It's the Oil Prices Stupid!: Inflation

So much talking about how we are replaying the 1980s, economically we are back in the 1970s. They called the 1970s the Age of Limitations. Reagan ran on rolling back the Welfare State, blaming it for the runaway inflation and for permitting the survival of the Unworthy and Criminal. Not helping matters was the Father of the Welfare State, LBJ was conducting the Vietnam War like his own personal game of Risk in the basement w/out raising taxes to offset the economic drain of dropping more munitions on a tiny South Asian country than had been dropped on all sides in Europe during WWII. Ask anyone what else they remember about the late 1970s, they will tell you spiraling gas prices and gas lines from the OPEC (Oil Producing Eastern Countries) Oil and Gas Embargo.

Maybe at first blush the two may not seem connected, the Embargo and the Inflation of the 1970s. Maybe I would have thought so too if I hadn't worked in a grocery store deli for entirely too long. I became aware of a pattern. Oil prices spike, our prices go up, and we quit offering extras like chips or an apple w/ our sandwiches. Oil prices go back down, prices for what we sold stayed up. No chips or apples w/ sandwiches. Normally, inflation is the product of increasing Demand, especially when Demand outstrips production. Inflation from Oil price spikes inflates the price of everything that requires fuel to transport or requires oil in their manufacturing process. All set apart from Demand. In fact, it is the key to the puzzle of Stagflation. A stagnant or receding economy w/ high unemployment and spiraling inflation. Oil increases prices w/ out the benefit of additional Demand. Jimmy Carter's failed solution was to treat is as though it was driven by Demand and excess govt spending on the Welfare State and so embarked on a program of cuts to govt spending.

Reagan was elected in 1980, on a wave of discontent w/ Carter's economic policies and the Iranian Hostage Crisis. Reagan's election was one of the worst things that ever happened to America. He took Carter's govt spending cuts and turned them up to 11. He also gutted the social safety net and ended, among other things, federal support and programs for public education.

Here is a neat thing about Inflation caused by Demand. If you destroy the economy, things get REAL cheap because nobody can afford them. This is how Republicans get their record as Inflation fighters. Nobody has more zeal for destroying America's economy that Republicans.

Reagan led a campaign of busting labor unions, most famously the Air Traffic Controllers (my grandma, racist and bigot that she was, Hated Reagan because she was a Union woman who worked for the city) and oversaw the Off-shoring of American manufacturing which then led to disastrous De-Industrialization. What had been black Middle Class communities supported largely by manufacturing were devastated almost instantly. Add an illegal Central American War funded by the selling of arms to "American Hostage Takers" in Iran and dumping tons of Central American cocaine into these communities, you get the urban Hellscape that was the Inner Cities of the 1980s and 1990s.

While Reagan was terrifying voters w/ Black folks, few recognized that their futures working in manufacturing had just been foreclosed on as well. They had the buffer of the Housing benefit of the GI Bill which had been denied Black WWII veterans which had been the basis for generational wealth. To fix that little detail, Reagan thought up the little notion of Reverse Mortgages to help strip out the remaining equity held by these families. They were just as fucked, ultimately, as the communities suffering the scourge of the Crack Epidemic and gang wars. Their fall was just a whole lot slower w/ far less militarized police response and incarceration and violent death. They still have meth to make ends meet.

Supply Side Economics, championed by Reagan, replaced the stability of a middle class based on manufacturing+retirement benefits w/ a low paying no benefits Service Economy coupled w/ cheap goods manufactured elsewhere for pennies on the dollar which Americans still can't really afford, but they can buy on credit. What could possibly go wrong? 

Can everyone in the class see how we went from 1970s Stagflation to the destruction of the Post-WWII middle class in the 1980s? Good!

This takes us to today. Republicans are campaigning on Inflation again and blaming president Biden, which is hilarious given that the last Republican president attempted an armed overthrow of the federal govt. Something about their priorities is just a little...off.

Today we don't have an OPEC Embargo fucking w/ oil prices. We have the Russian invasion of Ukraine and most of the world an Embargo against them, denying them a market for their Petro-Rubles.  If we support the Defense of Ukraine, we must recognize that the inflated oil and gas prices and concommittant climb in Inflation is an unavoidable sacrifice we are all making in Ukraine's Defense.  And, oh yeah. Fuck Putin! The effect is still the same for us as it as in the 1970s. Complicating this is an economy coming out of Covid deep freeze which Republicans still call a win because everything, including gas, was dirt cheap. Things always are when no one can afford them.

