DA - Inflation - Michigan 7 2023 BFHGR

Inflation DA’s – BFHRG
Notes
We decided to split these into separate files to try and make them more manageable since there are so many cards. This is the second of our three Economy DA’s --- These are both inflation DA’s. The first is just a simple inflation DA --- similar to the arguments in the original Interest Rates DA file. The cards for this section of the file can be used in the Wages DA and in the disads that were put out yesterday as a separate link module, or as a stand-alone disad since each of the aff areas is a little different, and each of the Disads a little better against ONE of the topic areas. There is also a Wage Inflation DA --- this disad is best against the Job Gaurantee affs. Worker wages have been increasing at a relatively unprecedented rate post-pandemic, and that is one of the biggest drivers of inflation. That rate of increase has slowed SIGNIFICANTLY in the last couple of months as the rate of wage growth is now returning to its pre-pandemic rate. The plan steps in and creates an unforeseen boost in wage growth by creating new competition for workers --- that drives a Wage-Price-Spiral --- as explained below, that drives inflation and collapses the economy. It would also likely drive quick interest rate increases --- which connects to your arguments from the original Econ DA.
Just for some background ---
The Wage-Price Spiral refers to a situation in which wages and prices continuously increase, with each feeding into the other, creating a vicious circle of inflation. Here are three real-world examples:
1. The 1970s U.S. Stagflation: During the 1970s, the United States experienced a period of economic stagnation, which was characterized by high unemployment and inflation. One of the factors that contributed to this stagflation was the wage-price spiral. As the cost of living increased, workers demanded higher wages, which then led to higher production costs and ultimately higher prices for goods and services. The increasing prices fed back into higher wage demands, creating a cycle of escalating inflation.
2. The UK in the 1970s: Britain also experienced a wage-price spiral during the 1970s due to a combination of factors, including the global oil crisis, rising inflation, and generous wage settlements. The power of trade unions in the UK contributed to significant wage increases, which then drove up the prices of goods and services. The increasing cost of living led to further wage demands, perpetuating the spiral and culminating in the Winter of Discontent in 1978-79.
3. Brazil in the 1980s and 1990s: Brazil faced an extreme case of the wage-price spiral from the late 1980s to the early 1990s. The country experienced hyperinflation, which peaked at an annual rate of nearly 2500% in 1993. As prices skyrocketed, workers demanded higher wages to keep up with the rising cost of living. These higher wages, in turn, contributed to even higher production costs and prices for goods and services. Brazil’s hyperinflation crisis was only brought under control with the introduction of the Plano Real, a new economic stabilization plan, in 1994.
P.S. there is lots of terminology to learn when going for these DA’s. It is worth doing a little bit of background reading to understand terms and phrases that appear throughout the file to understand what arguments you are making and how they interact with the aff econ arguments.
Inflation DA
Top Shelf
1NC --- DA Shell (UBI)
A --- Inflation is cooling AND dodges rate hikes.
BHWS 6/13, Boston Herald Wire Services, "Cooling down: US Inflation slows ," https://www.bostonherald.com/2023/06/13/cooling-down-us-inflation-slows/
U.S. inflation slowed in May, supporting the case for Federal Reserve officials to pause their run of interest-rate hikes this week.
Both the consumer price index and the core CPI — which excludes food and energy — decelerated on an annual basis, highlighting inflation’s descent since peaking last year. At 4%, year-over-year inflation is now at its lowest level since March 2021, according to data out Tuesday from the Bureau of Labor Statistics.
That said, a key gauge of prices closely watched by the Fed continued to rise at a concerning pace. The core CPI rose 0.4% for a third straight month, in line with estimates. The overall CPI, however, increased a smaller 0.1%, aided by lower gasoline prices.
The outsize increases in core prices were driven mainly by rising rents and by another spike in used car prices. Real-time data suggests that increases in those categories will soon ease and help cool inflation.
“Outside of those two components, the trend has become very encouraging,” Stephen Juneau, an economist at Bank of America, said in a research note. “We should continue to see improvement in core” prices.
The inflation figures come just a day before the Fed is set to make a decision on whether to raise interest rates for an 11th-straight meeting or to pause and further assess economic conditions.
