VICE: Good News: Economy Sucks, You’re Screwed, and It’s All Your Fault, Economists Say
Good news everyone: wage increases are slowing, raises are getting smaller, layoffs are beginning to happen, and inflation is all your fault. And you should be grateful about all of this, according to a series of recent headlines from the economic and political press.
“Millennials are to blame for sky-high inflation,” a CNBC tweet recently read. Politico ran an article titled “Pay raises are getting smaller. That could be a good thing for workers.” The premise was quite simple: inflation was being driven by wage growth, inflation is hurting workers, slowing down wage growth will help workers eventually. Politico later changed the headline to “There’s one hopeful sign for the Fed on inflation. Really” after backlash but the core thesis remained the same.
As Brian Sozzi, editor-at-large and anchor at Yahoo Finance said on Sunday, “ultimately, debating who deserves the most blame for inflation—Boomers or millennials—is a complete waste of time.” Millennials are burdened by historic debt and weren’t in any position to benefit from the stock and housing runup during the worst parts of the COVID-19 pandemic, boomers have created an economic order loudly groaning as it threatens to topple, but both are getting shafted by an ongoing supply crisis and corporate concentration driving inflationary prices.
As economics writer Matt Stoller showed in December about 60 percent of inflation then was driven by corporate profits and price-hikes. In late June, Stoller pointed out that every part of the theory that workers making marginally more money is driving inflation is wrong: there was little evidence wage growth was driving inflation considering wages were growing slower than inflation; a mountain of evidence that corporate concentration was driving inflation if we simply looked at who had the market power to hike prices and why; in other words, the Fed’s only tool to curtail inflation in the orthodox framework for understanding inflation—raising interest rates to increase the cost of borrowing, spur some layoffs, reduce consumer demand, and slow down inflation—wouldn’t work because the drivers of inflation were not workers but corporations.