Part of the problem is in the mindset of the American public. Social cohesion has been melting away like the middle class since Reagan got elected over 40 years ago. We imbided the message that you can have anything, so long as those weaker and more vulnerable than you pay for it. The garden of state blooms riotously when you keep it fertilized w/ corpses. We are now a nation at war w/ itself. There is no sense that We Are All in this Together. 

In the past, during WWII, the Greatest Generation grew Victory Gardens, had war material donation drives, bought War Bonds, and rationed gas. Skip ahead to the Bush/Cheney administration tried to pay for the Wars in Iraq and Afghanistan w/ TAX CUTS! Good God! How fucking stupid can you get?

The ethos post-Reagan, abetted by presidents Clinton and Obama, is that America doesn't pay. We don't do self-sacrifice. You only sacrifice the vulnerable. Thus the otherwise Republican peculiarity of preferring public policies that produce American bodycounts. This was taken to unholy new heights by Trump and heralded as the Way of the Future by presidential hopefuls Abbott and Desantis. It would heartwarming to see Trump really embrace the lessons of Hitler and slaughter all of his competitors on his own side and their followers in his own reenactment of the Night of the Long Knives. 

To those unfamiliar w/ me, I am calling Trump a Nazi and the current incarnation of the Republican Party, America First, a fundamental American Nazi Party. It had been since Lindbergh and Patrick Buchanan. America has no idea of the trouble it is in.

Inflation! Just like last time, in the 1970s, Republicans are running on being able to tame inflation. And they can, and it works. To the extent that the inflation is caused by increased Demand and Economic activity, it can be rolled back by Destroying the Economy. 

Wall Street Crash 1987, caused by Junk Bonds because evidently the best way to soup your car up is by cutting the brakes...talking about Stock Market deregulation here, exacerbated under Bill Clinton who primed the economy for Bush-43's Wall Street Meltdown in 2008, not Junk Bonds but Toxic Assets, w/ Mortgage Backed Securities leading to a foreclosure crisis that destroyed the inherited wealth of millions of American and kicked millions more out of their home. Who this did work out well for is monsters like Steve Mnuchin who bought up all those foreclosed properties for a song and continued to use Mortgage Backed Securities during the Trump administration to artificially pump up the Stock Market, despite their propensity to explode into Toxic Assets and mass home foreclosures. Though given the malice of the Trump administration, it is easy to see how they may have expected them to self-destruct when Trump is no longer in office ergo, not their problem. A neat little economic time bomb for someone else to deal with. A feature, not a bug. Trump gave the nation a Master Class on denying the benefit of the doubt to assholes like Mnuchin and himself. You can count on them to do the very worst thing for the very worst reasons...and there is even more and worse they've done you may NEVER know about. This is why the Trump Presidential Library must be an Evidentiary Library where investigators and forensic accountants are employed full time for decades to bring to light the full extent of Trump's criming. Additional crimes discovered will be speedily adjudicated and the time for each new sentence will be added to the rolling total of his prison term. Otherwise will we find ourselves w/out a country. Not kidding even a little bit.

The Republicans will destroy Demand to bring down prices. Great, except now you are poor and looking at cheap goods that you can't in good conscience afford.

What Republicans WON'T do is tackle the other half of the Stagflation equation: Oil price spikes.

And why would they? They are the party of the Oil Men. Huge price spikes mean big profits, which must be protected even as the nation starves and freezes for their prosperity. Even as the human habitability of the world becomes matter of grave doubt in the near term. There is just too much money to be made destroying the Earth NOT TO.

Pay attention kids. The prosperity of the oil companies comes at the expense of literally everybody else. Oil prices spike inflation in ways that can't be controlled by demand and it is rapidly degrading the environment. Everything is sacrificed to the Energy Cartels. Our economy. Our environment.

This is one of the golden calves worshipped by Republican, only the gun lobby requires more and bloodier sacrifices, creating a business model based on mass murder. For supporting these industries and their demands, the Republican Party is a Death Cult. Want to prove it to yourself? Make a drinking game out of it. Keep a bottle of moonshine on hand or other hard liquor. And take a shot whenever a Republican says or does something that is life affirming. In support of keeping ordinary Americans alive and healthy. And no. The Pro-Life Position is the fetishization of the Fish stage of Human Development. It ends at baby's first breath and does not a fucking good thing for the Already Born! That doesn't count.

