Dalrymple on Inflation

Thursday, October 08, 2009

I found Theodore Dalrymple's article on how inflation ruins one's ability to plan for the future to be interesting and insightful, as well as frustrating. The following paragraph essentializes the series of examples he uses to illustrate how money that is not really, as he put it, "a store of value," undercuts the work ethic and long-range planning in innumerable ways.

But asset inflation -- ultimately, the debasement of the currency -- as the principal source of wealth corrodes the character of people. It not only undermines the traditional bourgeois virtues but makes them ridiculous and even reverses them. Prudence becomes imprudence, thrift becomes improvidence, sobriety becomes mean-spiritedness, modesty becomes lack of ambition, self-control becomes betrayal of the inner self, patience becomes lack of foresight, steadiness becomes inflexibility: all that was wisdom becomes foolishness. And circumstances force almost everyone to join in the dance.
That is completely true. If only Dalrymple hadn't used the half-apologetic qualifier, "bourgeois" when he spoke of virtue, as if he needed another word to describe qualities that deserve the name more than the debased, sacrificial "virtues" of altruism!

This is why the article is frustrating for me to read, despite its good integration on some levels of example and conclusion. Dalrymple has tackled a complex subject -- how inflation can ruin your life -- rather elegantly, but he has ironically missed an opportunity to make a strong moral case against the practice of governments printing money.

Most people -- even in today's welfare state -- will bristle at open government confiscation of private property. Most people will at least complain about proposals for expanded government meddling in their affairs, as witness the "Fresca Rebellion." And many people will read this article and agree with it, but probably not see the essential similarity -- and evil -- of all three of these. This will be so, even though Dalrymple has shown inflation both robbing us and making us act in ways we would not choose.

The government acts by means of coercion. Everything it does, whether for its legitimate purpose (of protecting us from having our rights violated by others) or against it (by violating our rights itself), it does by physical force or the threat of such force. The evil of this when it is not protecting our rights is the same as that when any other fraud, thief, or attacker victimizes us -- except that in the case of inflation, it is not as readily apparent.

It is this last thing that Dalrymple doesn't quite make clear, because he doesn't connect virtue with rationality, and does not explicitly show how physical force negates one's judgement. The government is forcing everyone to use fiat currency that it can print willy-nilly. That's what the phrase, "This note is legal tender for all debts, public and private," does. I know that I don't want to "save" what I earn in the form of decorated paper issued by the likes of George Bush or Barack Obama. But I have no choice.

Dalrymple's essay reads to me like a murder mystery solved by a detective who discovers that the killer's shot ricocheted six times before entering just under a rib -- but then fails to lift prints from the gun.

Had he done so in this case, he would have discovered a suicide, rather than a murder. Yes, inflation may render virtue moot, but where does it come from? It comes from a public that wants itself or others to receive government "help," but does not want to trouble itself with how to provide such help and has just enough moral squeamishness left to not want to appear to itself to be stealing in order to finance it.

It was a moral defect -- altruism -- that led to the public's acceptance of the welfare state and this underhanded way of financing it in the first place. The erosion of "bourgeois virtue" is an undeniable consequence, but it is also in one sense just the chickens of unquestioned and unopposed altruism coming home to roost.

-- CAV


: Corrected some typos and made some minor edits.


Brian Phillips said...

I really enjoyed this post.

Unlike many government activities that seize wealth from the productive, inflation is not easily perceived. It takes considerable thought--rational, conceptual thought--to understand how government robs us through inflation. In a culture that increasingly worships the "now", many think that robbery can only occur if a gun is actually stuck in our face. And besides, yesterday's actions have nothing to do with today's consequences.

Gus Van Horn said...

Thank you, Brian.

What's worse is that the prospect of runaway inflation makes such more obvious gun-sticking a greater threat from the government and private citizens alike, the more severe it is.

It's an ever-present, insidious threat that can easily become much worse very quickly.