At the end of July, an economic adviser working for Bank of America wrote a memo that got leaked. It made bluntly explicit the long-standing common knowledge among savvy investment advisers: those “economic policies” debated among politicians, economists, and dutiful mass media operate at two different levels.
On the public level, debaters discuss what “we” need to do to fix “our economy’s problems.” It reeks of that “we are all in this together” language that reminds us of commercial greeting card poetry. On the other, private level, insiders discuss how the government should respond to economic problems in ways that boost employers’ profits even if at employees’ or the public’s expense.
Insiders express their preferred solutions in that nicely neutered term: “policies.”
Inflation, that “problem” torturing capitalist economies these days, offers us the first example of such policies. Inflation is a general increase in prices. Employers, not employees, decide the prices to charge for whatever goods and services their employees’ labor produces. Employers are at most 1 percent of the population while employees and their families constitute most of the other 99 percent. That 1 percent is not accountable to the other 99 percent of the population.
Inflations directly impact—reduce—the standards of living of the 99 percent. The only exceptions are those employees who are able to raise their wages or salaries at least as fast as inflation raises prices. That is a tiny minority of the employees in general and also right now during the 2022 U.S. inflation. If inflation raises prices faster or more than wages, that represents a redistribution of income and wealth upward from employees to employers.
Categories: Economics/Class Relations