10/03/2024
Two important aspects of the economic cycle must be understood to properly analyze the Longshoremen strike. It is correct that wage increases can drive up the cost of goods and services, but COVID corporate bailouts and monetary supply inflation came first.
These bailouts were funded 100% by money printing, not direct taxation. This means that the money supply was expanded, reducing the purchasing power of everyone, including dock workers. As Murray Rothbard outlines in Economic Depressions: Their Causes and Cures, when new money is injected into the economy, those who receive it first benefit from the old prices before inflation kicks in. But workers, like those at the docks, experience the effects of reduced purchasing power because they aren’t the first holders of this new money.
Naturally, the workers demand pay raises to ‘keep up’ with the decreased purchasing power. When employers raise wages, those costs are then passed on to consumers in the form of higher prices for goods. This creates a vicious cycle where monetary inflation begets price inflation, further eroding purchasing power.
So, while workers push for pay increases to survive inflation, the real culprit driving this price spiral is the policy of money printing that fuels inflation in the first place. Rothbard lays out this process clearly in his work, explaining how the cycle continues unless we address the root cause.
You can also link Rothbard’s work here for further reading:
