Inflation is destroying normal people
After failures in economic policy over many decades, inflation is beginning to happen to a higher degree than experienced at all recently. Let's examine why.
This is the Democrats fault. This is the Republicans fault. This is because of big corporations and because of foreign governments.
‘This’ is the massive inflation that is impacting every single working class American family that are now struggling to afford basic needs such as food, rent and gas even more so than they were before.
Even before the pandemic, the vast majority of Americans were struggling. Even in 2018, 4 out of 5 Americans were living paycheck to paycheck. 4 out of 5. 80% of Americans, most of whom work 40 hours a week, cannot afford to miss a single paycheck, and that was before the economy imploded as a result of the pandemic.
One of the few good things that came out of this pandemic, however, is that a lot of workers began to stand up to their corporate masters. Many workers realized that their jobs really sucked and they aren’t being paid enough for their difficult work, and as a result millions of people have resigned or gone on strike demanding better wages and working conditions.
This has then led to there being more jobs available than there are people willing to fill them, meaning that for the first time in decades, American corporations are being forced to raise their wages in order to actually get workers to do the jobs that they need done.
Willers Towers Watson, a human resources consulting company, found that 97% of companies have either increased their wages or are planning to raise their wages, with the average raise being 2.7% in 2021, and is projected to be 3% in 2022. That is a big number when we are talking about wage increases.
This raise in wages is good, but it becomes considerably less so when we realize that money is now worth less than it was at the beginning of 2021, meaning that people still are struggling to access their basic needs. You would expect that, when people are making more money, they would be more likely to be able to buy more of the basic resources that every human needs.
But they can’t, because of inflation and the price gouging that has followed that.
Let’s start with gas. Gas is one of the most important commodities for most people. Without gas, most people are unable to get anywhere. We need it to drive. We need it to fly. It is a basic need for the vast majority of people, which is why it is an important detail that gas prices have increased by over 55% from this time last year, to $3.359 from $2.161 for regular gasoline. That 55% increase way overshadows the 3% increase in wages.
Food prices are also increasing significantly, with the month of September alone seeing a year-over-year increase of 4.6%, a colossal number. Protein, poultry, dairy and eggs saw the biggest price increases, with the first of those seeing price raises up to 10%, which again massively overshadows the 3% wage increase.
The final obvious basic need that every human needs that is seeing is housing, both in terms of rent prices and that of buying houses.
Rent of a one bedroom house has skyrocketed by 19.8% over the last year, while a 2 bedroom house has increased by a mere 17.3%. I don’t need to repeat how devastating that is for your average Joe or Jane getting a 3% raise.
House prices have also increased by about 19% year over year in 2021, which means that the vast majority of people find it even harder now to buy a house, which is the main way that families are able to pass wealth down from generation to generation.
Now, I picked out these three things but inflation is happening across the board. These are just the most important areas in which it is happening.
Of course, it is important for us to note why this is happening so we can then go and fix it, and also how much of this is because of genuine inflation and how much is mere price gouging from big corporations.
The biggest reason that inflation is happening is because of the supply chain crisis. As a result of the pandemic, a number of blockages have come up in the global supply chain that the United States desperately rely on.
One of these blockages is a lack of port staff and truck drivers, especially in Las Vegas, which has resulted in most ships carrying needed resources laying idly for many days at a time. This has meant that, to get products manufactured overseas into the country, we have faced delays, normally of about 8 days. This 8 day delay causes every ounce of the 12 million metric tonnes of goods do not get to their destination for an extended period of time, leading to price increases.
That is the main reason that inflation is happening. Not because of government spending such as the stimulus package that Biden got through earlier this year. It is merely the supply chain crisis.
It is amazing over the last few months how many people, especially centrists and right-wingers, have been ideologically committed to it being because of bills such as that stimulus package, simply because that works for their political ideology. They blame this spending because they work backwards from their conclusion, rather than on a search for the truth so that we can solve the problems.
Of course, that’s not to say that supply chain issues are the only reason that prices are massively increasing. Across the board, there are a multitude of reasons for every part of the current inflation situation, including price jacking, Saudi Arabian oil tricks to punish President Biden, climate change and numerous other minor reasons which we don’t have time to detail. However, it is important for now that we do look at some of these smaller causes of the current inflation crisis.
Mohammed bin Salman and Joe Biden are not friends. In a rather big switch from the Trump administration, Saudi Arabian and American relations are far from their best. This stems from President Biden signing a rather meaningless executive order that says that the United States will not give the Saudi’s money for weapons unless its for defensive purposes (the Saudis have and will just say that every bombing they do in Yemen is for defensive purposes) and out of spite for President Biden not meeting with bin Salman.
President Trump, on the other hand, was one of many politicians who has taken bribe after bribe from the Saudis and has then done them favours. One of these bribes was when some Saudi officials paid for over 500 rooms at Trump tower, meaning that Trump personally made money from this deal. As a result, the 45th President gave the Saudis a multi-billion dollar weapons deal, allowing the Saudi regime to continue their reckless and illegal campaign in Yemen.
Another such bribe from the Saudis has taken place recently with Trump’s son-in-law, Jared Kushner, who was for 4 years responsible for the Middle East. As the New York Times put it
In a move that has raised eyebrows among diplomats, investors, and ethics watchdogs, Mr. Kushner is trying to raise money from the Persian Gulf states for a new investment firm he has founded.… Qatar, whose leaders saw Mr. Kushner as an opponent in the administration, declined to invest in his firm, a person familiar with those conversations said. So did the main Emirati sovereign wealth funds; Emirati rulers saw Mr. Kushner as an ally but questioned his track record in business, according to a person with knowledge of the discussions.
