Inflation — The Curse of Politicans

By Bill Lindo

Jan 15^th, 2024, Belize City: The recent statistics from the Statistical Institute of Belize (SIB) states that inflation in foodstuff for the month of November 2023 rose some 12%. One item, cilantro rose a whopping 165.3%. This constant rise in consumer prices, especially in food which humans must consume to stay alive, has been going on for the entire year of 2023 as well as 2022.

Here in Belize, the elites realized that the inflationary crisis since 2020 has provided them with the perfect opportunity to deal a deadly blow to the post-George Price (PUP full employment regime) era, which in their view had led to the working masses becoming too powerful. They concluded that it was time to strike back — to break the back of organized labour and reassert the unfettered power of capital over Belizean society – time to put workers in their place. This is the reason for the breaking of the power of the Christian Workers Union (CWU) by the Ashcroft Alliance and the attempt to destroy Belize Sugar Cane Farmers Association (BSCFA) of the North by the giant BSI/ASR/Tate & Lyle.

As in the 1970s, inflation is surging globally, threatening the post-pandemic recovery and raising once again the prospect of stagflation — the simultaneous incidence of stagnant or negative growth and accelerating inflation. And as in the seventies, establishment economists and commentators have been quick to blame the surging prices on excess demand (they say people had too much money to spend), fueled by excessive wage increases (the recent minimum wage increase by the PUP) and over-expansionary fiscal and monetary policies during the Covid-19 crisis (printing of money by central bank).

Their proposed solution is the same as that adopted in the seventies: central banks must hike up interest rates and cut back on fiscal spending — austerity.  Look at the US Fed or European Central Bank or the Bank of Japan, where high interest rates and cuts, especially to social programs reign. 

The problem with all this is that — again, just like in the seventies — the recent inflation has relatively little or nothing to do with excess demand and excessive wage growth. In fact, it has mostly supply-side origins, triggered by the Covid-19 crisis.  These foreign supply-side bottlenecks, which in turn were made worse in several countries by domestic supply-side bottlenecks — such as a shortage of long-haul truck drivers and dock workers in the United States and England — are the reason prices were raising long before the outbreak of the conflict in Ukraine.

In other words, useless/foolish lockdowns are to blame — not the fiscal measures adopted to contain their effects.  Over the last eighteen months, the Ukraine war and the sanctions on Russia have caused inflation, especially energy and food prices, to grow at an even faster pace. These price rises have several self-reinforcing causes. On the one hand, the conflict has directly disrupted exports of crude oil, natural gas, grains, fertilizer and metals, pushing up energy, food and commodity prices. These supply-side problems have been further exacerbated by the West’s utterly self-defeating sanctions against Russia, which have left European countries scrambling for more expensive alternatives to Russian oil from America and Africa — as well as by speculation in commodity (futures) markets.

This is why, as more and more people struggle to make ends meet, global energy giants such as Exxon Mobil, Shell, BP and Chevron have raked in record profits in 2022, far exceeding their revenue during the same period in 2021 — all because they are passing on ridiculous mark-up prices to consumers. As United States President Joe Biden recently put it, oil companies have “made more money than God this year”.  At the same time, speculative activity by hedge funds, investment banks and pension funds, fueled by central bank “QE-induced cheap credit”, rather than “supply and demand”, is also helping to drive up wheat prices, despite comfortably high global wheat stocks, raising the prospect of an unprecedented global wave of hunger. This is what American Economist, Michael Hudson calls “speculative inflation”.

This is the situation in the Western world. Our political leaders say that inflation is imported into Belize and thus the consuming public must accept that reality as nothing can be done.  But is this the truth? Before I answer this question. I will quote from one of the economic geniuses of the last century – Jacques Rueff the man who designed and implemented the French miracle of General Charles De Gaulle in 1958.  That year General Charles de Gaulle returned to power in France as the Fourth Republic faltered under the weight of the Algerian War for Independence but also deteriorating economic conditions. By the middle 1950s, the French economy had become Europe’s “sick man.” It was burdened by currency problems, high inflation, uncompetitive industries, feeble capital markets, and low productivity.  In 1963 Rueff wrote a new book — ”The Age of Inflation” to explain how inflation worked.  One of the salient points of his book is the following:

“In reality, only one man succeeded in coming to terms with inflation – Hitler. He understood that inflation destroys the ties that bind men’s desire to reality and in so doing, transform their freedom into a terrible menace to the social order.  To save the social order, he sacrificed freedom. By subjecting the individual conduct to strict control, he restrained people from utilizing that part of their purchasing power which exceeded the value of purchasable wealth.  In this way he was able to distribute generously the means of buying goods which did not exist. He turned this lie into a system of government…In his system, however, men, manipulated from without as the machine is manipulated by the mechanic, has ceased to be human beings. We must say with all gravity that whoever tolerates inflation but rejects disorder is a protagonist of dictatorship.”

