Inflation, What is it good for?
Why our distorted view of Inflation needs to change.
When Edwin Starr questioned the premise of war, few questioned the reasoning. The World War was only 30ish years gone and the Vietnam War was still fresh in everyone’s memories. Yet, overall, war has often been credited with the establishment of safe, secure societies. That is a debate for another time. Today, I wanted to take a critical look at the late-stage capitalist version of war. Inflation.
The War on Your Income
Inflation is complex. But in plain and simple terms, it is the constant rise in prices of anything and everything. Most economies today undergo inflation. It has largely become accepted norm. Inflation is often touted as a necessary evil. It encourages entrepreneurs to take risks and “beat the market”. It encourages creativity. It boosts productivity. There is little doubt that inflation has drive economic growth. But amidst widening global inequality, it is increasingly becoming clear that the vastly complex but essentially consumption driven economy has done little for the poorest and much for the richest among us.
Let’s look at an example.
Adidas contracts factories in Bangladesh, a third world country in the Indian subcontinent, to produce its garments. Adidas grew its revenue by 8% year-on-year from 2018–2019. Over the same period, wages for workers in Bangladesh rose by 6%, with real inflation at 6.4%. Wages were essentially slashed for these workers as Adidas executives patted themselves on the backs for controlling the bottom line. The bottom line for many is numbers on a spreadsheet that they read once a year. For the workers, it’s the difference being able to afford a square meal a day and going hungry to save up for lunch the next.
Your Money Matters No More
Inflation is simple. Simply put, too much money fuels inflation. Our centralised banking systems are designed to keep the economy ticking. Money flowing is money growing. Except not always. Inflation works great when there’s growth in the economy to ensure wages rise and everyone becomes richer. Sometimes inflation outpaces growth and annihilates savings. Central banks can and do control inflationary pressures but this is true only in nations where instruments exist for this to be possible. Ultimately, the average citizen is expected to quietly watch their savings waste away. But clearly, inflation is needed. So what do we do about it?
Inflation is accepted fact. Barring a catastrophe of unseen proportions or a change of unimaginable magnitude, no system of economics matches up to capitalism. Growth is a central tenet of the system and inflation follows(or leads). So why not make it central to government policy? Cost-of-living adjustments should not be optional but fundamental. But wouldn’t that in turn raise prices and set a circular cycle of rising prices and wages? No! There is absolutely zero need to raise prices. There is a golden way to raise wages with inflation and still keep employee wage expenditure the same as before!
It all starts at the top
Cut the corporate bonuses. Cut their exorbitant salaries. Desist from paying executives more than they could spend in 5 lifetimes. No one is worth $150 million a year. Especially, especially when a company’s so-called “contracted” garment workers make less than minimum wage. Shame on those who feel entitled to obscene compensations as their most integral workers, the ones who make the very product the company sells are unable to feed themselves. The stand much to learn from Haruka Nishimatsu, CEO of Japanese Airlines who takes home $90,000 a year. He feels the pain his employees feel. Remember, there are no self-made billionaires. Just selfish a-holes taking credit for the sacrifice of thousands less fortunate than themselves…