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The Pillaging of American Workers

Jeffrey Tucker

Posted January 13, 2022

Jeffrey Tucker

Back in the 1930s, some economists first imagined a rather clever scheme. The idea was to dig economies out of depression by generating higher prices. Now, one might expect that people won’t like that very much. People prefer lower prices to higher prices. How can the general public come around to tolerating an inflated economy in which everyone pays vastly more for goods and services, i.e. the money has ever less purchasing power?

The answer is obvious, at least to a smart ruling-class economist. Make sure that the price increases affect wages and salaries dramatically. That way, everyone feels as if they have more money in the bank. Everyone is getting richer! I used to make $10 an hour, but now I make $20 so I’m twice as rich. 

That way, when people slog to the store and notice that everything costs more than the past — no one quite remembers precisely the prices we paid for things six months or a year ago — they think, well, hey, I can afford this now because I have so much more money in the bank. 

It was called a “wage illusion.” It’s a fancy way of saying: pillage the public in a way that is not entirely obvious so that way, we can get away with pumping up the economy with more money printing, hence ending the depression and boosting aggregate demand, and then we get back on a growth course. True, that in real terms, that is, adjusted for prices, wages will have fallen but, hey, if people can’t quite figure that out, all is well. 

The Wage Illusion Is Here 

This is precisely what is happening now. The latest inflation data set against wage increases show that it is largely flat, but this is the first time in many months. Overall, last year, wages decreased in real terms (adjusted for inflation) by 2.4%. That’s a straight up tax on everyone, one you pay as you go. It’s like having a leaky bank account, but you can’t really find the leak. So that way you sleep better at night. 

I would bet (if I were a betting man) that advisors in the White House have been trumpeting this phenomenon during insider meetings for most of this year. These people came to power believing in inflation. They had fallen under the sway of “modern monetary theory” which is a vast ideological machinery that says 1) money printing has no downside, and 2) if it does have one, it is not really a downside but overall good. 

Modern monetary theory is part of a huge range of cockamamie ideas that have floated around for years in left-wing circles, alongside other nuttier ideas that aren’t exactly socialism but something else. We can also add here lockdowns to control disease, critical race theory to manage all social relationships, and abolition of fossil fuels to manage the world climate. All these ideas are nutty and dangerous and contradict every tenet of liberalism that built civilization, but they are out there, deeply dangerous and extremely deadly. 

All of this has been going on for years, even as people on the “right” side of the political spectrum keep battling ghosts of the past like socialism, a tremendously rotten ideology, but one that has almost no pull at all in today’s world. The true philosophical enemies to civilization out there now sail under very different flags, such as modern monetary theory. 

Sneaky Inflation 

Probably like you, I’m daily startled at how much the world has changed and how fast. That we would have to flash vaccine passports to get into a New York City bar is absolutely disgusting to me. We know with certainty that 1) vaccines don’t stop infection or spread, 2) everyone is going to get Covid and get immunity eventually, and 3) minorities are massively less vaccinated than others and so therefore they are legally excluded from participating in public life. 

This is all going on right now in what used to be the world’s greatest city. It’s hard even to find anyone who cares! Or perhaps being surrounded by so much collapse every day, we cannot bring ourselves to care about something that would have shocked all political sensibilities five years ago. This is the whole point of creating chaos: everyone loses focus so that the ruling class can have their way. 

So Much for Mailing Stuff 

Let’s raise a topic that seems more mundane but actually profoundly affects our lives. Shipping costs. I’m not speaking of the vast increases paid by businesses just to get their stuff from here to there. I’m speaking of the price you and I pay just to get a package of our own to ship. I hopped over to Fed-Ex last night (old habits die hard) and sent a letter-sized package to the other coast, a major city so I figured it would be perhaps $20 for overnight. Nope: it was $20 for one week! 

Remember when Fed-Ex specialized in overnight? Now the same service for the same price takes 7 days. I try to find out with precision what has happened with their shipping prices for consumers. We can read that they are up 7%, which is pretty much what one says these days as a way of proving that you are not gouging anyone. In reality, the inflation here takes a different form: much degraded services. 

And it has just begun. Fed-Ex as a company is facing seriously hard times due to increased costs and severe labor shortages. Their competitors face the same, so it hardly works anymore to shop around for the best option. Whatever you do, you are going to face extremely high prices just to ship something. I swear to you that the mail worked faster, better, and more reliably in the 19th century. Ok, that’s an exaggeration but not much of one. 

In addition, there is every manner of regulatory hurdle in consumer shipping. You can no longer just show up and ship something. You have to bring your government-issued ID. It must be checked. You have to declare the contents. The employees have to enforce every manner of regulation. You have no privacy. You get out of there feeling as if you just visited a government agency. More and more, every private business has the feel of a government agency. They have to behave this way. The regulations they face are egregious and untenable. 

No Sound Money, No Freedom 

For the first time in many generations, Americans are experiencing what it is like to live amidst a failing currency. It is a world of smoke and mirrors, a market that presents you with daily surprises that confound our sense of what is real and what is not, a range of experiences that are vaguely recognizable from the past and yet seem fundamentally different. An inflated world generates distrust, paranoia, and widespread feeling that someone is out to get us and take what is ours. 

We feel this way because it is true. And it is happening right now. Our liberties are draining away fast, and the rise of inflation is only one symptom of many. It can be turned around but will it happen in time? I’m not so sure. We are in discovery mode right now: how much can they destroy before the public revolts? Moreover: what does this revolt look like and will it make matters even worse? 

Regards,

Jeffrey Tucker

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