There's an old saying in economics that everyone has heard...
A recession is when someone else loses their job. A depression is when you lose your job.
We need a new saying as well...
Equity is when you finally get a pay increase you've deserved for years. Inflation is when everyone else gets a pay raise they've deserved for years.
Americans really are schizophrenic.
Pandemic shutdowns produced a much wider defintion of essential workers. If everyone is going to stay home for four weeks (remember when we thought it would only take a month or so to knock out the virus? Sigh...), exactly HOW did everyone expect to continue to get groceries? Ahhhh, we need stockers and clerks to still show up to work. How did everyone expect to keep goods flowing INTO the stores? Ahhhh, I guess we still need the merchant marine, the longshoreman, the warehouse worker and the trucker to keep showing up for work as well. How did we expect to obtain treatment for normal heart attacks, broken bones, cancer and COVID? Ahhhh, I guess the doctors and nurses better keep showing up to work. And when some sense of normalcy did resume, who were the people who had to put up with the obnoxious behavior of the average idiot 'Murican prior to vaccines being avaialble? Waiters, sales clerks, teachers...?
What about the marketing team at Kraft who just this week decided to launch a bold new brand for one of their foundational products... by re-branding Kraft Macaroni & Cheese to (wait for it...) Kraft Mac & Cheese? Those people could have taken the next 3 years off. The quintessential non-essential jobs. Those might be the quintessential non-essential jobs even without mass pandemics.
Today for what seems like at least the TENTH time in 2022, I received a robo call from my trash hauler. "We apologize for the delay in service today. We are experiencing a shortage of drivers. We intend to run the route as soon as possible so please leave all items out at the curb. Please know we are hard at work to hire drivers so service will be resumed as scheduled. We appreciate your business and patience during this time. Thank you!"
I find these calls interesting not because they have continued unabated for months now but because of what they reflect about the market forces at work and how businesses seem to be ignoring the signals present in the labor market. The fact that my trash hauler is losing drivers really isn't my problem. My trash hauler has a contract with my city to pick up the trash for X number of years. Period. If market forces have changed and they are having trouble retaining drivers, the trash hauler firm needs to raise wages until employees stop churning out. They have a CONTRACT to fulfill. If they need to raise rates at the next contract, so be it. If it now takes $19.00/hour to incent someone to drive around picking up stinky trash, then pay it and make it happen.
The arrival of COVID didn't qualify as a black swan event. Governments around the world had reviewed the impact of prior outbreaks of SARS, MERS, Ebola, etc. over the past 20 years and concluded a virus could trigger mass death and many formulated plans on how to identify such outbreaks, contain them in the short term as much as possible and work for treatments and vaccines. In hindsight, the biggest shock related to COVID was the FAILURE of most governments to follow the playbooks they had previously established and the resulting imposition of immense economic and social costs with a VERY inequitable distribution across the population -- with most of the costs being imposed on those at the bottom of the socioeconomic ladder. The black swan in all of this -- if there is one -- is the reaction of people upon whom the brunt of these costs were shifted. For MILLIONS, their "black swan" reaction was -- and continues to be -- two words. (I'll leave it to the reader to ascertain what those two words are.)
The US has a $23 trillion dollar economy and a grossly inequitable distribution of income and wealth to not even the "one percent" but the "half percent." The uber-wealthy are obviously not the essential workers in any economy or society. They are merely the invevitable result of a system with legal systems and tax codes rigged to distribute money upwards rather than outwards. In such a system, when events trigger a huge proprotion of truly essential workers to weigh the risks and rewards of essential jobs and flee them in droves, there are limited choices to correct the dynamics in labor markets for jobs facing mass abandonment.
- redistribute wage dollars in the economy into wages for jobs experiencing churn / abandonment
- reallocate costs within supply chains for goods and services
- develop technologies to replace human labor with technology, eliminating the JOB involved
In 'Murica, we have brainwashed the population into worshiping the wealthy and never taking anything back from them and they certainly won't volunteer doing so on their own so #1 is out (for now). There are many cases where approach #3 is being pursued, ranging from robots in hotels and fast food eliminating hospitality and cooks. In the absence of signficant progress in #1 or #3, most of the corrective forces are being experienced via door #2. There are unique factors at work in energy that are a key contributor to inflation right now, namely:
- zero investment in domestic refining capacity since the 1970s
- incremental shutdowns of capacity during the "negative oil" crises in 2020 that have not been turned back up
- disruptions in supply and shipping due to the war in Ukraine
- climate change mitigation efforts to reduce fossil fuel use that have cemented energy firms' decision to NOT invest in short term capacity
However, the balance of the skyrocketing inflation being experienced is stemming from this post-COVID black swan reaction of workers at the lower end of the scale. These are workers whose productivity skyrocketed over the last 25 years but whose real pay in inflation adjusted dollars remained flat while the income and wealth of those at the top skyrocketed. That deal might have been sustainable when people didn't feel an existential risk to their life by showing up to work. When COVID altered that calculation, the prior deal was off.
So what are Americans really complaining about when they gripe about inflation? Do they want everyone ELSE to continue working in McJobs of all types for $9.00 to $14.00 an hour so THEY can continue to order cheap Chinese trash from Amazon and live their pre-COVID life undisturbed? The inflation at work now is painful to be sure but it is not your grandfather's inflation from the 1970s. It reflects a redistribution of wealth uisng the only means remaining given a larger political paralysis and limits to the evolution of technology.
WTH
