What is the source of today's inflation?
Inflation is seeping into the economies of countries all over the world. Yet, here in Canada, the opposition Conservatives are blaming the spending and policy decisions by Justin Trudeau's Liberal government as the cause of inflation. On the surface, it seems entirely plausible that putting a bunch of money into the economy is going to cause inflation. This extreme over-simplification of a broad and deep-rooted problem ignores another broad and deep-rooted problem: economic inequality.
It is no secret any longer that the rich have for decades been increasingly sucking the wealth out of the working class which comprises of all of us who earn our income from wages. The most privileged of our society is throwing that plunder into speculative investments that seek profits over community-needs and are sending the rest to offshore bank accounts as we have seen in the recent Pandora Papers leaks. Money is leaving our communities, and the overall economy, in droves. You cannot ignore this in a discussion about inflation.
Another thing that cannot be ignored is the rising cost of housing in Canada. Something essential that most Canadians aspire to own is being turned into a commodity to be exploited by giant corporations and wealthy people seeking passive revenue sources, and money launders looking for a safe destination for their dirty money. Even here in Regina there are signs everywhere saying "we will buy your house". This isn't normal nor sustainable.
The cost of food and other essentials are also soaring, adding insult to injury to the working class that is not only earning less income today than they would have 30 years ago, but who also have higher rent or mortgage payments relative to that income. Because working class Canadians spend more of their income on housing today, they have less money to put into their local economies. This sounds like the opposite of inflation.
If government didn’t spend money–borrowed at historically-low rates for that matter–to make up for the economic drains that are Covid, inequality, and climate change, could you imagine how much more death and despair there would be? Covid would have nothing on the disaster that austerity would result in. Instead of looking at government spending as the problem, we should be ending the free ride that the ownership class has been on in recent decades.
So then what is causing inflation? The answer begins with our global, just-in-time supply chain that forces us to rely on our economic competitors for our essential goods. It’s so painfully obvious but we are being led to believe that blaming globalization on our economic problems is an extremist view, seemingly because grifters like Donald Trump and Maxime Bernier hitch their political aspirations to what is a populist cause. Right-wing populists like Trump and Bernier are not being honest, however, and of course populists on the left are considered extreme because they are threatening the power and profits of those who benefit from globalization!
Despite the gaslighting from the ownership class, the Covid pandemic has clearly showed just how fragile our globally-interconnected economy is. And if we continue to ignore the glaring cracks in it and avoid the radical changes needed to fix them, the next catastrophe–which will happen in time–will have even worse consequences than what we are experiencing now.
In the meantime, I invite you to watch this short clip from Saagar at Breaking Points, explaining how inflation is affecting our neighbours to the south, which is a similar tale to ours and other countries around the world.