George Orwell now seems downright clairvoyant. The messaging from the White House surrounding inflation has been emblematic of the ironically named Ministry of Truth in the dystopian novel 1984, first published in 1949. It is worth reviewing the fluid narrative of the last 13 months before all the doublethink gets memory-holed.
In early 2021, the nation was told that there was no inflation. After that, those in power told us inflation was only transitory. Then, we were told the average American need not worry because inflation was only a high class problem. Later, inflation somehow became a harbinger of a good economy. Now, inflation is bad again and it’s either the fault of greedy monopolists or — in recent weeks — Russia.
This latest switch has come just in time for February’s consumer price index (CPI), which showed the general level of prices rising at a four-decade high of 7.9% over the last year and 0.8% in just the last month. At this latest monthly rate, prices are on pace to double in a little more than seven years. Put another way, the real value of wages will be cut in half in that same time.
Energy costs have been a large contributor to general price increases since President Joe Biden took office, largely because of his punitive regulatory policies. Against that backdrop, the White House’s latest sanctions on Russian oil imports are not being joined by Europe or China, which are now purchasing Russian oil at a discount. The impolitic move only raised American’s prices, while lowering Europe’s and China’s, and Putin is still getting paid.
Yet we are told that this is a crippling sanction. That is only true insofar as the American middle class are the ones being crippled. The Ministry of Truth would be proud.
To replace the Russian oil that America is no longer buying, we’re cozying up to Iran, asking it to pump more oil. The White House doesn’t seem to mind anymore that the Iranians are the biggest state sponsor of terrorism — the Iranians are now our friends, and we are in talks to allow them to restart their nuclear program. It is reminiscent of the sudden realignment of alliances in Orwell’s 1984: “Oceania is not at war with Eurasia. Oceania is at war with Eastasia. Oceania has always been at war with Eastasia.”
The obvious answer is for American production to tap the abundant energy here at home, but the Biden administration’s war on domestic energy continues, with the White House citing unused drilling leases as proof that the oil and gas industry is holding back production and, therefore, to blame for higher prices.
But the Biden administration omits the fact that many of those leases are not on profitable deposits, and many are owned by speculators, not drilling companies. Still other leases have been compromised by prohibitively expensive red tape. Additionally, the ability to drill for oil or gas is useless when the administration refuses to allow pipelines to be built to new drilling sites.
Another Orwellian trick has been the recalculation of the CPI this year. The new methodology has effectively reduced the change in the CPI, giving the illusion that inflation is lower than it really is. Don’t believe your lying eyes when you go to the grocery store, the gas station or the hardware store. But using the same methodology from December 2021, the monthly inflation rate accelerated in February to 0.9%. That may not sound like much, but it equals an annual inflation rate of 11.4% wherein prices double in less than seven years.
But why is it that the administration is outdoing even Orwell when it comes to issues connected to inflation? That is probably because inflation is a tax on everyone, and ubiquitous price increases are so blatantly obvious that they cannot be hidden.
Therefore, they must be explained away, and blame must be diverted. Even though government is solely responsible for inflation, Big Brother will not accept any responsibility — as the Biden administration has demonstrated. That’s why the latest rhetoric is naming inflation “Putin’s price hike,” but that is an odd way to spell “Bidenflation.”
E.J. Antoni, Ph.D. is an economist at Texas Public Policy Foundation and a Senior Fellow at Committee to Unleash Prosperity.