LIFESTYLE
INFLATION: THE MOST UNIVERSAL TAX OF ALL By: Kelly Warren Moore
T
he late, great Thomas Sowell said, “It is a way to take people’s wealth from them without having to openly raise taxes. Inflation is the most universal tax of all.” There have been times in my life when I’ve wondered if I should have majored in something other than economics in college. When I was a student at UT, I started off thinking I wanted to major in accounting. What I realized was that due to the strength of the business administration curriculum at the time, even more so now, I think, the ability to take a bigger diversity of courses I was interested in was pretty limited. I knew I was on the clock. My parents would help me pay for four years of college. That was always clear. Not five, not seven, not a day longer than four years, and I had better have a degree when that was over. If not, there would be no “extension.” And here I was with the mammoth course catalog, and the possibilities to learn new things seemed endless. History! Language! Philosophy! Sociology! There was simply no way I could learn everything I wanted to learn in those four years with the restrictions of a business degree plan. So, I went to my counselor, who advised that if I chose to major in economics, I could still take a lot of the requisite business courses, but since the economics degree was in the college of Liberal Arts, there would be plenty of opportunity for me to study the classics, learn a language and make the most of it. When the bottom fell out of the Texas economy in the mid-late 80s, holding a liberal arts degree didn’t exactly pay huge dividends when I first graduated. My first job as a college graduate was at a mutual funds company in Houston, making a little over a thousand dollars a month. To say that things were tight is an understatement, indeed. It’s been a long time since those days, and I have worked hard and been fortunate and eventually grew into a successful
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career person. But it took years of grinding it out, making mistakes and digging out of holes personally and financially. Fortunately, though, the economy has had its highs and lows over the past 35 years or so. My personal finances have never been subject to confiscatory levels of inflation like we are only starting to experience now. Interest rates have fluctuated, but never to the point where they were in the late 70s when I can remember hearing then candidate and future President Reagan talking about the “misery index,” which is an economic indicator that adds the interest rate and unemployment rate. During the 1980 presidential campaign, the misery index was approaching 20%. We haven’t been anywhere close to that since, even during the financial crisis of 2008. It isn’t hard to see the road we are on today, though. As President Reagan said, “Inflation is as violent as a mugger, as frightening as an armed robber, and as deadly as a hitman.” Fortunately for all of us, we haven’t felt that fear for a long time in any meaningful way. Prices have remained largely stable, and wages have remained stable or risen for most of my adult life. So, if you are financially stable, life has been pretty darned predictable from an “if I make this much, I can afford this much” perspective. Inflation for the average American has been more of a concept than reality for so long that maybe it is time to revisit its definition and impact on all of us. Inflation is, quite simply, a rising cost of goods and services. If inflation rises faster than wages increase, people can’t afford the same amount of these goods and services as they did previously. Consumption decreases; the rate of savings decreases; production decreases because of the slowing consumption, and unemployment then increases as the need for workers decreases because of slowing consumption. The lack of real inflation combined with interest rates kept artificially low for decades by the Fed has given our society
WE HAVE TO REMAIN STRONG TOGETHER AND MAINTAIN OUR SENSES OF THE IMPORTANCE OF FAMILY AND COMMUNITY – BOTH OF WHICH HAVE BEEN UNDER STEALTHILY CONCEALED ATTACK FOR YEARS
