It’s Time to Talk About Greedflation
Let’s start by admitting that wealthy people tend to be greedy
I used to think most people were good. I thought something had to go terribly wrong for a person to harm another willingly. Then I grew up.
What I’ve learned in the past few decades is that people project what’s inside of them onto others — and that can make it very tricky to see the values of others clearly — particularly when they do not match our own.
So before getting into the mechanics of “greedflation,” we need to take a minute to understand the psychology of money and how that manifests in a capitalistic nation. At the heart of that is the concept of “projection.” (Stay with me; it will all make sense in the end.)
Projection
We’ve seen a lot of projection in politics lately. Trump, for example, projects every crime he has ever committed onto his opponents. It’s become so frequent that George Conway (erstwhile husband to Kellyanne Conway, who supported Trump’s delusions by publicly claiming “alternative facts” to be legitimate points for discourse and decision-making) recently said that with Trump, “Every accusation is a confession.”
But projection is also a huge problem for far too many Democrats, who have refused to address head-on the various issues we are facing as a direct result of the Trump-era reliance on lies to win votes. Democrats want to believe they don’t need to call out lies every time they are repeated because it’s so obvious. But it’s only obvious to them.
Democrats project their critical thinking skills onto people who do not possess the same — and with disastrous consequences.
When a crazy person tells lies that have the potential to rock your world, the correct response is to call out the crazy for what it is, not smugly assume the general population will see through it because you do. If it were not for this critical error, more people would have voted for someone other than Trump in 2016. Instead, millions stayed home because they could not believe anybody would be foolish enough to believe Trump’s lies.
I’ve been projecting my whole life. I have made the mistake of crediting humanity with, well, humanity. Now that I’ve made something of a study of the issue, I realize where I went wrong.
People are only inherently good when they’ve been raised with the resources necessary to provide them with all the basics required in Maslow’s Hierarchy of Needs. And even then, it’s a bit of a crap shoot.
But generally, people are decent when they haven’t been denied the basic requirements for physical, emotional, and psychological well-being. On the other hand, when those needs have not been adequately met, trouble invariably ensues.
Here’s the rub: In a nation that worships wealth, having too much money can also be problematic — because what’s sacrificed in the cause of accumulating wealth is often some basic emotional or psychological need.
The scarcity mentality
A person who is raised without sufficient love and acceptance from their family might not become a serial killer but might become stingy with their own affections to such an extent that the healthy, loving relationships they long for never materialize — a self-fulfilling prophecy, if you will. They might get rich, but they will never be happy.
Conversely, if you think about growing up in a family where no one felt safe from hunger — where getting a job to help pay the rent was more important than graduating from high school — you can imagine how defeated you might feel knowing you might never achieve your desired goals because you will never receive the education needed to rise above your current situation.
And even if you somehow manage to save and invest what little you make, and it grows into what others might consider a respectable sum, the impact your hardship might have on your psyche could mean that throughout your life, no matter how much you earn, you might never feel you have enough.
Whether you were raised with too little or too much, it doesn’t make you a bad person. But it might make you do things unconsciously that cause you to harm yourself or others. You might become a hoarder. Or you might become a bank robber. Or maybe you’ll just get into Private Equity and steal from others legally.
So, if we want to talk about economic policy and what brought us the greedflation we are all now experiencing, we need to consider those making policy decisions and what their motivations are.
The Republican animosity toward regulation
The Republican distaste for regulation has never been stronger than it is today. This is not an accident. It was designed to prevent democratic activism from controlling wealthy actors.
When Adam Smith wrote the “Wealth of Nations,” he brought forth the idea that “a rising tide lifts all boats.” But what almost no one will tell you is that Smith promoted regulation. He knew that some people would attempt to take advantage of others, and he believed regulation was essential to curtailing the harm they might otherwise do.
The main reason nobody ever mentions this is because a particular man published an abridged version of “Wealth of Nations” in the 1950s that conveniently left out that warning from Smith. That man was George Stigler, one of the many economists affiliated with the Chicago School of Economics — where most of the intellectual theories about post-industrial economics were born.
The Chicago School, as it was called, was the home of Milton Friedman, whose seminal works led dozens of misguided American economists to force their theories onto struggling countries around the globe to disastrous effect. When their “shock and awe” policies of wiping out entire government systems to force a “free market” were met with resistance, they advocated using any means necessary to suppress dissidents — resulting in the torture and disappearance of thousands — but that’s another story for another time.
Stigler’s stunt is one example of what happens when a credentialed theorist decides to alter the work of another to fit his own ideas.
. . . when Stigler produced an abridged “Wealth of Nations,” in the nineteen-fifties, he omitted most of the passages in which Smith advocates the regulation of industries where the unchecked pursuit of self-interest can cause social harm. Banking was one of them. —“The Price is Right,” The New Yorker
In removing those references, Stigler single-handedly promoted the idea that regulation is not a necessary part of a functioning capitalist economy — and we’ve been suffering from that error ever since.
The fight to resist appropriate regulation in our financial systems has been the cause of every bank failure, every S&L bailout, the current housing crisis (why are corporations buying homes and jacking up prices so families can’t afford them?) and rising interest rates — which were ostensibly raised to combat inflation, but which are really combating greedflation.
What exactly is greedflation?
I’m so glad you asked.
The best description I’ve found comes from a recent New York Times article, “Corporate America is Testing the Limits of its Pricing Power.” The article describes how corporations have benefited since pandemic-era supply-chain issues have been resolved.
While prices went up to account for those issues in 2020, many of these corporations have been seeing record profits in the past two years. And while they were all eager to pass the higher costs they incurred in prior years onto their customers, they are less eager to pass on the savings that reflect their now lower costs.
Alexander MacKay coleads the Pricing Lab at Harvard Business School, a research center devoted to studying how companies set prices. Since the pandemic, he has watched how businesses have become more willing to experiment with what they charge their customers.
Big companies that had previously pushed through one standard price increase per year are now raising prices more frequently. Retailers increasingly use digital price displays, which they can change with the touch of a button. Across the economy, executives trying to maximize profits are effectively running tests to see what prices consumers will bear before they stop buying.
No longer are prices tied to the cost of production and distribution. Now, it’s determined by how much you can charge before people stop buying. That means whatever you buy now is being priced based on what other people can afford to pay for it. Maybe you can’t afford eggs — but hey, lots of people can, so I guess you’ll need to eat something else. That, my friends, is the “free” market of today.
As long as we allow Republicans to continue to preach the erroneous tenet of regulation as the enemy of capitalism, we will not solve this problem. So, if you think Bidenomics is the reason you are still barely able to feed your family, think again.
When Democrats propose wild ideas like limiting the ratio of CEO income to worker income or demanding that necessities like health care, food, and housing are regulated so everybody can afford to be healthy, eat real food, and have a roof over their heads, they are not violating some sacrosanct tenet of the free market — they are simply doing what they must to ensure that the free market actually works for everyone — not just the rich.
So, when it’s time to vote in 2024, remember this and vote out the Republicans — every single one of them. Our future depends on it.