Several policymakers, including Chair Jerome Powell, have signaled they prefer to skip a rate hike at the June 13-14 meeting, while still leaving the door open to future tightening if needed.
Economists generally agree the central bank will leave rates unchanged Wednesday, but the next CPI report due in July will play a key role in determining what the Fed will do at that month’s meeting.
“This is a pretty good print in terms of signaling that we are likely to see the core CPI soften materially starting next month,” Omair Sharif, president of Inflation Insights LLC, said in a note.
“The way things are going now, I suspect we’ll see a soft core that will tamp down odds of a July hike.”
Excluding housing and energy, service prices climbed 0.2% from a month earlier, according to Bloomberg calculations, which is more consistent with pre-pandemic trends. The metric was up 4.6% from a year earlier, extending a decline since peaking late last year.
The gasoline price index fell 5.6%. Grocery prices edged higher after falling for two straight months, while dining out got more expensive.
Fed officials will want to see expected price declines in rents and used cars actually materialize before they extend any pause in rate increases.
“There’s progress, it’s encouraging,” said Eric Winograd, chief economist at asset manager AllianceBernstein. “I think it’s enough for the Fed to pause tomorrow….But I don’t think it is enough that we can sound the all-clear.”
B --- Federal UBI --- funded by tax increases OR deficit spending causes SUSTAINED INFLATION and collapses the economy
Hughes ’23 [Ryan A. Hughes; 01-27-2023; Founder of Bull Oak Capital an investment advisory firm, undergrad at University of Southern California; “Universal Basic Income is a Bad Idea”; Bulk Oak Capital; https://bulloakcapital.com/blog/universal-basic-income-is-a-bad-idea/ \\pairie]
UBI is expensive. Very expensive. As an add on, without simultaneously trimming government programs, it would require a significant tax increase.
Following the Finnish study results, Kari Hamalainen, chief researcher at the VATT Institute for Economic Research, said implementing a universal basic income for all citizens “would be expensive. If we had a universal basic income, we’d have to incorporate taxation”, and based on these results, “it would be unsustainable.”
Bridgewater Associates conducted a study in 2018, which found the cost of a $1,000/mo stipend to every adult in the U.S. would run approximately $3.81 trillion per year. This amount represented 21% of US GDP or 78% of tax revenue in 2018. (Source: CNBC) Yes, the stipend would help to make people feel more financially secure, but as the Finnish study proved, it would not meaningfully increase employment or production. It would merely be an enormous expense, one that would likely cripple [destroy] the U.S. economy.
A UBI program will require a massive tax overhaul and an in-depth evaluation of existing social programs. Some believe the cost would be partially offset by the removal of other social programs and the diminished administration costs that come from running a program without a “means test.” This would be a concept that requires program administrators to ensure recipients meet specific qualification standards. While in the pure UBI, the payment goes to all citizens.
DISADVANTAGES OF UBI
Naval Ravikant, co-founder, chairman, and former CEO of AngelList outlines other reasons we should be avoiding Universal Basic Income. He believes that those who are down on their luck don’t want handouts.
“The moment I start giving money to you, I’ve lowered your status. I’ve made you a second-class citizen.”
Naval Ravikant
Naval believes that it is better to help lower-income individuals gain meaningful lives through education and success. “You have to teach a man to fish, not basically throw your rod and leftover carcasses at him and tell him ‘here, eat the scraps,'” he continues.
Others believe that there are better uses of government funds than the “handouts” of UBI. In a recent Financial Times article, Ian Goldin, a professor of globalization and development at the University of Oxford, claims that “Individuals gain not only income but also meaning, status, skills, networks, and friendships through work. Delinking income and work, while rewarding people for staying at home, is what lies behind social decay.”
Joseph Stiglitz, Nobel laureate in economics, professor at the Columbia Business School, and Chief Economist at the Roosevelt Institute believes that people have a desire to work and gain dignity from doing so.
This previous statements strike a chord with me. Self-sufficiency is an essential aspect of well-being. Steve Taylor, Ph.D., says, “Self-sufficiency is the quality of feeling secure and content with oneself, a deep-rooted sense of inner completeness and stability.” What would be the knockoff effects if we take this away from an entire populace? Will we see a drop in production? Would there be higher levels of unhappiness and self-worth?
