I am not versed enough in economics to understand what is going on;
neither are most people.12
In contrast to the 1920s and the preceding chapter, there were now multiple
possible sources of evil behind inflation, not so focused on evil businesses of
various kinds, but now also on evil labor.
In my 1997 study of public views of the inflation crisis in the United States,
Germany, and Brazil, conducted after the worst of the inflation had subsided but
during a period in which people remained concerned about inflation, I surveyed
both the general public and, for comparison, university economists. My research
uncovered differences in narratives across countries, across age groups, and,
particularly, between economists and the general public.
For the most part, the economists did not think that inflation was such a big
deal, unlike Irving Friedman, who was writing for the general public.
Meanwhile, although US consumers did not agree on the causes of the inflation,
they were nonetheless angry about it. When asked to identify the cause of the
inflation, their most common response was “greed,” followed by “people borrow
or lend too much.” In specifying the targets of their anger, the US respondents
listed, in order of frequency, “the government,” “manufacturers,” “store
owners,” “business in general,” “wholesalers,” “executives,” “U.S. Congress,”
“greedy people,” “institutions,” “economists” “retailers” “distributors,”
“middlemen, “conglomerates, “the President of the United States,” “the
Democratic party,” “big money people,” “store employees” (for wage demands
that forced price increases), their “employer” (for not raising their salary), and
“themselves” (for being ignorant of matters).13
In addition, unlike economists, the general public believed in a wage lag
hypothesis: the idea that wage increases would forever lag behind price
increases, and therefore that inflation had a direct and long-term negative impact
on living standards. In short, the wage-price spiral offered a geometrical mental
image of one’s economic status spiraling down for as long as strong aggressive
demands of labor kept it happening.
In some ways the 1957–58 recession differed substantially from earlier
recessions. It did not have the character of a buyers’ strike, as the Great
Depression did. In fact, sales of luxury items remained very strong. Anger was
not so much directed against “profiteers,” and there was little shame in living
extravagantly. The alarmist talk about the wage-price spiral did not focus anger

onto the rich. Rather, sales of postponable everyday purchases suffered more.14
At the same time, the public sensed that no feasible government policy could
stop the wage price-spiral. The earlier recessions of 1949, 1953, and 1957 had
left inflation a little lower, but only temporarily. The lingering narrative of the
Great Depression suggested to the general public that it was perhaps too great a
risk to try to control inflation by starting a bigger recession. That idea was part
of the popular conception of the wage-price spiral model, that the nation should
base all of its economic decisions on the assumption that inflation will get worse
and worse.

Angry at Inflation
Out-of-control consumer price inflation has occurred many times throughout
history, and the phenomenon has always induced anger. The loss of purchasing
power is extremely annoying. But the question is this: At whom should the
public direct its anger? Anger narratives about inflation reflect the different
circumstances of each inflationary period. By studying these narratives, we can
see the effects of inflation and how they change through time.
The most extreme cases of inflation tend to happen during wars. When
governments are in trouble, they may not be able to collect taxes fast enough to
pay for the war, and in desperation they resort to the printing press for more
money. But the stories may not resonate, and the public may not see or
understand what is happening. That is, narratives that blame the government for
the inflation may not be contagious during a war. Instead, it is more likely that
people want to blame someone else. Businesspeople, who are staying home
safely while others are fighting, are a natural target of narratives.
In chapter 17, we saw the remarkable epidemic of the word profiteer during
and just after World War I. People were very angry that some businesspeople
were made rich by the war, and the result was the imposition of an excess profits
tax (not only during World War I but also during World War II). Such anger
against the people who get rich during wartime is a perennial narrative, not
limited to the twentieth century. For example, there was anger during the US
Civil War (1861–65) at those who profited from the war, but it wasn’t directed at
business tycoons creating inflation to make large profits. The narratives were
different. Consider, for example, this sermon by Reverend George Richards of
the First Congregational Church of Litchfield, Connecticut, on February 22,
1863:
How, in contrast with the greedy speculators, in office and out of it, who have
prowled, like famished wolves, round our fields of carnage—stealing
everything they could lay their hands on—robbing the national treasury—
purloining from the camp-chest—pilfering from the wounded in the hospitals
—appropriating to themselves the little comforts meant for the dying, if not
stripping the very dead!15
During the 1917–23 German hyperinflation, the inflation rate was