Politicians love inflation. It allows them to
get their hands on ever more money, and not just more scraps of
paper, but real spendable increases. I can remember when $5,000
was a pretty good annual salary. A person could own a home, a
car, and raise a fairly large family on $5,000 a year in the middle
of the twentieth century. Today, that amount of money will get
you a comfortable two week vacation.
As the buying power of money falls, people need
more and more of the stuff to maintain the same living standard.
Unfortunately, as they get more and more money they climb into
higher tax brackets and that gets more money into the hands of
the politicians. Indexing the tax rates has helped, but not everything
is indexed. Only a greedy government gets any real gain from inflation.
That potential gain reduces the government’s incentive to
avoid inflationary measures. The solution is universal indexing.
Index everything to inflation. That removes any incentive to encourage
the spread of this plague.
Some things of course are indexed already and
some of our politicians are constantly trying to find ways around
the protections offered by that indexing. The most publicized
recent attack was on the cost of living allowance (COLA) increases
paid to retired government employees and military retirees. Our
compassionate leaders did not think it was fair to keep giving
“raises” every year to a bunch of useless old fossils
who refused to die, when that money could have been spent on so
many other, worthier, causes. The COLA, of course, is not a raise.
It is money paid to keep one’s buying power from eroding.
Not getting a COLA to match inflation is the same as having your
retirement income reduced by an amount equal to inflation. I personally
do not want a COLA increase. I do not want inflation; but if we
get inflation I need the COLA increase.
Our esteemed leaders have at last found a way
to justify reducing retiree income. They have decided that the
cost of living does not actually rise as much as the inflation
index because when people are faced with an increase in the price
of one commodity, they simply switch to another. The sophists
would have been proud of this lot. If I can buy tripe for the
price I used to pay for sirloin, buying the tripe has not really
compensated for the increased cost of food. My standard of living
used to include the occasional sirloin and now it doesn’t.
My standard of living has been lowered. Is that reasoning too
subtle for government economists? If we can avoid the effects
of inflation simply by changing our habits, I say that we should
not do it by stages. Why doesn’t everybody right now trade
in his car for a bicycle and start subsisting on canned cat food.
By the government’s reasoning, that will lick inflation