I’m not an economist, so I can’t delve too deeply into the intricacies of inflation.
But I think I’m as qualified as most people who write about economics in that I can talk about Adam Smith’s “Wealth of Nations” all day long without having actually read it.
And I do know a thing or two about dollar stores and dime stores.
A lot of consumers reportedly freaked out – were “aghast,” as one writer put it – recently when the Dollar Tree chain announced it was upping the price on most items to $1.25, a 25 percent across-the-board increase.
“Dollar and a quarter store doesn’t have the same ring to it,” one columnist quipped. And Consumer Reports was prompted to issue a list of suggestions for dollar store shoppers, such as “Your options on each item could be pretty limited” and “Not many carry fresh fruits and vegetables.”
What? You mean I can’t just stroll into a dollar store with my meticulously crafted list and satisfy all my shopping needs?
All I can say to those aghast consumers is, welcome to my world.
I grew up in a time and place where those of limited means who weren’t desperate enough to shop at the Salvation Army went to a place called the dime store. It was technically a five-and-dime store, but nobody called it that.
Even as a 10-year-old clutching my sweaty change, I was smart enough to realize there were a lot of items in that store costing more than a dime. It never occurred to me to wonder why it wasn’t called the 19-cent store or the two-bit store.
What ended up as a nationwide phenomenon had begun on Feb. 27, 1879, when Frank Woolworth opened his Great Five Cent Store in Utica, New York. Yes, five cents for anything in the store, from candy and baseballs and drinking cups to writing books and fire shovels and purses, until the stores morphed into the five-and-tens, which had to finally set a top selling price of 20 cents in the 1930s.
That 20-cent limit was abandoned in 1935, which begat Woolworth’s, the largest chain in the world for a while.
What we’re talking about here is the sort of creeping inflation we can all live with, the sign of a healthy economy humming along, small increases in prices and wages that are so incremental over time we hardly notice until we read a story about decades past and mutter, “Dollar sure went a lot further back then.”
What we’re facing now, though, is Sudden Onslaught Inflation of the kind we haven’t seen in about 40 years, drastic price increases that sweep like a tornado through a trailer park. We feel it at the gas station and the grocery store as we wonder how far the next paycheck will go. Today, we have to look back just weeks rather than decades to lament the reach of a dollar.
It’s the kind of inflation even conservatives don’t quite trust to Adam Smith’s “invisible hand” of people acting in their own self-interest in a laissez faire economy. It’s inflation that screams for government attention.
But it can be hard to move the government, especially when the message should be, quit doing so much harm.
We can accept that truly free markets aren’t possible without government establishing guidelines so we all know we’re playing by the same rules, things such as a currency and monetary policy to move on from bartering, enabling and enforcing contracts, trying to frustrate the destructive power of monopolies. But we should be afraid when it moves beyond umpiring the level playing field,
Contrary to popular belief, Smith saw the biggest threat of government not so much in its attempt to intervene in free markets, but to capture them. He detested mercantilism, the collusion of governments and big business to control the flow of goods and services to the point where individuals had no meaningful choices. Central planning does not work, whether foisted on us by governments, a monopolistic merchant class or a combination of both.
We can only imagine how aghast Smith would be at the cozy relationship of Washington and Big Tech to control everything from what goods we can buy to what information we can see. And what would he make of the emerging economy in which, thanks to lobbying and generous campaign donations, we will buy everything from Amazon except a few trinkets still available at the dollar store?
And since he would have known that inflation is basically too many dollars chasing too few goods, we can be pretty sure he would recognize the federal government’s pernicious role. We can’t blame it for the shortage of goods (except, perhaps, for being asleep at the switch while the supply chain crashed and burned), but it is front and center in responsibility for the flood of dollars.
The Build Back Better plan to dump a few trillion more into the economy seems dead for now, but there are trillions already in the pipeline. We were treated last week to stories about all the glorious plans for spending the money in Indiana — $50 million each for the Fort Wayne area, the South Bend area, the Indianapolis area …
Oh, boy, can’t wait for the effects to kick in. I have my sweaty change ready for next month’s trip to the $5 store.