Commentary,  Employment & Unemployment,  Inflation,  Macroeconomics

Who Wins, Who Loses in the Fight Against Inflation

The Centre for Future Work recently co-published with the Canadian Labour Congress a major new report on inflation: its causes, consequences, and how it could be tackled in a more balanced and fair manner (rather than throwing the whole economy into recession, which seems the inevitable outcome of the Bank of Canada’s current strategy).

The report has generated considerable attention in print, broadcast, and social media.

CBC’s daily political podcast, Front Burner, published a feature-length interview with report author Jim Stanford (Director of the Centre for Future Work) on why the Bank of Canada’s current approach is punishing workers for inflation they clearly did not cause. He discusses the options for reducing inflation more fairly, while protecting working and low-income Canadians against its effects.

Jim Stanford also appeared on CBC National television to discuss the impact of inflation on real living standards, and also the contribution of record-high corporate profits in Canada to rising prices. In this interview with Ginella Massa, Jim critiques the recent announcement by Loblaws to freeze prices on its ‘no name’ brand of products: inadvertently it confirmed that this company (and other large supermarket chains) clearly possesses anti-competitive power to unduly influence prices on final products, inputs, and even wages.

For a summary of the key points in the new Centre for Future Work/CLC research paper (including its proposed 6-point strategy for reducing inflation more fairly), please see this thread on Twitter.

Finally, while the Bank of Canada continues to blame wages and an “overheated” labour market for inflation, almost no attention is paid to the role of swollen business profits in driving up prices for consumers. The evidence is overwhelming that companies across the economy (not just supermarket chains!) have increased prices far more than required simply to cover expenses. The result has been a major jump in the share of corporate profits in GDP: up by over 5 percentage points (on an after-tax basis) as a share of GDP.

Developing a better understanding of the causes of current inflation (which in fact have nothing to do with a 1970s-style ‘wage-price spiral’, so feared by the central bank) is essential for informing a more appropriate and effective solution to it.

Jim Stanford is Economist and Director of the Centre for Future Work. He divides his time between Sydney, Australia and Vancouver, Canada. Jim is one of Canada’s best-known economic commentators. He served for over 20 years as Economist and Director of Policy with Unifor, Canada’s largest private-sector trade union.