Inflation, Political Opportunism, and an Odd Connection to Veganism
Note to readers -- This week, I published two Verdict columns:
"Are Activist Judges Efficient? Who Cares? What Matters Is That They Do Justice," published yesterday, drew inspiration from one of Professor Colb's recent run of brilliant, wonderfully acid columns about Samuel Alito's atrocious draft opinion in the Dobbs case. My column, however, was not focused on abortion but rather saw me seizing an opportunity to endorse a version of "efficiency" that I can finally get behind.Today, I published "How Did the Public Discussion About Inflation Become Even More Ridiculous?" Here, I briefly summarize and then expand on my arguments in that column.
by Neil H. Buchanan
A DC think-tank maven recently referred to inflation as "the problem from hell." She meant that inflation of the sort that we are currently experiencing is a political nightmare because it is an economic nightmare. That is, people hate it but politicians cannot make it stop, so the in-party is helpless against attacks from out-party politicians who can demagogue the issue without even pretending to offer a solution (because there is none).
That is pretty much right, and it tracks with the first part of my column on Verdict today. I make the point more specifically in the context of Republicans trying to make hay out of Treasury Secretary Janet Yellen's honest acknowledgement that she incorrectly predicted that inflation would have subsided from its slightly elevated levels by now. (I say "slightly" because ... come on ... 8 percent annual inflation versus 2 or 3 percent annual inflation is simply not a big deal, either in the US or anywhere else. This is not a matter of people using currency as toilet paper or showing up at grocery stores with wheelbarrows full of cash, hoping to buy goods before the prices double by the end of the day.) Those attacks on Yellen are silly and unfair, which means that things are as they always are on the political right in America.
As an economist, however, I am finding inflation to be a problem from hell in a different sense: nobody knows that they are talking about, but everyone insists on talking about it. This is, admittedly, the same problem that I confront when I write about budget deficits, Social Security, or unemployment. Even so, there are some uniquely frustrating aspects of the inflation story that are worth teasing out here.
Oddly, I am inspired to write this in part by a purported connection between inflation and veganism. Stay with me here. It all fits together.
For the benefit of longtime Dorf on Law readers, I should note that I do plan to write my annual veganniversary post this year, which is due at the end of July. But because of the pure happenstance that I decided to write my Verdict column about inflation and then saw a New York Times guest op-ed titled "You Want to Buy Meat? In This Economy?" I decided that I had to draw the two together here.
The op-ed, written by someone named Annaliese Griffin ("a journalist who writes about culture, lifestyle and health"), falls into the familiar category of essays that are kinda/sorta pro-vegan but that lack the courage of their possible convictions. The usual excuse for this approach is that non-vegan readers are notoriously thin-skinned about being "made to feel guilty," so most writers try to make all kinds of noises to indicate that they are not being too extreme. Whatever. Sure. Fine. Even though I am an absolutist in my ethical veganism, I certainly am happy when fewer animals are tortured and slaughtered than when more animals suffer those fates. Improvement is improvement.
Setting that aside, Griffin does make some interesting points. In particular, she reports data showing that the overall rate of inflation in the US (most recently estimated at 8.3 percent on a twelve-month basis) is merely an average, and some items are going up in price more rapidly than others. Overall, food prices rose by 10.8 percent in that time, meaning that most of the rest of what we buy had gone up in price by less than 8.3 percent (although the prices of some items, like gasoline, had gone up even more quickly than food prices).
More to the point, not all food prices had gone up by the same rate. "Meat, poultry, fish and eggs now cost 14.3 percent more than they did a year ago," Griffin writes. "If the current rate of food inflation holds and Americans don’t change their meat consumption habits, they will spend roughly $20 billion more on meat, poultry, fish and eggs over the next year than they did in 2020." Interesting, to be sure. Again, if one subset of a basket of goods is going up by more than the average, then the rest -- in this case, the non-cruel stuff -- is going up by less than the average. Other than wheat (because of the Putin premium), the prices of vegan-friendly foods are rising at slower rates. I do not have the breakdown in front of me, but it is possible that some prices are even falling -- although given how much supply-chain issues and fuel costs translate (via transportation of produce) into food prices, that seems unlikely.
Griffin provides some enlightening history about the ways in which people and governments have altered "normal" eating in response to relative price changes, including an unexpected side note about Herbert Hoover's pre-presidential career as the "food dictator" during World War I. Her larger point, however, is that relative food price changes have predictably changed the way that people eat, and those changes can do so again.
She makes the especially important point that it is MUCH easier for the average person (at least one who is lucky enough not to live in a food desert) to save money by changing the food they buy than by changing how much they spend on transportation. For reasons too obvious to belabor here, the US leaves most people without meaningful alternatives to driving cars, so economizing on gasoline is much more of a challenge than substituting rice dishes for flesh burgers. (Writers like Griffin would never use a provocative phrase like that, and The Times would surely edit it out if she did. But we face no such self-censorship on Dorf on Law.)
