Ecology a pain-killer for inflation.
Our system is heading toward inflation. And ecology will help us accepting it.
In 2021, public and private debts are enormous. We have two solutions. Either we do not reimburse (part of) the debt, or we pay the debt. The first option is irrelevant because no one knows how our global and complex financial system would react.
Then there are grossly two ways to pay too huge a debt. 1) Dramatically increase the wealth of your economy. Not realistic. Not sustainable either. 2) Let inflation goes up so that the value of your debts decrease. A major problem is that it also makes people poorer. How do you have them to accept it? Let us see why ecology will probably be a central ideological tool in this subtle art of mastering inflation.
Before delving into the relationship of inflation with ecology, it is essential to understand that if inflation is much greater than the interest rates on private and public debt, then we are basically done with our obligations in a few years. Also, inflation computation is a highly political index because it provides a reference point for the interest rates. Hence, it is the benefit of an indebted entity (a state or a company) to underestimate inflation.
In France, for instance, the price of housing is not taken into account to measure inflation. The institution in charge of computing inflation opposes well-structured arguments for such a decision. However, back to reality, this makes no sense given the unrealistic housing prices for a young working-class like me. Though, this underestimation is probably to trick creditors, not the people. Yet, underestimating inflation makes citizens rightfully angry: they are told that everything is fine. At the same time, they observe a massive decrease in their buying power. This is precisely what the yellow vest campaign was about in France.
Also, in the wilderness of economist forecasts, many arguments do not point toward inflation. For instance, some say that the velocity of the money is down. This is just because we are staying home! Other say that wages did not increase, so it is hardly a sign of inflation. But for those who worked from home (which is still a vast fragment of the western world population), aren’t the months at home without spending money in bars and restaurants precisely a form of increase of their consumption power? Also, aren’t bitcoins, and the stimulus check, out of the box free sources of money? There are endless arguments and counter-arguments in favor of or disfavor of inflation. Here, we would like to simply explain why ecology mates very well with inflation. Ecology can be turned into a perfect political tool to make people accept inflation.
First, for a green revolution with an increasingly unstable climate, we need an awful lot of new infrastructures. We need to build train lines, dams for hydro-power, wind farms, nuclear plants, solar farms, clean our local environment to enjoy traveling next door, insulate buildings, adapt to climate change, etc. All these infrastructures are costly and cannot be paid in cash. We need to take debt. So the debt is not only at a considerable level now, but it is also doomed to increase. And I don’t see another way to reimburse such gigantic debts without inflation. Biden’s infrastructural plan of 4 trillion dollars gives you a hint of the amount of money that remains to be spent. Actually, China is also spending trillion on infrastructure!
At a micro-level, ecology induces inflation. The premium paid for organic vegetables is inflation. For the relatively (this is debatable) same vegetable, we spend an extra cost. More generally, more expensive healthy food is inflation. Shouldn’t food be healthy from the beginning?
Extra taxes for polluting items like four-wheel-drive cars is an even more obvious example of direct inflation. The value of the object is the same, but the quantity of euro to buy it increases.
Also, all the benevolent work we do from time to time (like composting, sorting the garbage, driving to the glass collector, etc.) is implicitly reducing the money we get rewarded for our time working. Good or bad, it is simply a fact.
So ecology creates inflation. But even more importantly, ecology contributes to making inflation socially acceptable.
We (at least me) welcome the increase in the price of smartphones and electronic devices because it means that we will buy less of them. It means that we will collectively take better care of them, we will probably better engage in recycling processes, etc. We welcome an increase in the price of flying to the other end of the world. What the point of going to New York when you live in Paris? Inflation is good for reducing our mobility around the world. Inflation goes with an increase in the price of commodities, so it is a perfect pretense to engage ever more in recycling.
We can keep on finding many examples of sort of relationship between inflation and ecology. But this is a technical perspective. From a principled point of view, our way of life is the reason for the environmental crisis.
What if the 7.5 billions of humans have access to the everyday hot shower? The fridge? The question is not just C02 emission, but water consumption, mining for metals, aquifer depletion, soil destruction, and so on.
Inflation is precisely a non-evident and non-democratic manner to downscale our way of life. Ecology is the suitable ideological ingredient to have us willingly accept it. But, we should make sure that it is appropriately used!