In other words, inflation in religious terms is the same as Satan – evil because it destroys the ties that bind man to man. The rich use it to steal from the poor.  And it destroys the social order. But there is another way to deal with inflation, especially imported inflation.

My assumption is that the small open economy of Belize will not change, and that human freedom will prevail in Belize.  To answer this burning question on inflation, I will digress for a moment.

Many years ago, my cousin Josephine Coye-Young’s (Fina) husband Junior Young  (Horace Young’s younger brother) and then Deputy Financial Secretary to Mr. Fonseca told me something I have never forgotten.

He said, “Bill, you keep complaining about the people who make policy in Belize, especially in government but you forgot that they were trained by the people who subjugated us Belizeans to slavery, humiliation, destitution and poverty – the lack of freedom.  These people are trained to continue Belize’s subjugation.  A few rebels like yourself managed to break from their indoctrination in their schools. The vast majority will never be like you. Belize needs to re-educate its leaders like what Mao did in China and Fidel did in Cuba. Those two leaders after taking power did not kill the “old guard” like the French or Russian Revolutions. Instead, people were taken to desolate mountains and got a complete re-education.”

In 40 years, China went from having an average income of USD $ 84/year to some USD $ 36,000/year today.  Today the United States’ average income is about USD $ 63,000/year.  In Belize the average income is some USD $ 6,800/year.  And in those 40 years, China has removed over 800 million of its citizens from poverty which the World Bank calls a miracle.

With the complete re-education of its leaders, China now has a unique system of governance. They call it socialism with Chinese characteristics. George Price promoted the Mixed Economy. A 100 years ago, it was called the American System of Political Economy of George Washington, Alexander Hamilton, Abe Lincoln, Henry Charles Carey, Franklin Delano Roosevelt and Henry Wallace.  In China the political class is chosen from members of the Communist party of China.  The party never changes, but policy always changes. China is very conscious of its public opinion. If a policy doesn’t work, it changes immediately. In China, no individual is larger than the State or the Party.  However, in the West, including Belize, individuals, especially if they are rich, are bigger than the state and government. And here the policy never ever changes. Faces (politicians) come and go but the policy remains. This is why poverty is so insidious in Belize.

When George Price wanted to return Belize to the Mixed Economy in the upcoming 1998 general elections, he was forced into retirement in 1996 along with his supporters in the PUP.

Now to the question of solving inflation. If we do not wish to solve inflation by the method employed by Adolf Hitler, then there is only one way to do it – production or through the capital account. Monetarist tools are doomed to fail. But our political leaders, because they were trained by the elites and the former slave-masters and have not rebelled against the indoctrination, will shoot a lot of bull. And since we do not wish to change Belize from an open economy then only local production, or self-sufficiency can cure the evil inflation.

But the big boys/elites who own the politicians will not allow a change in policy.  There will be no local manufacturing unless it’s done by carpetbaggers or the bacra-man, what the former PM Esquivel used to call roots Belizeans will never be allowed to do any import substitution – no manufacturing because it will lead to independence.  No roots Belizean will be allowed to be independent of the big boys. No heavy industry will be established by roots Belizeans. Belize is owned by the bacra-man and the carpetbaggers.

I need to remind the politicians, that Rome fell because of inflation, Hitler came to power because of inflation, and both Mao and Fidel came to power because of inflation. Do not let history repeat itself in Belize.

Let’s put it another way. In the year 2000 a worker had to give 200 weeks of his time to own a pickup truck like the Mitsubishi L200. Today to own the same truck, he must work 380 weeks, even though his wages have increased. And a three-bedroom concrete house in the city used to cost him 345 weeks or 6.6 years of time. Today, 24 years later, the same house will cost him 750 weeks or 14.4 years of his time. This is the evil of inflation.  But this writer along with other roots Belizeans have come-up with a plan to reduce the time to some 450 weeks or 8.6 years for that worker time to cover the cost of his new home by local manufacturing using our own raw materials that God gave us Belizeans.  More on that another time.

The next 35 days will see if the current government is serious about destroying inflation in Belize, or if it is all bull. Today, on January 15^th, 105 years ago Belize’s founding father, George Price was born. What better way to honour him than to start implementing his Mixed Economy and create 24,000 new jobs with an annual wage of $ 41,600/year.  Achievable things if we only believe in ourselves.

Long Live a Free Independent Belize!

Let’s Make George Price Dream Real — modern Industrial Belize. (Photo of Belize’s Founder — George Price and a modern steel factory above)