The cost of living crisis on the other hand is not properly speaking a macroeconomic issue at all. It is a problem of poverty, inequality, precarity and unequal power relations in labour markets. If one is serious about addressing those problems, the solutions are clear enough: Raise benefit levels substantially above the rate of inflation. Control the prices of essentials, if you must, but only for the purchases of those on the lowest incomes. Make the tax system more progressive and remove punitive benefit traps for those on low incomes. Rebalance the labour market by institutional reforms that empower trade and individual workers. Run positive labour market schemes. Redress the overlapping structures of racism and discrimination that concentrate poverty amongst minorities, single mothers and children. Do all of this not slowly, but with the urgency of the cost of living crisis at your back.
This cannot be a top down, drawing board exercise. Addressing inequality, discrimination, poverty is not as simple as conducting monetary policy. The world is designed to make central banks and their instruments pivotal to the economy. They are structurally empowered, designed to be the ultimate technocrats perch. By contrast, in the vast majority of settings welfare and social services are more or less deliberately underfunded, understaffed, underpowered and institutionally hemmed so as to ensure that they are unable to deliver real uplift and lasting and sustainable protection for their “clients”. They are not empowering but disempowering mechanisms both for those they serve and their staff. So a true answer to the “cost of living crisis” would be a question not just of more spending but of political organization and mobilization to create a state structure actually capable of securing a decent standard of living for those in the bottom half of the income and wealth distribution.
https://adamtooze.substack.com/p/chartbook-164-the-return-of-tina
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