inflation Archives

Yes, it’s here. Trumpflation: that combination of rising wages, rising interest rates, a border that’s closed to low wage labor, a trade war with China, tensions with our European allies over economic sanctions, and a dropping fertility rate.

What’s it all add up to?

Well, it doesn’t really add up, but the result will be rising prices and wages that won’t keep pace. Add in the nice gotcha that will hit many people’s tax bills next April and you have a problem. This is what can happen when you govern by chaos, ignorance and a commitment to making the wealthy wealthier.

Don’t get me wrong, I’m all for a rising, healthy economy where anyone who wants a job can get one. And the economic expansion that began under Obama will continue to provide more employment and more money in the economy. Corporations have lots of cash on hand and many have committed to either building factories or bringing production home from overseas. These are positive developments and a wise president would leave this all alone, especially one who has told us repeatedly that he is a fan of laissez-faire economics.

The problems creep in when you poison the well with ideology. Isolating the country, threatening a trade war, slapping tariffs on goods and stoking a labor shortage because of short-sighted immigration policies will, I fear, stomp on this growth and will lead to unintended but decidedly visible consequences.

Which we are already seeing. Gas prices are up. Food prices are up – even at my local warehouse store. Of course, the convenience of all of this is that when the government calculates inflation they exclude, you got it, gas and food prices. So while these are the components that affect people more directly, the real inflation rate will likely remain low while people scratch their head about why goods cost so much more.

As for wages, I am glad to see them rising somewhat. But they are not rising enough to cover the rising prices. The promise of the tax cut was that American corporations would create more high wage jobs and invest in new infrastructure. The reality is that most of the tax cut money is going into stock buybacks that do very little for workers. The federal minimum wage remains the same and this Congress will probably not raise it. Add the rising interest rates on cars and homes etc., and the debt will cost that much more. Unless workers are going to get a 4-5% increase, at some point they will start losing money.

The labor supply is in real jeopardy because fewer people are coming to the United States. They’ve been barred or scared off by the administration’s intolerance and hatred. Simply put, our economy has grown over the years because of new workers who come to this country. The birthrate has slowed, even revered in the past year. Countries that cannot replace their populations run the real and documented risk of stifling economic growth.

But at least we’ll get to test that old adage that immigrants are taking low wage jobs from Americans. With fewer immigrants, we will finally see if Americans flock to the fields or to the meat-packing plants. If wages stay low, then I don’t see this happening. When farm and meat producers begin to pay higher wages, we will all pay more at the store.

If we had a real populist in charge, then perhaps we could look forward to working people getting ahead and a tax cut that didn’t penalize people who voted against him. But we don’t have a real populist in charge, we have a president who would rather rule chaotically and unpredictably, although his unpredictability is becoming far more predictable, which creates uncertainty, volatility, and inequality.

Which is exactly what this country can look forward to.

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Inflation: Letting The Air Out Of Teacher Pay

As if being a teacher isn’t enough of a financial challenge, here’s some worse news, compliments of a front-page article in Sunday’s New York Times about the Federal Reserve possibly injecting some inflation into the economy. Right now it’s an intellectual argument, and if you’ve ever studied the Great Depression of the 1930s, you know that the real danger to the economy would be deflation. In an effort to combat that, the Fed would look kindly on an inflationary course for these reasons:

The Fed has worked for decades to suppress inflation, but economists, including Janet Yellen, President Obama’s nominee to lead the Fed starting next year, have long argued that a little inflation is particularly valuable when the economy is weak. Rising prices help companies increase profits; rising wages help borrowers repay debts. Inflation also encourages people and businesses to borrow money and spend it more quickly.

The next paragraph, though, shows that not all people would benefit from such an economic course. Read it and weep.

The school board in Anchorage, Alaska, for example, is counting on inflation to keep a lid on teachers’ wages.

But wait; there’s more.

Rising inflation also punishes people living on fixed incomes.

So there you have it. The very same people who caused the financial meltdown, destroyed the pension system, and enacted laws that capped what municipalities and states could pay for social services now want an economic policy that would punish teachers and other public workers while they’re working, and it would keep on giving after they retire and are on a fixed pension and Social Security. Is that the way to continue to attract the best and brightest people to teaching, and to show them how much society respects their contributions? Absolutely not.

(As a side note, I completely reject the notion that we have not already attracted some of our best people to become teachers. America’s teachers put in an extraordinary amount of hours into their jobs and genuinely care about their chosen field. We’ve attended some of the best universities in the land and have studied with world class professors and professionals. So, it bothers me a great deal when others say that we need to get the best and brightest into our classrooms. We’re already there. Pay us what we’re worth, give us the tools to do our jobs and stop nickle and diming the schools in the name of an ideology that disrespects and ultimately wants to destroy a system that gives us the right to bargain collectively, set acceptable work rules and protect our due process rights.)

(Which leads to another side note. The right wing doesn’t know what it’s talking about on education.)

The politicians and think-tank lackeys who are presently influencing the education debate in this country have done a fine job singling out teachers, telling the public that their schools are failing, and blaming us for having pensions and benefits. Now the economists want to manipulate the economy so that it punishes us more. The contradiction is that if you continue to squeeze America’s public workers, then we won’t be able to spend and otherwise contribute to the economy. We won’t be able to afford to send our children to college. And we won’t be able to continue to do what we love.

Yes, I know there’s an old myth in this country that says that teachers don’t teach for money, they teach because they’re committed to their craft. As with most myths, this is not only false, but dangerous, and society is playing with fire if it believes it can continue to treat us poorly.

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