Pages

Friday, April 8, 2016

The mad hatter on inflation (1977)

From the June 1977 issue of the Socialist Standard
“Alice felt dreadfully puzzled. The Hatter’s remark seemed to have no meaning in it, and yet it was certainly English. ‘I don’t quite understand’, she said, as politely as she could.‘Have you guessed the riddle yet?’ the Hatter said, turning to Alice again.‘No, I give it up’, Alice replied: ‘Whats the answer?’ ‘I haven’t the slightest idea’, said the Hatter.”
(From the Hatter’s Tea Party, Alice in Wonderland)
Mr. Hattersley, Minister of State for Prices and Consumer Protection, tells us from time to time what he is doing and what he hopes the result will be. One such talk was on TV on 18th April (reported next day in The Times and Financial Times).

His overall job is “to protect consumers” against rising prices and for this purpose he was putting through a Prices Bill “much tougher than anything done in the past”. Some simple-minded people thought that this meant that prices would actually be prevented from rising. Not so, said the Hatter:
If we just froze prices, the outcome for many companies would be certain bankruptcy, for others inability to invest, and therefore a reduction in the number of people employed.
He added, however, that his government hoped to get the annual rate of increase of prices down to 13 per cent, by Christmas. This depended, he said, on a continuation of the Social Contract to control wage increases. If not, prices by the end of the year might be rising at an annual rate of 21 per cent.

“I am dreadfully puzzled”, said Alice. “Wasn’t the Social Contract supposed to reduce the rate of price increase; but all you now' hope is to get the rate of increase down to 13 per cent., which happens to be the same rate at which prices were rising in February 1974 when your government entered office?”

“What is more”, said Alice, gaining confidence as she saw the dazed look on the Hatter’s face, “I am told that prices rise because of an excess issue of paper money, and under your government the note issue has gone up from £4587 million to £7062 million”.

“Nobody told me about that”, said the Hatter, “and I don’t believe it. Besides, I am sure that if we didn’t do this we would have a lot of unemployment”.

“But you have a lot of unemployment”, said Alice. “It happens whether you have inflation or not. It is just the way capitalism works”.

“Nobody told me about capitalism either”, said the Hatter. “I am however sure that there must be some answer to the riddle, otherwise what am I doing in my job?”

“Very well”, said Alice. “What’s the answer?”

“I haven’t the slightest idea”, said the Hatter.
Edgar Hardcastle

No comments:

Post a Comment