Anwar Shaikh on Inflation, William Buckley, Liberals and Conservatives

[@doin_fine]

I'm gonna have to watch this all the way through.

[@19battlehill]

To understand the inflation of the 1970's into the 1980's --- you look at OPEC at oil. All is ubiquitous in our economy -- every truck, every tanker that moves products uses oil, every plastic is make from oil -- did you know a tire takes 5 gallons of oil to produce. So, when OPEC (which is an oil cartel) takes the price of a barrel of oil from in 1971 from $2 a barrel to $12 in 3 years - you are going to get inflation because price increase in oil, makes price increase in almost EVERYTHING. What made the inflation worse was the strength of Unions - as people saw their money buying less they demanded higher wages - which drove the prices up even more. 30% of jobs were unionized in 1970. INflation was broken when oil glut happened in 1980's (increase in oil price - brough more oil on line).

[@donalocoisdealbha2226]

I think both of those points you make are consistent with what Shaikh is saying here. One of the 'limits' which creates inflation is availability of physical inputs (in this case oil), another of them was the high wage share which reduces the surplus available for reinvestment in production. As you say in the 70s there was a combination of both, so it was particularly severe inflation. Writing now in 2022 we have high inflation again, so I'd be interested to see Shaikh's theory applied to see what today's 'limits' are.

[@zahid1909]

@@donalocoisdealbha2226 Brilliant!