But the Saudis are more interested, according to four people briefed on their continuing negotiations. The kingdom’s $450 billion Public Investment Fund is negotiating with Mr. Kushner over what could prove to be a sizable investment in his new firm, two of those people said.… According to a person familiar with the firm’s plans, Mr. Kushner hopes to raise an amount in the low billions of dollars by early next year.
You read that right. Jared Kushner, who was responsible for American policy concerning Saudi Arabia, is now negotiating a massive investment fund that will doubtless earn Kushner billions upon billions of dollars.
Of course, this kind of bribery was not unique to the Trump administration by any stretch of the imagination. Saudi lobbyists have spent millions of dollars on politicians for both major parties, and have since reaped the rewards for these deals.
However, despite all that money going towards getting exactly what the Saudis want, Joe Biden has only done about half as much as the Saudis would have wanted. He isn’t giving them as many weapons and he isn’t meeting their leader.
As a result, they have decided to punish Americans by jacking the fuel prices. As Ken Klippenstein reported in The Intercept (excerpt below), the Saudis aren’t happy with the current administration.
In June 2018, heading into the midterms, Trump requested that Saudi Arabia and its cartel, the Organization of the Petroleum Exporting Countries, lower energy prices by increasing output, and the kingdom complied. Prices bottomed out in 2020 amid the coronavirus pandemic, and usage sank to record lows. Prices surged once the pandemic waned and the economy reopened, and this August Biden requested that OPEC again increase output.
This time MBS refused, angry at having yet to be granted an audience with Biden and contemptuous of the U.S. pullback from the war in Yemen. As one of his first pieces of business, Biden had ordered the end of American support for Saudi Arabia and the UAE’s war, though caveated it by barring only the backing of “offensive operations.” Saudi Arabia nevertheless received it as a grievous blow.
In a statement to Klippenstein, Saudi supporter of MBS, Ali Shihabi, wrote “Saudi has put a lot of work into getting a cohesive OPEC+ to work over the past 15 months since the crisis that dropped oil futures below zero so will not break ranks with the consensus or Russia on this. Also the Kingdom resents being blamed for what is essentially a structural problem not of its own making in the US which has hampered its own energy production. Finally, I hear that the price of Thanksgiving Turkeys has doubled in the US so why can oil prices also not inflate?” Shihabi added a winking emoji to the end of his comment.
So it’s quite clear that a big reason that the price of oil is increasing is because of the Saudi government punishing Biden for taking tiny measures against the crimes of the Saudi Arabian government.
There is no real fix here in the short-term. If we want to stop the inflation at the gas pump, we have to cozy up to the nation committing a genocide in Yemen, which is simply not something that I can morally condone. In the short-term, I do not have a clue what we do. However, in the long-term one thing that we can do is focus of green energy, including electric and hydrogen cars, that mean that we don’t rely on crazy murderous regimes for one of our biggest basic needs as a society.
Meat inflation, the biggest area in which food prices are increasing, is partly because of climate change, which has resulted in one the main form of cow feed in the United States - that being corn - is now significantly more difficult to grow, making it scarcer and causing prices for farmers to increase. Therefore, prices rise for the consumer as well.
This is not as complex nor as scandalous as the Saudi Arabian issue, but the challenge is just as difficult to solve and the consequences for not solving it are probably much greater. We need to solve climate change for this to happen.
The only real way that we can solve climate change is if we implement the global green new deal that Noam Chomsky and Robert Pollin described in their 2020 book of that title. It is the only way.
The final issue that I mentioned earlier is price jacking, primarily from big corporations. One graph recently showed that corporate profits are at a 70 year high, and despite that prices are increasing. Therefore, the only reason that prices could be increasing is because these corporations want a bigger profit margin and will do anything to achieve this, and inflation gives them a perfect excuse.
The only solution to this is to enforce price gouging laws.
Of course, none of these solutions do anything about the greater inflation issue, which is, as described above, caused by the supply chain crisis.
Again, there is no obvious short term solution. The only real help that the government can give is what has already happened, that being Joe Biden’s efforts to keep the ports open 24/7.
The only other thing that Joe Biden can really do is make speeches talking about the crisis, as that will probably help his approval rating and optimism. We can see this from the 1930s when, even though the new deal did little initially, people felt like the government was doing something to help them so they overwhelmingly elected FDR, and then the new deal’s effects began to be felt.
On the other hand, there is a long-term solution that Joe Biden can very much play a role in implementing.
One of the main reasons that we are seeing supply chain issues at the moment is because of years of outsourcing because of free trade deals such as NAFTA, the TPP and the 1979 free trade deal with China. Because of these deals, we have become reliant on these other countries for our resources, meaning that when an inevitable crisis such as this one came up, the United States would bear the brunt of it.
Therefore, the solution is to end these free trade deals and bring back American manufacturing.
As well as no longer being reliant on other countries, we can also then gain control over the greenhouse emissions from warehouses that we have no control over when it is overseas.
We can also make sure that the workers making these products get paid decent wages and given good working conditions, rather than the horrible wages and conditions seen overseas, which often includes child slavery.
Finally, we can give many millions more Americans across the Rustbelt who struggle to make ends meet after this outsourcing has destroyed entire towns a second chance. This will then allow the people in this town to help themselves, rebuilding the American middle class.
This is the biggest way that we can fix the current inflation crisis, and it will take many years of work from the government to convince corporations that they are best off using American employees.