The Spark

the Voice of
The Communist League of Revolutionary Workers–Internationalist

“The emancipation of the working class will only be achieved by the working class itself.”
— Karl Marx

Making Inflation Disappear—On Paper!

May 19, 2008

Last month, the government once again made the laughable and ridiculous claim that inflation is “contained” at a supposedly “moderate” 3% annual rate. In the real world, the only way that could be true is if the government did not count the skyrocketing cost of housing, food, health care, transportation and just about everything else.

The government has been cooking its inflation statistics for a long time. Back in the early 1970s, when food and gas prices skyrocketed, President Nixon instructed the head of the Federal Reserve, Arthur Burns, to make inflation look lower than it was. Burns came back with a new concept, what he dubbed “core” inflation. He said that since energy and food costs were more “volatile,” they should not really be part of this new “core” inflation index that government officials and newscasters started talking about. Of course, this was always patently absurd, since everyone consumes food and energy, which are the real “core” of every consumer’s budget. But no matter, Burns’ “core” inflation did not include those things, and that was used to promote the idea that inflation was under control–which it wasn’t.

The proof came just a few years later when the Reagan administration sought to downplay the surging inflation again, this time by hiding big increases in housing costs, pretending they took up a much smaller share of ordinary people’s budgets. And then, in the 1990s, the Clinton administration came up with one of the phoniest arguments ever invented to deny that there was much inflation. Saying that whenever prices rise, people substitute cheaper products for more expensive products, like hamburger for steak, they concluded that prices weren’t rising, but were even going down.

Their falsification of the real level of inflation provided the bosses with an excuse to keep wages low–even as those same bosses raised the prices of what workers consume. Government officials used these debased inflation figures to nearly eliminate cost of living adjustments for government workers and Social Security recipients.

Just like politicians spawned all those lies about “weapons of mass destruction” to launch their dirty wars against Iraq and Afghanistan, so they have spawned all kinds of lies to hide their dirty attacks against the standard of living of working people in this country.