So we know Inflation is mainly due to too much money swirling around in the economy and/or price gouging
Is the answer higher taxation on the rich? More price regulations? Or something more nuanced?
I changed the title from Leftist to Soc-dem, cause leftist answers usually mean complete revolution- what's an answer that I can condescendingly tell my centrist friends that will 'fix' the economy without throwing all working economists to :gulag:
completely restructure the entire economy and system of distribution and allocation of resources
Inflation is cool & good in and of itself. It's a super useful tool, and during times of recession or not spending or whatever it's good that the collective can print money and prime the pump. The problem isn't that more money is being printed, the problem is where that money is going.
Think of the difference between:
Recession hits, nobody is spending money - gov prints 10% of the money supply and uses it to build a vast high speed rail network to the benefit of all. Like a million people get busy, and those people all spend their $$ Yada Yada Yada.
Vs
Recession hits, nobody is spending money - gov prints 10% of the money supply and gives it to ?? already rich people ??? so their investments don't go tits up??
The printing of the money isn't inherently bad, it's what gets done with it that makes it bad
This is why China will massively invest in infrastructure at the mere smell of economic recession. It keeps the economy going and provides places to expand when things get better. If China didn't decide to massively invest in infrastructure ca. 2008, I doubt they would be where they are at right now. Building infrastructure is always a good thing but neoliberals cannot understand this anymore.
edit: it is quite funny that when China does this, the west screams that it will create too much debt while meanwhile printing an absurd amount of money and handing it directly the the rich with no real strings attached.
The soc-dem answer is to raise marginal tax rates and not do things like PPP because we'd get a lot more stimulus per dollar from things like unemployment checks.
Not really. Money circulates. Vouchers would only be usable one time, after which they are destroyed. It would be pretty trivial to set this up as a centralized digital payment system.
How is that worse?
Edit: also, fiat money isn't based on work...
also, fiat money isn’t based on work…
For the average person it is. What's the difference between "work to get the money to pay for things you need" and "work to get the vouchers to pay for things you need"?
Don't think soc-dems really have a good answer to it (weird I know, capitalist ideology doesn't have solution to capitalist problems). They just try to control it by setting interest rates the same way most other states do. Usually trough undemocratic central banking systems that are accountable to no one.
Putting the central banks back under democratic control would be a good start, but libs will probably call you an authoritarian for suggesting central banks shouldn't be allowed to operate independently.
Inflation isn't as bad as you think if it's steady and predictable. If you don't get a raise every year then you know you're actually getting a pay cut. Mostly it stops people from hoarding their wealth under their mattress and puts it into circulation.
The uncontrolled inflation comes from stupid decisions like placing economic sanctions, getting involved in war, and giving boat money to business owners during an crisis. Leftist policies are already good at addressing that.
2 things come to mind...
The first is "Don't worry about inflation". Just get the money into hands that will spend it or regular human things. Won't stop private firms from raising prices but maybe price hikes won't hurt so much.
Non-means tested 100% universal UBI.
Are you a billionaire? Here's 2000 buckerinos a month until you renounce your citizenship or die.
Are you living out of your car due to fucked up life circumstances? Here's 2000 buckerinos a month until your renounce your citizenship or die.
Are you a houseless pan handler with mental health issues that makes being a "normal" and "respectable" member of society difficult? Here's 2000 buckerinos! (Society will make it somebody's job to make the rounds and remind everybody that they've got their monthly UBI deposit and give them a new card or hand out cash or whatever)
The second would be "public" services that compete with "private" services. So wherever there is a "private" bank that does checking/savings/direct deposits/debit cards/loans there is a State/Federal bank that does all the same things but with less or no fees, less or no penalties, lower (or zero) interest rates on loans, simple instead of compound interest schemes when giving out loans. I'm sure there are other sectors where this could be applied.
This might help with prices that are artificially inflated. I used banking in my example because ... well ... loan interest rates are often described by economists as a signal of risk that the lender is taking. Dumb thing is, if you make a large dollar principal loan more expensive by having a higher interest rate, doesn't that increase the risk that the loan wouldn't get paid back? If the loan officer thinks the lendee is a risk, either deny the loan outright, or loan out a smaller amount of money.
Hmm I think a dem soc would use taxation to curb inflation. If they take money out of circulation with taxes, and instead use it for consumption, hold it or destroy it, then it would in theory reduce inflation. A soc dem would use reserve bank interest rates to slow lending. Both tactics don't stop the most vulnerable from being ravaged by the system.
Removing money from the supply with taxes would cause deflation, which would cause indebted people to be further in debt, and the working class would need to take pay cuts every year instead of pay raises. Inflation is controlled when the central bank buys or sells bonds to the government to control the supply of money and money from taxes is only used to provide liquidity for those day to day transactions.
Mark Blyth is my favorite socdem and his biggest economic policy recommendations are net wealth taxes are citizens’ wealth funds. I don’t really see inflation as an issue so long as it’s controlled
"Inflation" is supposed to describe money getting devalued because too much money is being printed. What people are actually talking about when they talk about "inflation" which is caused by people having more money in their pockets, as opposed to spending in general, is price gouging. When necessities are monopolized, the company is free to raise prices based on how much money people have in their pockets. The solution, obviously, is to break up or nationalize those monopolies.
sorry- edited the question- what's a snotty condescending answer that still keeps this horrific system in place while 'fixing' inflation?
Well, not handing BILLIONS OF UNACCOUNTABLE DOLLARS IN FORGIVABLE LOANS TO BUSINESSES would be a good place to start. Glad we didn't do that, right? Oh wait, we did? Well those companies used it responsibly to keep workers employed and didn't just dump it into stock buy backs, right?.... R-right? Fuck me they did?
Roughly 25% of PPP loan funds went directly to workers who would have lost their jobs. The rest (75%) went to business owners, shareholders, creditors, and suppliers of companies receiving loans.
https://www.investopedia.com/where-ppp-money-went-5216725
Well what was the fed up to? It's acting as a responsible, if undemocratic, institution to keep inflation down and hasn't essentially served as a money printer for finance capital for over a decade, right?
https://www.forbes.com/advisor/investing/quantitative-easing-qe/
Sheeeeeeeeit. So you're telling me that we've handed Trillions of dollars to the upper echalons of society in the form of tax cuts, forgivable "loans" (aka subsidies), AND dramatically increased the money supply by putting it directly in the balance sheets of big banks? I can't possibly imagine why we have so much inflation! Its gotta be those pesky unemployment benefits and stimulus checks we gave to poor folk.
Unfortunately, there isn't a super quick answer to this. Neo-liberalism has been at the helm of our economic policy for 45 years and there's no silver bullet answer. Was it the massive tax cuts that occurred? Is it the bloated and disgusting military spending? Is it Quantitative Easing and money machine go brrrrrrr? Is it price increases in response to falling rate of profit trying to extract more from an advanced economy?
It's all of the above and more. The contradictions of capitalism are numerous and we're running headlong into them. Only a historical and material analysis can provide an accurate picture and solutions, and once you do that you're inevitably lead to "ooooohhhh, the socialists are right." Then we're back to @blairbnb's answer:
completely restructure the entire economy and system of distribution and allocation of resources
