It’s accepted wisdom that the high-priced goods endured by consumers in recent years were evidence of inflation. Except that they were not.
Better yet, it’s no reach to suggest that 18th and 19th century thinkers John Stuart Mill, Jean-Baptiste Say and Adam Smith would similarly reject the wholly facile modern inflation narrative. Evidence supporting this claim can be found in their centuries old, but still timely books on political economy.
In Mill’s Principles of Political Economy, he pointed out that “If one-half of the commodities in the market rise in exchange value, the very terms imply a fall of the other half; and reciprocally, the fall implies a rise.” Mill’s observation was hardly contrarian. Economics is all about tradeoffs, which means a rising market price implies a lower market price. Or, as the Wall Street Journal’s Matthew Hennessey put it in his 2022 book Visible Hand, “you can’t have both your allowance and a comic book.”
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