Inflation blues ...

Inflation is scary. When prices go up, we all wonder, "will I be able to afford gas? should I buy hot dogs instead of hamburger?" To most of us, inflation means mostly the higher prices we pay every day. But to a small business, inflation means a major disruption in the ecosystem in which they strive to survive.  

Here's how a wonderful, small, creative business run by women with which I've had past dealings describes what inflation looks like to them. It's one of the clearer descriptions of an economic phenomenon I've ever read. Give it a read.

• Small business miseries

Our world has been on a very wild ride since the start of 2020. Our latest woe is inflation. 

Here at [our little business], we are also struggling with inflation. 

Inflation is a two-sided coin for a good business. We must keep our employee's wages up to combat their struggle with purchasing. ... we are doing our best to ensure our employee's economic welfare. 

The other side of the coin is a business's need to purchase goods and services to run said business. Those costs are figured into the prices of a product. When expenses go up, the cost of a product goes up.   

If every business raises the cost of their products, there is a cascade effect on the entire economy. It's a crazy cycle that can drive the economy into a tailspin. 

Our raw materials are more expensive. The services we use, especially shipping, are more expensive. And our wages are through the roof. Yet for the next six months, we are going to hold the prices of our quilts where they are. 

We are willing to forgo profits and break even for the next six months to see what happens to the overall economy. 

We hope we don't need a huge price increase in January. But the inflation rate is over 8% right now. 

[Finally, here's the pitch:] If you are considering having a Too Cool T-shirt quilt, this is the time!

Yes, I'm reproducing their ad here, because they deserve the publicity for the lucidity with which they explain what can feel like a mysterious, evil force of nature. 

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• People protecting themselves

And here's one of my favorite economic writers, Adam Tooze, offering some home truths about what inflation and economic policy responses means to workers and our societies. Like the small business owners, he too is realistic.

The BIS [Bank for International Settlements] may be of the view that on welfare and social justice grounds, low-inflation regimes dominate higher inflation regimes. But it nowhere spells out that argument. If that assumption does not hold, then favoring a low-inflation regime implies a distributional and a political choice. 

And, more fundamentally, to view social and economic power, strictly from the point of view of price and wage setting is reductive. Indeed, it is reductive to view those institutions simply from the point of view of distribution. 

Institutions of collective bargaining are not merely mechanisms for wage and price setting. One may value collective bargaining institutions in their own right, as complex articulations of social reality and as places where solidarity finds organized expression. One may value them as expressions of alternative visions of social balance. Up to the 1980s, organized labour was the backbone of social democratic politics and a partner of liberalism in the fashioning of democracy in capitalist societies. 

Trade unions and structures of collective bargaining at all levels mattered not only because they counterbalanced elite power, but also because they gave intelligent and articulate expression to working-class grievances. They framed inequality in terms of social realities rather than imaginary enemies. Historically they did so in direct opposition to other forms of popular political mobilization - like fascism, for example. In recent decades it is not implausible to suggests that the rise of working-class support for nationalist populism is directly related to the decay of those collective institutions of labour organization. ...

Yes -- strong unions should help workers navigate turbulent economic seas with some hope of stability and safety. This is a moment in which unions making a comeback -- looking at you Amazon and Starbucks workers -- can breathe new energy into our struggling democracy.