Issue highlights:
- The devil’s crowbar: “the battle against inflation is not merely about taming the cost of living,” writes CCPA Ontario Director Randy Robinson. “For those with the power to wield it, inflation is a tool, a devil’s crowbar to pry wealth from the hands of those too vulnerable to hold on to it. With four big interest rate hikes this year, the Bank of Canada is already doing its part to provoke a recession—and begin the wealth transfer in earnest.”
- Power, profit, and the politics of inflation: To understand our approach to inflation, you have to go back to the 1970s, Alex Himelfarb writes in his sweeping essay: “Those in my generation will remember the 1973 oil crisis that brought with it soaring inflation and the eventual response: sharply higher interest rates and pressures to contain government spending. And that perspective still shapes our thinking.”
- Inflation and the general ineffectiveness of monetary policy: The Bank of Canada is following an age-old rulebook: when inflation is on the run, the bank tries to chase it down by increasing interest rates to cool the market. Economist and monetary expert Louis Philippe-Rochon says fiscal policy is a more effective way of dealing with affordability issues.
- The great unaffordable North: “For all of the magic of living in the North, it is becoming increasingly untenable for those in the working class,” writes Saba Javed. “Without government intervention, people living in poverty are at risk of being pushed out altogether.”
- Hate the cost of high rent? Blame the 1990s: “The most intensive cuts to social spending in Canadian history happened in the 1990s, including the complete annihilation of Canada’s post-war funding commitments to affordable housing,” write Jacqueline Kennelly and Andrew Crosby. Renters are still paying the price.
- Cost of food is at a crisis level: “Living a dignified life with access to fresh food should not be a privilege for the wealthy, it should be the bare minimum for all,” writes The Stop’s Maria Rio. “It is time to step up as a community, support our neighbours, support local nonprofits and mutual aid groups, and demand better supports for those who are being systematically kept in poverty.”
The politics of inflation: The good, bad and the ugly
Trish hennessy
It has been a long, long time since Canadians had to worry about high inflation.
In the pyramid of problems that governments generally wish to avoid, the rising cost of living is right up there. It’s an opposition party’s best friend—a tool with which to skewer the party in power.
Periods of inflation can show us politics at its worst. CCPA Ontario Director Randy Robinson gives us a taste of this in his article in this issue of the Monitor, “The devil’s crowbar: how the right weaponizes inflation.”
The politics of inflation can spin angst into anger—and there are a lot of anxious Canadians right now.
A late-July survey by Angus Reid shows the combination of rising inflation and higher interest rates is taking its toll: 75 per cent of Canadians say it’s a bad time to make a major purchase, such as a new home or renovation, a car, or a big vacation.
In that same survey, 33 per cent of women aged 35–54 say their finances are in bad shape and they’re barely keeping their head above water; 27 per cent of women aged 18–34 and 25 per cent of men aged 18–34 say the same.
And there’s more bad news. Many economists, including CCPA Senior Economist David Macdonald, worry that the current steep rise in interest rates—which the Bank of Canada has put forward as a solution to inflation—could push Canada into a recession.
After two-and-a-half years of “learning to live” with a global pandemic, a recession is the last thing anyone needs.
As you’ll read in this issue of the Monitor, some drivers of inflation are beyond our control: Russia’s invasion of Ukraine is driving up food and gas prices; and supply chain disruptions from China are adding fuel to the fire.
But some things are completely within our control. There are fiscal tools at the federal and provincial governments’ disposal that could help make life easier for people who are struggling to keep up with inflation.
This issue is filled with good ideas that governments could immediately adopt, from providing more affordable public services and keeping a lid on rents to boosting incomes through higher social assistance rates (which are deplorably low) and other cash transfers.
In their article, Robin Shaban and Keldon Bester say a strong Competition Act could address inflation by tackling market power, which has allowed major corporations to pass higher costs onto consumers while making excess corporate profits.
A number of contributors in this issue point to excess corporate profits—and the need for governments to tax them.
Going after fat corporations makes far more sense than what some right-wing proponents are doing: going after workers’ wages. As Jim Stanford argues in this issue, workers didn’t cause inflation, but they can be part of the solution:
“The way out of this quandary is for workers’ movements to reject the underlying neoliberal arrangement in which excess capacity—in essence, a reserve army of workers—is always available to discipline labour and control inflation,” Stanford writes. “The labour movement must stubbornly resist the system’s efforts to make workers pay for a crisis they didn’t create.”
Finally, as Alex Himelfarb writes in his essay, the story of inflation “has always been a story about power and profit, and it’s power and profit we should be focusing on in our response.”
Trish Hennessy is a senior strategist and editor with the CCPA National Office.