Franke: A 12-Year-Old Tackles Inflation
by Mark Franke
“I hate inflation.”
I could have heard this from my wife when she returned from the grocery. I could have said it myself at the gas pump. It could have been the topic of conversation at one of several monthly get-togethers with groups of retired friends.
Instead, it was my granddaughter who made this pronouncement one day last week while I was driving her and her brother to school.
Ah, a teachable moment.
I could have offered a lecture on the quantity theory of money from classical economics, drawing out the formula in magic marker on the auto’s windshield. I could have quoted my favorite economist, Milton Friedman, whose succinct statement that “inflation is always and everywhere a monetary phenomenon” is one of my favorites from him. I could have discussed the irresponsible expansion of the Federal Reserve’s balance sheet to cover Congressional profligacy and the resulting time bomb just waiting to explode.
But then she is only in sixth grade.
So I punted.
Why do you hate inflation, I asked.
Because everything I want to buy costs more now, she replied. Please understand this is a girl who sells lemonade along the street to raise funds, which she uses to buy stuff for herself and for others. An incipient capitalist with a generous heart she is. Miserly she is not.
Next question: Do you know why we have inflation?
Yes. Dad told me it was because the government gave a lot of people free money which they spent, causing prices to go up.
It isn’t fair, she said, since she didn’t get any of the free money.
This child understands economics better than all the occupiers of Capitol Hill and 1600 Pennsylvania Avenue. At least she has a working knowledge of cause and effect. Actions result in consequences, something she apparently comprehends better than the residents of the District of Columbia.
Note that she pinpointed two phenomena that infect our American ethos. She recognizes that the government’s giving people “free money” doesn’t result in good things for everyone else. She works hard making and selling lemonade, ofttimes baking cookies to offer at her stand. Why should she work for her income while others just wait for a check to arrive in the mailbox, courtesy of Uncle Sugar?
Note also that there is a whiff here of the envy that we Americans cultivate against our neighbor. We daily live out Aesop’s fable about the dog with the bone that sees its image reflected in the water and immediately wants that other bone. And there is a commandment or two about covetousness. Such envy is contrary to my granddaughter’s nature and upbringing; she wasn’t coveting the free money others got but simply observing what doesn’t make sense to her adolescent brain.
This caused me to recall my high school economics class, my first exposure to the discipline I’ve come to love. We had a student teacher, poor man given what high school students inflict on student teachers, but he said something I have never forgotten. “Inflation is the cruelest tax of all.”
His profound statement resounds 55 years later. It is so much easier for our political masters to inflate the currency than to raise taxes. Both are evil to a free market libertarian like me but with inflation they can delay the day of reckoning. It is nothing more than the childhood game of kick the can, the winner being the kid who kicked it furthest down the street. The current gang of kids playing in our nation’s capital have become quite adept at winning this game. Or so they think.
I have no idea how the November elections will turn out. Abortion supporters are energized after the recent Supreme Court ruling, Donald Trump is like a Phoenix bent on repeated self-immolation, and our Gaffer-in-Chief outdoes himself every time he opens his mouth in public. But one thing I know based on our electoral history: People vote their pocketbooks. And my pocketbook is depleting even faster now than just a few years ago. We need a solution.
My modest proposal is to send the President, Vice President and all 535 members of Congress home to hold real jobs. In their place let’s randomly select a roomful of pre-teens and ask them what we should do. They might decide to spend the entire federal budget on Xboxes and the like, but my sense is that they will do mostly prudent things. And they won’t have to worry about pleasing major contributors or securing interest group endorsements.
The fact that I am even suggesting such an alternative is at once frightening and depressing. Have things really gotten that bad?
After listening to a 12-year-old decry our state of affairs, I think I know the answer to that question.
Mark Franke, M.B.A., an adjunct scholar of the Indiana Policy Review and its book reviewer, is formerly an associate vice-chancellor at Indiana University-Purdue University Fort Wayne.
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