To cure an illness, the right diagnosis is needed. Without it, the risk is that the wrong medicine will be prescribed, failing to address the underlying malady and even inflicting needless pain on the patient. So it goes for the devastating wave of inflation that has swept much of the world. The roles of the pandemic, disrupted supply chains, Brexit and Russia’s egregious invasion of Ukraine have all been much discussed. But a dangerous myth has been deliberately manufactured into an apparent piece of common sense: that wages must be suppressed if surging prices are to be contained.
Before we go into the details of how this myth has been propagated, it’s important to establish the facts: inflation has been caused by corporate profiteering, not wage increases. Don’t take my word for it. The Organisation for Economic Co-operation and Development looked this month at whether workers, business or governments had contributed most to inflation, and the data revealed that in the UK business was most to blame.
