Today is my daughter's birthday. She is five going on fifteen and as per tradition, the clan took her out to IHOP for breakfast. At this particular IHOP, memorabilia from IHOP days past hang on the wall. One such piece of history is a menu from 1966 where a plate of pancakes will cost $1.20 (currently $5.29) and a soda $0.25 ($1.50). I find this stuff fascinating in a bizarre way and say as such. Suddenly, I am beseeched by my son of ten years with a simple question, "How come things cost so much now?"
I begin to answer simply with one word, "Inflation". My son is very bright and hungers for knowledge constantly so I know I will not get by with such a simplistic answer. Quickly thinking of how best to describe the machinations of our economy and the idea behind capitalism.
I begin with a simple definition of "inflation". As wages increase, the value of the buying power of the dollar increases, thus supply and demand vary increasingly the price of goods and services. If wages become stagnant and the price of goods and services continues to rise, this is a recession. He understands this as his class discuss the Great Depression in history class in school. I'm impressed and continue, filling in gaps and confirming his recitation of the details of the Great Depression. I am reminded by FDR and want very much to go into detail about the wonders of this man but continue with the lesson in Capitalism.
Next I explain what I call the "Cogs of Capitalism". Its made up of three cogs of varying size. The smaller of the three is the upper class/big business. Next in size is the poor/lower class. These two cogs sit on either side of the bigger cog, the middle class. The fuel to turn these cogs is money/supply and demand/trade. As the upper cog invests in business based on the needs of the middle cog, the machine begins to turn. As the middle cog turns more, the upper cog turns faster and eventually the lower cog begins to turn. The more and more the machine turns the faster the cogs turn. I explain it this way to show the importance of our society, our democracy, our economy for the middle class to be strong.
Without a strong middle class, to say that if the middle cog was missing prongs, the machine would not run as smoothly. This could cause the lower cog to slow down and the upper cog would pull back on its contribution to the machine, hoarding in the fear of recession. This only breaks the machine further until it collapses.
Simple terms for a complex problem. I avoid the political intonations sparking in my head to keep myself on track. He is ten after all and should be worrying about being a kid, not have the world's problems hoisted on his shoulders.
"So are we lower class," my son asks. "By no means," I reply. But then even though demographically I could be considered upper middle class its hard to draw those lines these days. Signs that the Middle Cog is weakening.
A Thomas Paine quote has always resounded with me:
"If there must be trouble, let it be in my day, that my child may have peace."
Seeing my son with his hunger for the unknown and my daughter eating the chocolate chips from her IHOP "Happy Face", it rings all the more loudly with me.
I will take this trouble head on so they may live in peace. I invite anyone who reads this to join me, if not for your children's peace of mind then your own.