Chaplain Barry C. Black Has An Inflation Lesson for Slow-Learning Economists
The Becket Fund is a non-profit law firm focused on the protection of religious liberty. Its reach is global.
At the Fund’s annual dinner last week in New York, U.S. Senate Chaplain Dr. Barry C. Black was given Becket’s highest honor, the Canterbury Medal. Black’s speech upon receiving the award was uplifting, frequently laugh inducing, and very insightful.
Black grew up in Baltimore with his three brothers and sisters. His mother worked various jobs to keep the family afloat financially, and while her time was limited, she made sure that her kids learned scripture. So much did the learning matter to her that she rewarded her kids financially each time they recited scripture from memory. Black recalled to quite a bit of laughter that his mother ultimately had to amend how she compensated him after he proved particularly skilled when it came to memorization.
In Black’s case, he wanted to earn more money because young person that he was, he craved candy. Candy bars cost 5 cents each in the 1950s. Imagine that.
Fast forward to the present, and one Nestle Crunch Bar on Amazon lists for $2.48, though boxes of 36 can be purchased for a little under $33. Imagine that.
Candy bars haven’t much changed, but their costs surely have. The dollar doesn’t buy as much as it used to. What used to purchase 20 candy bars will generally only purchase one at any retail establishment, and then as previously mentioned 36 can be had for less than a dollar/per if purchased in bulk on Amazon.
Black probably didn’t plan it this way, but the inspiring story he told about his childhood included a very useful lesson about inflation. Looked at through Black’s life, inflation is theft. It’s the process whereby the agreement about value that is money (the dollar, in our case) is gradually devalued such that it commands less and less in the marketplace.
This is worth thinking about. A lot. Most of us work for dollars, but it’s not the dollars we want. We want what those dollars can be exchanged for; the clothing, shelter, food, entertainment, and candy (among other things) that we can get in return for our dollars. We produce for dollars, but we’re really producing to fulfill our many needs and wants, not to mention the needs and wants of those closest to us. Currency devaluation is a cruel tax on our work. Unfortunately, economists and politicians don’t agree.
Captive to the wholly fallacious belief that devalued money renders what we produce more competitive in global markets, economists and the politicians who blindly follow them relentlessly make an easy-to-discredit case for devaluing the money we earn. They say the dollar must lose value over time so that U.S. businesses can compete globally. Every American suffers their economic illiteracy.
Missed by Ph.Ds and politicians is that nearly everything produced in the world today is a consequence of global cooperation. Translated, imported inputs very much factor into “American” products and services. Which means the devalued dollar in no way cheapens what we sell when it’s remembered that devaluation logically coincides with increased production costs.
Worse, the currency devaluation that excites academics and politicians ignores that what renders U.S. companies most competitive from a pricing standpoint is relentless investment in production enhancements that enable the creation of more and more with fewer and fewer hands. The problem here is that devaluation exists as a tax on investment when it’s remembered that investors, when they put money to work, are buying future dollar income streams. Devaluation reduces the value of those income streams, which makes the investment necessary to achieve lower production costs much less likely. And then it can’t be forgotten that per Chaplain Black’s childhood experiences, Americans earn dollars. Americans set out to earn those dollars with getting things in return for those dollars top of mind.
Never explained by politicians and economists is how an economy that is comprised of individuals can be improved when those same individuals see the money they work for shrinking in terms of exchangeable value. They have no answer.
Instead, they dissemble. Their claim is that a gradual erosion in the value of the dollar (“top” economists routinely call for 2% annual inflation) does wonders for economic growth since the fear of devaluation causes people to consume. You see, economists in their infinite wisdom comically believe that consumption powers economic growth. In truth, consumption is an effect of economic growth. It’s production that powers economic progress, which means savings power growth for those savings morphing into the investment that routinely increases our productivity.
Crucial here is that currency devaluation is anti-saving precisely because those who delay consumption of goods and services until a later date see the exchangeable value of their money decline. In short, the inflationary bias of economists and members of the political class runs counter to economic growth for the devaluation encouraging consumption at the expense of savings. It’s kind of sad, yet economists and political types are clueless as to why it’s sad.
And they’re slow learners. Indeed, despite the long and very global correlation between currency devaluation and slow growth (if any), politicians and Ph.Ds continue to promote it. They can’t be helped, or they can’t learn.
Since they can’t, it may be best for us to dumb down the economic lesson. Barry Black has one for them. His nickels used to buy candy bars. Now they aren’t even exchangeable for a piece of candy. Black’s story very clearly reveals the horrors of inflation whereby the dollars we get in return for our work buy fewer and fewer things over time. Can politicians and economists please explain to us how the devaluation they champion, but that robs the Blacks of the world, is a good thing?