I thought about this episode while reading David Henderson’s EconLog post about it even lower is the quality of the $1.50 Costco Hot Dog. Episode 374 of Anthony Davies and James Harrigan’s podcast “Words and numbers” talks about how much beer and hot dog prices have gone up at baseball stadiums. The $1 Kahn’s hot dogs I used to buy at Riverfront Stadium in Cincinnati live only in memory.
According to poll data from progress datalikely voters on the left, right, and center blame food manufacturers and retailers who “raise prices to increase profits” for rising prices. The closest thing to voting on any variation of “too much money chasing too few goods” is “President Joe Biden’s policies,” which would mean anything President Biden has done. The Federal Reserve is apparently not on the list of potential suspects. I’m not sure it would have been possible for Data for Progress to include monetary policy in the election.
The contractionary blame game reflects John Maynard Keynes’s argument–and it is not clear that Lenin ever said such a thing what Keynes said to him. Inflation not only does it make currency rates and ratios difficult to interpret. It also involves all the visible forces of political law on the side of destruction because high gas and grocery prices make a lot of sense to voters, which means that the politicians have something to stomp on and beat down the floor at election time. Which is more blood-boiling and soul-stirring: vocal C-suite vultures sticking it to average Joes and Janes to maximize profits or the theory of capital abundance?
Costco, after all, he chose to stop serving sauerkraut and onions to hot dog customers. Their suppliers he chose charging higher prices. Some unknown schmuck in an office building somewhere he chose recommending price increases to the managers and directors of big, faceless agribusiness corporations who are accountable only to arrogant, faceless shareholders. Which is easier to do: believe that evil forces are at work or explain all the terms in the equation M*V = P*Y, total spending– money times the velocity of money, which is the frequency with which each dollar is spent–is equal to the product of the price level and the amount of real output (Lawrence White explains this statistic in his Concise Encyclopedia article on inflation). If there’s a lot of money and production isn’t growing exponentially and marginally, Costco basically has no choice but to lower the price if it wants to keep the price fixed at $1.50–but if you start trying to explain how Costco and its suppliers work. in a world where too much money is chasing too few goods, and most voters will get you out faster than you can say “speed.”
Art Carden is Professor of Economics & Medical Properties Trust Fellow at Samford University.
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