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Inflation vs. price-gouging or the real truth
Hint, if your party points exclusively at either, they are lying.
Okay everyone, today’s article is a bit shorter but, as that our next election is only a few short days ahead, here’s a topic that is all over the news, but as a tool of political leverage. Neither party is completely telling the truth either by out-right dishonesty or dishonesty because they don’t tell the whole story.
For all nations, a healthy economy is a key piece of national security. If it’s not working or out of balance, we must get to the bottom of it… fast. Today, I will give you some of the basics about why it matters if, “it’s inflation or price-gouging.” Spoiler alert… it’s both.
It doesn’t matter if you sit on the left or right, you are being bombarded by all kinds of nonsense about inflation. Since politics, especially here in Texas, is a contact sport, truth has a sad way of evaporating during election season. When one of this year’s hot topics is the economy and the economy has serious ramifications in the national security world, it’s time to seek some ground truth from some experts. You can’t solve issues with the conspiracy theories of the right nor the over-rosy picture painted by the left. Like most things, the truth is somewhere in the middle.
I’ve been tracking this issue professionally for a couple of decades, even more so since the beginning of the pandemic. Still, I am in no way qualified as an expert. I am though somewhat of an expert on research. The first rules of research are to find credible, non-partisan sources whose work you can validate by way of their methods and their sources. I use this approach to everything I research. My first research stop is always the CRS, Congressional Research Service. It’s famously non-partisan and run by an extraordinary staff of elite experts. I’ll introduce you to other terrific sources as we go.
First and foremost, where does our economy fit into national security? Here’s a graphic from CRS:
As you look at the graphic, it is easy to understand the importance of whether it’s inflation or price-gouging matters. In short, a healthy economy funds everything in government that contributes to security. Price-gouging only helps fund the bank accounts of corporations and elite wealth Americans. One can be fixed by Congress and the other only via shame and law enforcement. As that I stated up front that it’s a bit of both, now we must see how to prioritize Congress, who has a conflict of interest due to the donations of corporations and elite wealth citizens or LE/ law enforcement, who depends on a healthy economy to pay the governments bills.
What do the experts say?
First, the conservative think tanks:
Among the top conservative think tanks are, Heritage Foundation, AEI, American Enterprise Institute etc. I will use Heritage for my example. Their talking points are:
1. Their statement on the economy overall:
a. “Here’s Heritage House’s assessment of the US 2022 economy:
The United States has one of the world’s wealthiest and most diversified economies, led by a highly productive services sector, advanced manufacturing, and world-class research and development. The 2020 pandemic throttled relatively solid economic growth that had been stimulated by tax cuts and a lightened regulatory burden. Unfortunately, unchecked deficit spending and unprecedentedly accommodative monetary policy not only continued, but also accelerated in 2020 and 2021. Meanwhile, racial tensions and bitter political polarization aggravated by the pandemic have deepened, especially since the 2020 presidential election. Since assuming office in 2021 with narrow control of both houses of Congress, President Joseph Biden has pursued a radical left agenda aimed at fundamentally transforming both the country and the economy.”
2. Their statement on inflation:
a. “Since President Biden took office in January 2021, Americans have faced increasingly higher prices for food, gasoline, and other common household items. And while prices have been going up, wages have been going down, placing additional stress on family finances.”
– Heritage/ “Biden inflation tracker”
As you can see, they assert blame but without explaining how they arrived at this assessment. This doesn’t mean that they are explicitly wrong but how do we know with only blame as a guide to their thought process? They use very similar statistics and data as the left, but their assertion is exclusively partisan.
The left think tanks:
For the left side of the aisle, Center on Budget and Policy Priorities.
1. One of their lead statements on inflation:
a. As for the cause of recent inflation, some assert that it’s entirely due to rapidly rising consumer expenditures fueled by the federal programs that relieved hardship in the pandemic and supported the economic recovery. Federal support for struggling families and unemployed workers did cushion the substantial decline in household income that otherwise would have occurred and supported spending that promoted a strong partial economic recovery in the second quarter of 2020. Relief bills enacted in December 2020 and March 2021 also boosted a flagging recovery and supported stronger growth. But total consumer spending, rather than surging above its pre-pandemic trend, has roughly tracked that trend lately, as the graphic shows.
2. One of their statements on the economy overall:
a. Well-designed legislation that supports the economic future of families, workers, and children while at the same time reducing deficits would have little if any effect on aggregate demand for goods and services that would raise inflation concerns. Moreover, legislation that includes measures to improve access to health coverage and childcare, to provide more income support to help the lowest-income families with children to cover basic costs, and to address climate change would deliver substantial benefits.
