Burgess column: Inflation? Prices Don’t Just “Rise”

Prices don’t just rise, they are raised. The sun rises, so does the tide, but there are causes. And there’s a reason prices go up — they are raised. Prices are raised by business people, sometimes to cover their own rising costs. And sometimes just to make more money. Economic theory, and practical experience, tells us that prices are raised by business people as high as they can raise them and still sell their product or service.

Inflation is when most people who sell products or services are raising their prices. It’s a natural phenomenon only in the sense that people naturally want to make as much money as they can out of their goods or services.

Right now in the U.S., we’re experiencing moderate inflation, by historic standards, at around 7% for 2021. It was much worse during the ‘60s and ‘70s, but wages were going up then too, and unemployment down. There’s a lot of hoopla in the news about INFLATION! Sadly, negative news is thought by some to be more interesting than other kinds of news. Of course, Republicans are working frantically to weaken President Biden and Democrats in general for the next elections.

Also, some in the news industry see beating up on Biden as a way to pedal news. It’s easy. The President, whomever he is, always annoys a third to half of the population just by being there, so he makes a good target. Having lived through presidents from FDR on, I can tell you they’ve all been targets of various disaster stories—some warranted, some not. And since the media is almost completely owned by wealthy businessmen, liberals such as President Biden get more negative scrutiny than pro-big business Republicans.

I was a boy when President Truman was vilified by Republicans whose plans he upset so dramatically by winning the uphill 1948 election — even though turncoat “Dixiecrats” had kept his name off the ballot in several Southern states. They told a joke in which he threw dollars out the window of Air Force I to please a few folks on the ground. Then the pilot said, “Why don’t you jump out, and make everybody happy.”

But the economy overall did well under Truman, as it has historically under Democratic presidents. Readers who doubt that, can look it up on the internet, or — as I had my students do when they asked which party was better for the economy — look it up in the Almanac. But you have to look at more than rising prices. A low unemployment rate is good for workers and business — because employed people buy more. You also have to look at whether wages are going up or down. The minimum wage is a measure, and by that standard it’s a struggling economy, as the minimum wage peaked in terms of “purchasing power” in ’68. Since then, only under President Clinton did folks in the bottom tier of the economy gain ground. And he got re-elected in spite of the media focus on his private life and Republicans impeaching him.

As to inflation, it’s a special problem for folks on fixed income, such as retired working people. And inflation is not easy to control. Nixon put controls on prices and wages, but that just made it hard for workers to catch up. Carter and Reagan supported higher interest rates, but that hurt anyone who had to buy on credit. The inflation in the Carter-Reagan years was caused mostly by oil prices going sky high.

And, no, President Biden’s approval rating is not at an all-time low. Truman, Nixon, Carter, and both Bush’s all had ratings dipping below 30%. Biden’s mid-January rating is around 40%. Politically, he has plenty of time to recover more popularity for the next presidential election in 2024. Of more concern to him is probably the Congressional elections this fall. If Republicans can take control of either house of Congress — with more votes or voting manipulation--they will surely make life more difficult for him.

Meanwhile, as President Biden’s infrastructure bill is implemented, the outlook for the actual economy will be good, if we can get past most of the Covid.

Jack Burgess is a retired teacher of American & Global Studies. He’s also the former Executive Director of the Columbus Education Assn. & former Chief of Arbitration Services for the State of Ohio.

This article originally appeared on Chillicothe Gazette: Inflation? Prices Don’t Just “Rise”