There is nothing wrong with any of Griffin's points, but they are still frustrating -- partly because they annoy me as an economist, but mostly because they miss the more important story about why the prices of cruel versus non-cruel foods matter.
Roughly the last half of today's Verdict column discusses the public's misunderstanding of what it means to have persistent -- but steady -- inflation, which involves understanding the difference between changes in prices versus changes in inflation. "I paid more for X" is not proof that we have inflation, because inflation is a general increase in prices overall, as measured by statistical weighted averaging of a representative sample of goods and services. Even if overall prices were falling (deflation), we could well see some prices rise. In the column, I note that this is true of wages (and salaries) as well, where any healthy economy at any given moment is going to have some types of jobs losing ground to other types of jobs, meaning that some wages will fall relative to others.
My point there was to say that we could perfectly well learn to live with 8 percent inflation in perpetuity, because modern economies and governments have proven that it is possible to adjust nominal values smoothly in a way that allows (non-hyperinflationary) inflation rates to leave everything "real" unchanged. That is, if everyone knows that their rent will rise by 8 percent, but so will their wages, the prices of movie tickets, admission to Disneyland, Social Security benefits, and so on, then everyone also knows that the overall 8 percent increase does not matter to them.
What does matter is relative prices. If I am receiving a 3 percent raise when everything else is going up by 8 percent, then I am falling behind (and at least one person is getting ahead, offsetting the difference between my raise and the overall average). That might be for a perfectly good reason, however. For example, my falling behind might be because I am working for a dying industry -- a cashier in the last Blockbuster on earth, perhaps.
What does this have to do with meat and lacteal secretions? As Griffin points out, they have always been more expensive than non-cruel foods, sometimes spectacularly so. In one of my veganniversary posts, I wrote that meat is not just murder but extremely expensive murder. Even setting morals aside (including the climate-destroying aspects of animal exploitation), non-vegan diets are inherently more expensive than vegan diets. Yes, there is the organic/non-organic (but not inorganic) angle and other side issues that make Whole Foods's prices so high, but there is no getting around the fact that feeding people with plants is presumptively much less expensive than first feeding plants to animals and then murdering them for humans to eat.
This means that even if inflation were zero, and even if relative prices themselves were not changing (for example, if the premium on steaks versus legumes were unchanged), people who eat non-vegan diets are definitely paying more for food than they otherwise could. The statistics that Griffin provides indicate that recent relative prices changes are making that tradeoff even worse, but again, it is that change in relative prices that is the core point, not that there is inflation.
Put differently, imagine that we were currently experiencing deflation at a rate of, say, 5 percent annually. That would actually be very bad for reasons that are far beyond the scope of this column, but I can guarantee you that Republicans would be screaming about "the Biden deflation" even more loudly than they are currently complaining an uptick in inflation. In any case, people would be watching their wages fall, and they might be only slightly mollified by seeing that the nominal prices of the things they buy were also falling. They certainly could have every reason to think, "Hmmm, I'm worried that my budget is getting tighter, so maybe I should start looking for foods whose prices are falling by more than 5 percent rather than the ones whose prices are falling by less than 5 percent. Hello, vegan aisle!"
Again, I am not saying that Griffin is wrong about the increasing appeal of non-animal products in our current economy. What I am emphasizing is that this has nothing to do with inflation. In a trio of Verdict/Dorf on Law columns back in February (here, here, and here), I described what I dubbed the "inflation, am I right?" phenomenon, in which people start to hear everyone else complain about "high prices" and think that the savvy thing to do is to drop references to inflation into every conversation. It does not matter they have no idea what they are talking about (in fact, ignorance is useful), because all they have to do is nod gravely and mutter, "Yeah, prices up. Bad."
The title of Griffin's column -- "You Want to Buy Meat? In This Economy? -- manages to do that without even using the i-word. At best, she is saying that meat was always more expensive relatively, and now that that tradeoff is getting even worse, maybe people should/will change what they buy somewhat. But to hammer the point once again: That is not because of "this economy" or inflation.
As I noted above, there is some similarity between inflation and other much-misunderstood economic concepts, such as government borrowing. When everyone seems to be talking about the federal budget deficit, we can be sure that nearly every person who wants to sound well informed will say, "And think about how ___ will increase the national debt. What about future generations?"
In 2022, the news hook du jour is inflation, so everyone wants to drop that buzzword into their conversations. Because prices are the raw material of inflation, it is almost impossible to fight the urge to equate the two, even though they are very different things. People do not want "low prices" in general. They also do not truly want zero inflation (or at least, they would be against it if they understood what that meant). They do want to respond to changes in relative prices, which has nothing to do with either "high prices" or inflation.
More than the standard-issue opportunism of trying to be relevant by staying current with the news cycle, linking arguments to inflation is affirmatively confusing -- to the speaker at least as much as to the listener. Luckily, America continues to be home to a stable democracy that encourages robust public discussion, led by devoted public servants who are committed to preserving the constitutional order and adjusting their arguments based on logic and evidence. What could go wrong?