WILL REDUCE PAY
While some economists argue that UBI could drive up wages, others believe it will drive them down. Why would an employer pay more if UBI gives citizens enough money to live on? They will most likely try to get away with paying them less, as these individuals have another source of income.
What is happening in the gig economy is proof enough that this can be the case. Many gig workers are willing to work for low wages as they have other sources of income.
AUTOMATION WILL NOT REDUCE JOBS
As stated earlier, Andrew Yang believes that robots and automation will purge America of countless jobs. Will automation replace some jobs? Yes. It is almost guaranteed that some jobs will be phased out. But other, more meaningful jobs will be created in its place. This has been the case since the rise of humanity.
Automation is not a new concept. Since the earliest times, tools and machines have been invented to make a task easier. In 1722, the lathe was invented, a tool designed to hold a section of material to be carved, cut, or shaped. The lathe is credited with being the first machine tool that led to the invention of all subsequent machine tools.
Universal Basic Income Is A Bad Idea
Think of the invention of the automobile (an automated mobile). The need for relying on horses to do the heavy lifting of daily work, pulling trolleys, carriages, delivery carts, etc., severely diminished with the rise of the automobile. Many industries collapsed as a result: streetcar operators, carriage manufacturers, blacksmiths, horse breeders, stable keepers, etc. However, the number of new jobs created because of the rise of the automobile more than made up for this. Workers were needed for assembly lines, road construction, oil and steel industries (including vulcanized rubber), and even motels for long trips.
Today, there is little need for blacksmiths, cobblers, VCR repair shops, or milk truck delivery drivers. Yet jobs for computer programmers, online security specialists, plumbers, and HVAC repair workers continue. Although retraining may be needed in certain fields to counteract the changing economy, implementing a UBI is like a societal band-aid, perhaps a drag, and not a viable solution to economic disparity.
Societal and economic change is constant, and allocating free money to the public won’t change this fact.
INCREASES TAXES OR FEDERAL DEFICIT?
In the U.S., the Roosevelt Institute think tank says that a $1,000 a month payment would grow the economy by $2.5 trillion by 2025 if paid for by increasing the federal deficit. On the other hand, if the UBI were paid for with taxes, there would be no net benefit to the economy.
However, net wealth is not created by simply redistributing money from one class of people to another. Wealth is created by increased labor, trade, and innovation. As such, I have difficulty believing that UBI could grow the economy by $2.5T.
As stated earlier, Bridgewater Associates conducted a study in 2018, which found the cost of a $1,000/mo stipend to every adult in the U.S. would run approximately $3.81T per year. The simple math of taxing Americans $3.8T annually to gain zero economic boost does not add up.
PESKY INFLATION
If UBi were to be financed by increasing the federal deficit, it would most undoubtedly fuel inflation. As a reminder, inflation is caused by a more rapid increase in the quantity of money than the quantity of goods or services produced during the same time period.
In other words, if the nation’s printing press produces money at a greater rate than its economy can produce, the result will be higher inflation levels. Printing an extra $3.8T yearly will surely cause inflation to roar. If our irresponsible fiscal spending habits during 2020 and 2021 taught us anything, it is that handing out money to anybody and everybody does not contribute to low inflation levels.
C --- Inflation escalates global hotspots---extinction.
Brands 22, *Hal Brands, Distinguished Professor at Johns Hopkins University’s School of Advanced International Studies; (January 20th, 2022, “Inflation’s Biggest Risk Is Geopolitical Unrest,” Bloomberg, https://www.bloomberg.com/opinion/articles/2022-01-20/inflation-s-biggest-risk-is-geopolitical-unrest)
Inflation isn’t just a domestic problem. Sure, year-on-year inflation hitting 7%, the highest rate in four decades, is threatening to derail Joe Biden’s presidency. As my Bloomberg colleague John Authers has written, the inflationary trend appears broad and durable.
Yet now as before, inflation is a geopolitical phenomenon, which is rooted partly in rising global tensions and could have deeply corrosive effects on the U.S.-led world order.
That’s what happened the last time the U.S. faced this problem, from the late 1960s to the early 1980s. “To all Americans,” Ronald Reagan said while running for president in 1980, inflation had become "something as violent as a mugger, as frightening as an armed robber and as deadly as a hit man." The causes were closely tied to global affairs.
