“The people cannot be all, and always, well informed,” Thomas Jefferson wrote in a letter in 1787. “The part which is wrong will be discontented in proportion to the importance of the facts they misconceive.”
When it comes to the very important subject of inflation, Jefferson couldn’t have been more on the money. Our discontents are largely driven by misconceptions. The American people, for example, have been trained to believe that inflation is Joe Biden’s fault — or maybe even their own fault, triggered because they have too much spending power.
The truth is that inflation is largely due to corporate greed.
Since you read radical media like In These Times, you already know all that. You might even have hope, because you’ve been learning why the mainstream understanding might soon change.
There’s a stereotype, and sometimes it’s even true, that leftists are so wrapped up in ideology that they don’t provide an accurate picture of reality. When it comes to today’s inflation problems, however, the Left has just been saying what’s objectively true, while the establishment sounds like a bunch of loons.
You know, from our September/October cover story by Hadas Thier, that Federal Reserve Chairman Paul Volcker, in the 1970s and 1980s, blamed inflation on high wages, then induced a recession that squeezed wages for a generation to rein inflation back in, which did even more harm to workers.
You know, if you read Samir Sonti in the summer issue of Jacobin, that the current Federal Reserve chair himself isn’t confident that the traditional, one-size-fits-all response to high prices — hiking interest rates — will even lower prices, because the original problem wasn’t the traditional issue of excess demand but the supply shortages driven by Covid. (Capitalists cheer the Fed putting the brakes on the economy anyway, because squeezing the power of labor is something they love.)
And you know, if you read Matt Stoller on Substack, that one reason inflation keeps steady — even as supply disruptions fade — is that corporations are exploiting their market power to raise prices way above any actual increased costs. That conclusion is so incontrovertible that, in a clear sign that mainstream understanding about inflation may be about to change, even the capitalists over at business publications like Bloomberg cited price gouging as a reason corporate profit margins are higher than they have been since 1950.
Finally, there’s the nonsense out there about high energy prices.
Republicans, and too many Democrats, are calling for “energy independence” in response to inflation, which is a pretext that translates into drilling and fracking more in the United States. Regardless, energy is extracted by private companies who sell it on the world market; America doesn’t keep the stuff just because it’s drilled here.
The political parties agree even more readily that maintaining warm relations with the Saudi monarchy is essential to lower energy costs. But that’s nonsense, too. Global supply and demand dictate oil prices. A stunning book by Robert Vitalis makes that case devastatingly. Oilcraft—a reference to “witchcraft,” as in magical thinking — argues that the trillions America has expended projecting force in the Middle East and propping up the House of Saud has had zero real effect on the prices America pays for oil.
The misconception, though, is tantalizingly enriching to defense contractors and the House of Saud itself. It’s just one more myth, of the many, saturating our discourse about high prices. And wouldn’t you know it — all of those myths just happen to be advantageous to the rich.
The clarity and force with which these old, wrong paradigms are getting debunked by movement journalists should give us hope. When it comes to fiscal and monetary policy, another world is not only possible, but maybe not all that far away.
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Rick Perlstein, an In These Times board member, is the author of Reaganland: America’s Right Turn, 1976-1980 (2020), The Invisible Bridge: The Fall of Nixon and the Rise of Reagan (2014), Nixonland: The Rise of a President and the Fracturing of America (2008), a New York Times bestseller picked as one of the best nonfiction books of the year by over a dozen publications, and Before the Storm: Barry Goldwater and the Unmaking of the American Consensus, winner of the 2001 Los Angeles Times Book Award for history. Currently, he is working on a book to be subtitled How America Got This Way.
