Understanding Inflation Analysis

John Case

Understanding Inflation

(Literary Masterpieces, Volume 14)

Which comes first—the prescription or the description? In any political argument composed well, it is impossible to answer this question with any certainty. Description of a problem, though typically presented prior to the prescription, serves to prefigure the proposed remedy, and that is how it should be, for who would want a described problem, with its implicit explanation, to be divorced from the chosen solution? A good description, in other words, narrows the choice of conclusions, and the more complete the description is, the less room is left for alternative implications, alternative courses of appropriate action.

Furthermore, political discourse requires one to use language that is not completely neutral. Issues must inevitably involve partisan positions that relate not only to judgments of value but also to judgments of fact. It is these latter assessments, or, more precisely, the words selected to express them, that distinguish one politically relevant description from another.

Understanding Inflation is political ecomony at its best, and is therefore a perfect example of the descriptive-prescriptive interdependence just discussed. In exploring “why we pay more, get less, and what we as Americans can do about it,” John Case spends the first 175 pages on the “why,” leaving only the last twenty to the “what.” Although the reader must wait so long for the author’s explicit statement of solution, it is all there, albeit indirectly, in the earlier chapters, or at least almost all there, for Case does at times appear to be pointing to a solution that is very different from the one finally presented.

The main thrust of the book, the author’s account of inflation, involves numerous elements. To understand inflation, one must consider it as a system, a system involving the interplay of big business, “not-so-big business,” labor (including unions and licensed professional associations), and government (in its roles as employer, borrower, and consumer). As the book jacket so succinctly states, Case shows exactly how and why inflation has become a built-in feature of the American economy, as various interest groups have combined to try to insure that their share of the economy’s income—whether in the form of profits, wages, or fees for services—will not fall; and how government protection of these groups’ prerogatives and government spending have sustained the price rises. In addition, the impact of historical events such as the Vietnam War and OPEC actions are considered as exogenous factors that are basically beyond the control of American economic policy. What Case presents, then, is a picture of the American political economy that is quite pluralistic. A variety of fairly equal interest groups, in the context of an overly responsive government, are seen as inflation’s primary cause, and impacting on this pluralistic system from the outside are those world events beyond control. All the pieces are thus in place in the so-called puzzle of inflation.

What does all this entail in terms of what should be done? Obviously the stimulus-response relationship between interest groups and government must be broken, somehow stopping either the demands being made on government or the government’s responsiveness. To attempt the former is seen as unrealistic: “Everyone, given half a chance, asks for more.” Besides, in practice, since the specific “voluntary” self-controls would actually be determined by those in power, the call for everyone to sacrifice is likely to...

(The entire section is 1450 words.)