Is inflation morally wrong?

historians saw a mob of hungry peasants, E.P. Thompson saw resistance to capitalism. Studying England’s 18th-century food riots, the Marxist historian coined the term “moral economy”. The rioters, he argued, were not motivated purely by empty bellies, but by a belief that the bakers, farmers and millers had violated paternalist customs, which suggested they should limit their profit, sell locally and not hold back grain.

A new working paper by Stefanie Stantcheva of Harvard University helps explain the divergence. Ms Stantcheva asks, “Why do we dislike inflation?”, which updates a paper published in 1997 by Robert Shiller, who later won a Nobel prize in economics. Using two surveys, she posed Americans a series of closed questions, such as “How have your savings been affected by inflation?”, and open-ended ones, such as “How would you define ‘inflation’ in your own words?”.

Some of their beliefs reflected what has happened during the current spell of inflation. Following the covid-19 pandemic, real incomes did indeed fall, as prices rose faster than wages. It is only over the past couple of years that wages have grown sufficiently to make up the difference. The price of basics, such as food and fuel, has risen faster than other items in the inflation basket. And even if your income is rising, it is irritating to see a greater share go on necessities.

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