Moving On Amid the Stagflation Stalemate

The UK House of Commons was stunned when Conservative politician and former Chancellor of the Exchequer Iain Macleod spoke about stagflation before the House on 17 November 1965. Britain’s financial sector also rejected Macleod’s argument, unable to believe that inflation and economic stagnation could occur at the same time.

“We now have the worst of both worlds—not just inflation on the one hand or stagnation on the other. We have both at the same time,” he said.

The government and the Chancellor of the Exchequer at the time, James Callaghan, dismissed Macleod’s view. Economic thinking in the 1960s and 1970s held that unemployment and stagnation could not possibly occur together. Macleod was thought to be deluding himself. British economists of the day believed that the economy could balance itself out as long as the government managed prices and incomes.

The problem was that economists in the 1960s and 1970s had overlooked one crucial factor: human desire. In theory, people and governments everywhere could weather a period of inflation safely and eventually achieve economic stability. There was just one condition: they had to be willing to embrace the “new normal” wholeheartedly.

By the “new normal,” I mean lowering an already elevated standard of living by cutting back on spending. Ordinary people might not find it particularly difficult to start doing this. But what about government officials and members of the British royal family? Could they lower their standard of living—for example, by going from eating three meals a day to just two?

Illustration: Srigading Temple, Lawang, Malang. 

“Go, and Don’t Come Back”

Traditional communities around the world follow customs that may seem strange at first glance to us modern people. One thing worth knowing is that they hold firmly to a principle that remains with them to this day: once someone has died, they cannot come back to life.

Communities that follow the Siberian Native Faith bury their dead on mountain peaks or deep in the forest. Some nomadic Siberian tribes even move on when one of their members dies. They leave the body far behind, signaling their willingness to let the deceased go and their desire not to have the departed come looking for them.

These people, whom we might consider primitive, seem to have understood that decomposing bodies produce fluids and bacteria that can be hazardous to health. Soil and groundwater can become contaminated if a body or burial site is not kept at a safe distance.

It is therefore reasonable that some sources describe Siberian Native Faith communities as treating burial grounds as forbidden areas. No activities are permitted there, which is why they build neither sacred sites nor places of worship in cemeteries. They certainly do not build homes there. And it turns out the reason has nothing to do with being afraid of cemetery ghosts.

Coming Out of a “Coma”

For many people, stagflation is a state of coma in the truest sense of the word. Just imagine: opportunities to earn an income keep shrinking as the cost of living shoots sky-high, with no telling when it will come back down. There is little we can do to break out of that situation. We are stuck. Only hunger and thirst can force us to keep breathing and moving.

If we think of stagflation as someone who has died, then all we can do is accept reality. Deluding ourselves into believing that the deceased will return someday is no different from pretending that our economic situation is just fine. (dswas)