Take a shot when ANY Republican acts to help keep Americans alive and well, in an even remotely humanitarian fashion. Toast them w/ that shot! You will never have another hangover for the duration of this drinking game. You will never even get a buzz!

Even Obama was bought by the Energy Cartels. Promoted the lie about Clean Coal, promoted Natural Gas obtained by Fracking which caused a new kind of pollution in Oklahoma and Texas. Seismic Pollution! Earthquakes! He promoted Natural Gas as a "bridge" to renewables, making federal fleets run on the cursed shit. Like moving from heroin to morphine to shake an opiate addiction.  And then there were all those bomb trains, substandard trains hauling crude oil that was extras spicy because it was cheaper not to stabilize it, or lower its volatility before shipping. Obama was unswerving from his Reaganomics conviction that foxes guard hen houses best and businesses must regulate themselves instead of the govt. 

Lastly, does anyone remember how devoid of testicular fortitude Obama was during the Deep Water Horizon disaster? BP bought up all the law enforcement in Louisiana and a few federal agencies to protect their interests while that ecosystem died and the fishing industry that depended on it. They dumped Correxit into the waters, further poisoning everything thing that lived there including the people who handled it or came in contact w/ it. OSHA was nowhere to be seen. When Obama told them to stop, they laughed in his face. Weak.

If we would take the inflationary boot of Energy Cartels off of the throat of America and give our grandchildren and great grandchildren a world they could SURVIVE, we must do what the Republican are constitutionally incapable off. Shaking off their yoke of carbon dependence. Electric vehicles remove the vig of the oil industry from every load they transport, lowering prices, assuming companies don't just pocket the savings while passing the same old high prices on to customers. Cynical? I told you that the Benefit of the Doubt is a currency no longer used. Neither is Good Faith.

So when Republicans talk shit about Inflation, ask them what they are doing to change America's crippling addiction to Oil. It's not even that hard a fix. We just withdraw all tax support to anything involving Carbon Fuel. They have the money and the resources to turn the corner and lead in the area of developing renewable resources. Solar, wind, power transmission, energy storage technology. It is a smaller leap than the transformation from railway lines to communications...telegraph and telephone, for any company to make!

This would end the dependence we have which places us at the mercy of foreign actors and amoral conglomerates that see the end of Human habitation as an acceptable price of doing business.

On the policy side of the Inflation issue, there is something we can do to ameliorate today's intolerable economic pain. Raise the federal minimum wage, for all Americans! Between offshore manufacturing and automation, production had spiralled unimpeded since Reagan. In 1960 dollars, adjusted for inflation, minimum wage should be over $20/hr. Of course employers don't like that they'd have to pay their employees more. But what they lose sight of is that their WORST PAID CUSTOMER, denizens of the $1.00 Menu, will also be making $20/hr. What CAN'T they afford?

One of the idiosyncrasies of Supply Side is that it rewards cost cutting up and down the supply chain in manufacturing, especially w/ regard to wages. Supply-side. Cheap goods sold for maximum profit.

But there is an inescapable reality. When people don't have money in their pockets, they don't buy goods and services. Businesses w/ out customers close. Cities built around their factories became ghost towns inhabited by those who were too poor to escape. The businesses that served the factory workers then closed as well. Swelling the ranks of the unemployed. 

Bill Clinton ended cash Welfare the same way Reagan ended programs and funding for public education. One underappreciated fact is that money in the pockets of the unemployed is life support for the businesses they patronize. Those businesses died because of Bill Clinton. 

Reaganomics maximizes profits for the few while destroying aggregate Demand every way it possibly could. These days we call it the Income Gap. America is supposed to be the market for the world. How great would it be to be able to shop there? Isn't the point of business to make sales? Penny Wise and Pound Stupid. 

Money in the pockets of Americans goes to goods and services. These businesses meet this Demand for goods and services by hiring more workers who in turn spend the money they make on yet other goods and services, supporting yet other businesses. Just like Supply-Side economics in Reverse. Round and round in a virtuous cycle GROWING, EXPANDING the Economy.

America hasn't seen anything like that since the end of WWII.

 #FuckEnergyCartels #FuckReaganomics #FuckSupplySide #Inflation

Post Script 7-6-22

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Well how about that!