As you can see here, there is a lot of talk about everything surrounding the economy of which inflation is not substantially included in their overall assessment. They do though address the general misperceptions in a different and detailed article. In this article they close by saying that the White House and Congress need to get together and help the Fed solve the problem of inflation.
Reputable mainstream think tanks, like Brookings, CSIS and universities have other opinions.
a. They dedicate an entire research program to the US economy. None of the recent headlines use the word inflation but they include the issue, along with its overall impact on the rest of what they deem more important issues for our economy.
b. In other words, serious analysis doesn’t avoid inflation but focuses on the overall health of this primary national security issue
a. Like Brookings, PEW focuses on the big problem of global perspectives about the economy. One of their primary focuses is that inflation is a global issue and has very little to do with US domestic politics.
a. NEU sees both sides, but not equivalently. They, as expected from a university are looking at the facts, nothing more. They acknowledge that there are so many complicated factors involved in inflation that no one issue or “side” is to blame exclusively.
What the news says: right, left and mostly unbiased such as the AP and REUTERS
1. The right:
a. This morning from FOX:
a. This morning on MSNBC:
A check of MSNBC headline programming from their website, doesn’t indicate any comment on inflation.
This quick look at two opposing, ideological websites show a very different approach to this pivotal, political issue and both are intensely focused on the pre-midterm election. When I see these types of approaches, I thoroughly discount it. I also do not include either in my research… ever! The right uses the word inflation ad nauseum and the left not at all. The truth is in the middle my friends.
Now, is it inflation or price-gouging?
Let’s take a look at what some of the respected mainstream news outlets have to say.
“WASHINGTON (AP) — Furious about surging prices at the gasoline station and the supermarket, many consumers feel they know just where to cast blame: On greedy companies that relentlessly jack up prices and pocket the profits.
Responding to that sentiment, the Democratic-led House of Representatives last month passed on a party-line vote — most Democrats for, all Republicans against — a bill designed to crack down on alleged price gouging by energy producers.
Likewise, Britain last month announced plans to impose a temporary 25% windfall tax on oil and gas company profits and to funnel the proceeds to financially struggling households.
Yet for all the public’s resentment, most economists say corporate price gouging is, at most, one of many causes of runaway inflation — and not the primary one.”
“There are much more plausible candidates for what’s going on,” said Jose Azar an economist at Spain’s University of Navarra.
· REUTERS: The quote below is from an excellent graphic product on their website.
o “Overall, it is a touchy moment. The Fed has had episodes where it attacked high inflation, notably in the 1970 and 1980s, at the expense of higher unemployment. It has had episodes, including the decade just concluded, of inflation that was lower than its target. But it has never had a moment when the central bank said it was going to let inflation get a bit high then edge it back down. Fed officials feel they have the tools and expertise to do this. They also have plenty of skeptics. Whether they succeed rests on all those recent price shocks - to used cars, to food, to energy, and other items - proving to be “transitory”.
Well, that should be enough to convince everyone that this is not only a delicate political issue but an immensely complex one as well. What matters in regard to our midterms is that voters stop listening exclusively to one or the other major political parties. Inflation as explained by either sides’ news outlets will likely or pointedly mislead in favor of their preferred policies. There is no indication that anything the new administration did, made a significant difference either way, despite the finger pointing by the right. There is corporate greed, but not on the level assigned to it by the left. Like everything in national security, true answers depend on problem-solving, not politics.
Whose fault is it that politics is hyper-partisan? The bottom line is that it’s all voters fault. If we would demand honesty and integrity from our elected representatives at the ballot box, we all win. If we remain tribalized to an extreme degree, we all lose. That my friends, is a harsh but accurate bottom line. Our first president and only independent one warned us starkly when he left office after his second term. George Washington, hands down my role model of leadership, for what our democratic republic should have been, before “factions,” political parties came into popularity, at the birth of our nation. We apparently haven’t listened. The only question remaining is, “will we, before it’s too late?”
"However [political parties] may now and then answer popular ends, they are likely in the course of time and things, to become potent engines, by which cunning, ambitious, and unprincipled men will be enabled to subvert the power of the people and to usurp for themselves the reins of government, destroying afterwards the very engines which have lifted them to unjust dominion."
President George Washington
FAREWELL ADDRESS | SATURDAY, SEPTEMBER 17, 1796