discover your history, and learn from it. History isn't a map, but at least it can be a guide.
Deb in the City