In the late 1960s, the combined costs of the Vietnam War and President Lyndon B. Johnson’s Great Society programs sent prices rising. In the 1970s, the chief drivers were soaring energy costs and supply disruptions caused by the Yom Kippur War of 1973 and then the Iranian revolution of 1978-1979. It was a vicious cycle: Geopolitical upheaval caused economic upheaval, which then added to the underlying global instability.
High oil costs and scarce supplies caused ruptures within the democratic world, as Japan, France and other U.S. allies scrambled to cut bilateral deals with oil producers. Inflation ate away at an American defense budget that was already falling as a result of post-Vietnam retrenchment.
Secretary of State Henry Kissinger worried that economic chaos might destabilize the Western world. It certainly contributed to a general malaise in America and other advanced democracies, feeding fears that the Soviet Union — then benefitting from record oil prices — might win the Cold War after all. “Can Capitalism Survive?” Time magazine famously asked in 1975. Only when the Federal Reserve finally broke the inflationary cycle with bone-crushing interest rates did the U.S. regain its geopolitical footing.
Today, rising energy costs are again pushing prices higher. The messy divorce of economies between the U.S. and China is disrupting supply chains and generating inflationary pressure. The economic messiness provoked by another geopolitical breakup — Brexit — isn’t helping matters. Not least, the inflation surge has resulted from the massive stimulus that governments pumped into their economies in response to Covid, the greatest global crisis of this century.
In countries where there is lots of revolutionary kindling, inflation can provide the fatal spark. Historically, rising prices contributed to political upheavals such as the French Revolution, which touched off a quarter-century of war in Europe, and the Arab Spring, whose effects are still roiling the Middle East. This month, a doubling of fuel prices triggered protests, revolt and then Russian-backed repression in Kazakhstan. There’s probably more of this to come. In late 2021, the Food and Agriculture Organization at the United Nations reported that global food prices had reached their highest point in a decade.
Look out for geo-economic turbulence, as well. Argentina, the European Union, Russia and other countries have restricted the export of commodities such as grain to keep domestic food prices manageable. If Washington ratchets up interest rates to tame rising prices, it could unintentionally batter deeply indebted countries that have already lost years, even decades, of economic progress due to Covid. Indeed, when the Fed slayed inflation in the early 1980s, a decade-long Latin American debt crisis was part of the collateral damage.
Finally, there is the question of what will happen to the U.S. Biden isn’t entirely wrong to argue that inflation is actually a sign of strength: The U.S. economy rebounded quickly from Covid, fueling demand that is outstripping supply. Yet inflation is rarely a good-news story.
Inflation is psychologically demoralizing because it makes growth meaningless, and stagnation crippling, for people whose real wages are in decline. It fosters a sense that the people are victims of forces that their leaders cannot control. It gives credence to arguments that America’s true problems are at home, rather than abroad, and thus threatens to create a more distracted, inward-looking superpower just as global threats are intensifying.
The damage isn’t hypothetical: As John Ferrari of the American Enterprise Institute points out, the U.S. defense budget is already at risk of being strangled by the “inflation anaconda.” The 5% bump that Congress approved for the Pentagon this year sounds impressive, but only until one considers that inflation is running at 7% and the military is particularly exposed to rising costs for energy and materials such as steel. As inflation builds up, Pentagon is forced to build down — just as China is racing to expand its military capabilities, Russia is threatening a major conflict in Eastern Europe and relations with Iran deteriorate.
The Biden administration appears to be recognizing, perhaps belatedly, that rising prices pose a severe threat to its domestic agenda and political fortunes. Inflation may also have nasty geopolitical effects in a world that hardly seemed stable before.
Uniqueness
2NC --- Uniq Wall
Inflation is declining now---
CORE PRICE REDUCTIONS.
Rugaber 6-23 [CHRISTOPHER RUGABER, Economics reporter for the Associated Press; 6/13/23, “US consumer price growth slowed last month as inflation shows signs of steady decline”, Associated Press, https://apnews.com/article/inflation-prices-interest-rates-economy-federal-reserve-4c0ea8315ab90c1b832ef6fa67dc0c7a DOA 6/26/23] nmui
WASHINGTON (AP) — Consumer prices in the United States cooled last month, rising just 

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