Has the price of cheese, bread, and eggs in your grocers increased this year—along with the price of health insurance, prescription drugs, and doctor office visits? But when your ears are to the ground, aren’t you hearing that inflation is so in check? The cut off date for the annual 1.1% increase in the Consumer Price Index (CPI) just released ended in January. Yet, since January, I’ve noticed more than a few major price increases in my own little budget.
According to economists at Merrill Lynch, Stan Shipley, and Bruce Steinberg, there are no inflationary pressures in the U.S. economy.
“Inflation remains completely under control,” Bill Cheney, chief economist for John Hancock Financial Services, declared. “Goods and even services are cheap, and businesses are eager for sales at almost any price. Bargains abound.”
Such unison in the declarations of well-known financial experts tempts me to think that January’s 0.2% increase in the CPI is just too low to be bothered about. Never mind that folks most able to take advantage of all Mr. Cheney’s bargains won’t be found among the current 5.6% core of our unemployed, nor the rising number of laid-off workers. The CPI is a broad one however, and supposedly it offers up a balanced history of inflationary trends. But to a lay person, like me, the history of the index itself seems flawed. Energy and food prices are often excluded from quoted rates because they fluctuate so widely. So, what else remains in the index that’s as fundamental to us when it comes to our quality of life—except the cost of health care?
In addition to the exclusions of food and energy, there’s this little chronology of the past that goes on in the back of my head: the on-again, off-again relationship of the US dollar to the gold standard; the extreme inflationary pressures of the seventies; the deregulation of banks in the eighties, followed by newly defined economic indicators; the “Fortune 500” shrinkage to the “Fortune 100” via moves off-shore beginning in the early fifties, but occurring more rapidly and simultaneously over the past two decades with the largest mega-corporate mergers in history. Can we really pretend these events do not have very deep currents in today’s economy?
Such history leaves me frustrated with a lack of context in which the GNP, the mortgage interest rates, trade balances, the CPI, and all the rest appear to reside. Without full context, however, citizens readily feel unable to identify “appropriate” levels of inflation, or appropriate behaviors among the financial institutions with which they must deal. And, without that context, and lacking degrees in economics, citizens are dependent upon industry regulators. Perhaps the recently reported trend among Japanese housewives to purchase gold is more about a lack of trust than it is about the monetary value of the gold. Just how efficient is the current means of determining these rates anyhow? Even efficiency in an index that lacks appropriate context, forces the rest of us to simply trust those upon whom we rely for accurate, unbiased information. Now, just who—and where—would be those folks? Could it be that Maureen Dowd’s concept of a new “Office of Mendacity” is unsettling precisely because it may be too accurate?
“Author Fritjof Capra in The Turning Point cautioned us years ago that “stagflation” was quickly becoming a structural feature of all economies relying too heavily on energy, on natural resources, and on capital investments—rather than relying on labor and renewable sources of energy. (“Stagflation” is deemed a condition of the economy when inflation runs in conjunction with increasing unemployment.) Who would have dreamed that stagflation could take such hold with today’s mere 0.2% rate increase? Capra also spelled out how a nation’s excessive dependence on energy was inflationary, and how that dependence would ultimately bring about massive unemployment. Capra never minced words when it came to advocating that societies examine the real, and social, cost of goods, not merely bottom lines of special interests. Please, let’s do ask Congress to look at the real cost of our heavy dependence on nuclear and petroleum energy sources, along with who re-regulation of banks, brokerages, corporations, and petrochemical concerns actually benefits.
According to Capra, excessive dependency on either nuclear, or petroleum, sources of energy demands highly centralized, authoritarian structures to maintain social, political, and economic equilibrium—and at what cost? Current energy policies—combined with comprehensive terrorism strategies—too easily provide the formula for our grand entry into a permanent “plutonium economy,” wherein much of society works to serve the interests of small, yet global elites.
“Ending the Oil Addiction,” a recent op-ed piece in the New York Times, reminds us that a very big piece is missing from President Bush’s design to reduce our vulnerability to terrorism: reducing our dependence on gulf oil. Maybe it’s not realistic to expect an “energy president” to favor conservation measures, and to give solar technology its due. Calling upon experts and congressional representatives is imperative if this country is to examine the relationships existing between major petroleum and nuclear expenditures, inflationary pressures, and massive unemployment within our own borders.
Let’s not stop there with the relationships between energy expenditures and unemployment. The trend for filing a company’s charter in Bermuda to reduce, to avoid, or even to evade US tax payments is downright un-American—regardless of an Enron scandal. A further insult is that these formerly American companies continue to bask in the protection of the legal and market systems of the United States. No wonder my elders now frequently enjoy recalling a time when even the infamous textile mills of the south made trivial efforts to improve the standard of living for their “lint-head” employees. Who really believes that generating tax savings with moves to Bermuda will result in fewer worker lay-offs, rather than in greater executive compensation? Senator Charles Grassley (R-Iowa) feels the Senate Finance Committee should investigate such moves to Bermuda, but the Treasury Department seems to think it’s our own tax system that’s driving American companies to off-shore tax havens.
Let’s see now, without sufficient revenues, governments lose much of their ability to govern. The Treasury Department’s statement that they need to “rethink” international tax rules more than thirty years old is almost amusing. No American tax payer enjoys the luxury of thirty-year-old tax laws. I’m not as convinced that our tax system is repressive as it is being held hostage to special, big, and foreign interests. The IRS, we must remember, is charged only with enforcing what our congressional representatives legislate; much like law enforcement agents without the nicer retirement benefits. A maze of tax law changes represent a big business in this country, but the real root of dealing with the interests that clamor for all those tax changes remains embedded in the reformation of campaign finance law. So, in the meantime, every time I hear rumblings in the media—with politicians promising me they’re going to reduce my taxes—I will continue to immediately start hoarding funds for the increase in my taxes; for I’m just a member of the middle-class, you see.
On the bright side: maybe Paul Hawken’s audience will begin to widen. These days he’s looking much more like a visionary calling for the pulling of a few corporate charters. Heck, it looks like Enron may have beaten him to the punch.
My bottom line:
- This habit of shifting the cost of doing business abroad to taxpayers at home should have ended a very long time ago and;
- The re-regulation of those who gamble with other people’s money will not solve the problems of institutions far into the red.
Alas, I am not an economist either, so my only recommendations for readers are:
- Go to the Bureau of Labor Statistics website and check out your income and today’s prices against those of any year with their nifty little inflation calculator and;
- Check out the price of cheese the next time you’re in the grocery.
If the price of cheese has gone up since January 1, you might want to stand in the dairy isle and scream, “Who forgot American cheese?”
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