Why Isnít Inflation a Campaign Topic?

by

John Wright

 

I suppose I could be accused of adding extra salt to political potato chips, as there are plenty of nasty campaign topics in play this year. But why no serious talk about real inflation? You do understand what I mean, since you buy food, gasoline, cars, homes, medicines and, well, it is hard to find items other than those made cheaply in China or other Far East locations that do not represent examples of very high inflation since the year 2000. Why the silence?

I visited numerous WebPages about election issues, and I searched subcategories about the economy. Hmmm Ö it appears that there hasnít been any notable inflation for I found virtually nothing. Candidates and parties must know something Ö maybe I am wrong. Maybe I am taking bad drugs and have imagined that the USA has experienced serious and continuing inflation. And maybe pigs fly.

I like ribeye steaks. They now cost $7.56 per lb. at Costco®, whereas one year ago they were $6.25 per lb. and two years earlier $5.25 per lb. Gee, I wonder who is buying all of our beef and driving prices up? Can you guess? For that matter, can you even remember what you paid four years ago at the supermarket for anything? Oh, and how have your after-tax wages and salaries changed since then? Just for the record, the $2.31 per lb. increase translates to 44% inflation. I bet you donít qualify for food stamps, do you?

The oil inflation issue is exciting. What was $1.09 per gallon three years ago is now $1.97 per gallon. I donít wonder where the oil is going but I do wonder what will happen to oil prices going forward. You see, our little experiment in Iraq isnít working out so well. Boom! There goes another pipeline. We have really pissed off the folks in the Middle East and the folks in Venezuela with our meddling in their governments and businesses. The net inflation in price for regular gasoline: almost 81%.

Recently I bought a 32" x 120" sheet of stainless steel for a back wall of a kitchen counter. The shop owner who sold it to me apologized for the high cost of $180. He said the cost literally doubled since last year. Okay, that one is easy Ö 100% inflation in one year. I then asked why he couldnít seek other suppliers. His answer: "There are only two primary manufacturing sources in the world and both of those are not in the USA." I found that answer to be very interesting as it speaks not only to increasing demand in countries like China but Ö particularly to the issue of complete loss of control of prices when we allow offshoring or outsourcing of manufacturing. Per the words in the old popular song, "You ainít seen nothiní yet!"

Those of us who bought new premium homes in the past five to ten years are experiencing two changes that are hard to believe. The first is that real estate prices have inflated at least 35% in the past three years. Ahhh Ö that sounds great for us, but what about first time and second time homebuyers? The second change is that property taxes are going through the roof due not only to higher selling prices but also property tax reassessments. The results: 1) Home buyers are getting hosed in prices and taxes, and 2) Those who diligently pay off their mortgages and own the premium homes canít afford to retire in them due to very high property taxes resulting from the reassessments. Property tax increases of 30% to 50% and higher are common. Oh, yes, we must add in the massive increase in the cost of home heating fuels. Whee!

For the first time I am now hearing about some companies planning to eliminate employee health insurance completely. Isnít that an interesting financial tug of war between the employers and the insurance companies and the "for profit" medical world of hospitals and pharmaceutical companies? Guess who the rope is? My bet is that you will be pulled apart financially if you get caught in that cost control game, for you and your family members will have to have some medical treatments and/or pharmaceuticals. I know it isnít fair to point the finger of blame, but can you figure out the identity of the only group of people who have the power to stop this absurdity Ö and who have not risen to their level of (Hereís a hint: elected) responsibility? No insurance equals about 900% inflation. Are you eligible for Medicaid? Of course not!

Now we simply must look at our costs for automobiles. Forget gasoline prices as I have already mentioned them. Do think about purchase, maintenance and insurance costs. Kiaís® are appropriate to people who are working at the new jobs in our new economy. Indeed manufacturers are producing a variety of cheapo cars for the poor. Alas, if you want something nice, be prepared to spend at least $30,000 and up. Maintenance costs tend to be minimal until a vehicle needs repairs. Then, hold onto your socks Ö a bill for $300 to $600 is quite common for trivial stuff, even a pair of tires. That simple brake job somehow demands more than pads or shoes. Then, with no legal alternative except in New Hampshire, the insurance folks dictate their terms to you. You will be hosed, regardless of your driving record. Look at a minimum of $1200 per year for what? Peace of mind? It is difficult to put a single number together to represent the net inflation, but I will wager that the total is at least 20%.

Inflation has not been targeted as a political issue. Indeed, if one looks at the consumer price index (CPI), which happens to be a waste of time, things look okay (one to two percent per year). That simply means the real cost of living increases have been excluded from consideration in creating that index. Think further about your income level. If it is not increasing proportionately after taxes when real prices are increasing you are becoming poorer. Retired people on fixed incomes are in trouble. And when was the last time your old employer sent you a notification of an increase in your pension? More likely the notification was about the demise or restructuring of the company and itís pension plan. You lose. Promises made while you worked will be broken, including medical insurance coverage.

Not to worry. You will always have your generous Social Security check to fall back on when you retire. But will you be 75 years of age and clerking in a Wal-Mart® for less than minimum wage when you become eligible for the government pittance? Sorry, Virginia, there is no Santa Claus. Your buying power will be about 10% to 20% of what it would have been without chronic high inflation.

So Ö the only political aspect of inflation this year is in the inflated opinions the candidates promote to us about themselves. History proves otherwise. Your labor does not and will not make you free and secure. Your tax break means essentially nothing if you are a little guy. You have, however, a free ringside seat to watch the next few years of inflation unfold, and I hope your needs are few for the story is ugly.

Gee, I hope I havenít inflated the seriousness of this topic.