On July 1st Cory Doctorow published “After inflation, the whip-crack” at Pluralistic and explored how limited economic models have led to wrong-headed approaches to inflation and deflation.
The story that inflation is “too many dollars chasing too few goods” puts undue influence on “too many dollars” and not enough on “too few goods.” The 40 year neoliberal experiment in letting the economy-computer run itself was a sham from the start, a way to trade democratically accountable market structuring through public regulation for secret, unaccountable market structuring through back-room deals between monopolists.
The idea that we should fix “too many dollars” by taking away workers’ jobs and cutting their wages so they can’t afford the necessities of life ignores the possibility that we can work on “too few goods” instead – by onshoring production of key inputs like lithium, and by shortening supply chains so there’s fewer ripples in the bullwhip’s path.
Focusing on monetary policy – rather than productive capacity – is a trap that the wealthy set for us. The tell is obvious: “too much money creation” is never a problem when it’s financing military spending or tax cuts. The rich know that the true predictor of an economy’s health is its ability to produce goods, and fretting over its production of money is largely a distraction.“After inflation, the whip-crack” by Cory Doctorow