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“Is there such a thing as virtuous inflation?” That’s the question asked recently by Chris Grisanti of the management investment company Grisanti Brown & Partners. And I find the white paper in which he posed this question interesting enough that I’d like to share some of it with you.

Essentially the arguments being advanced by Grisanti are that “first, the movement to higher prices for oil, corn, steel, iron ore and many other commodities is … a secular and permanent event, caused … by increased global demand. Second, the causes of this inflation are basically benign, and you ought to be happy about it, for reasons both altruistic and self-interested.”

There central difference, Grisanti argues, between the inflation the 1970s and the inflation we are experiencing today is that three decades ago the inflation was supply driven, but today it is demand-driven. Which means that in terms of public policy, we have to approach it differently.

But here’s where I think Grisanti’s logic gets interesting, where he dares to take a glass-half-full approach:

Grisanti estimates that “between 800 million and 1.5 billion people have been making a transition from poverty to the very lowest rungs of the working classes. The global dimensions are complex, but on an individual level the concept is straightforward: Before, they ate solely beans or rice; now they eat chicken or pork occasionally. Grain needs soar, as it takes four pounds of grain for every pound of meat produced. Before, they lived a subsistence, agricultural living; now they toil in a factory and earn enough to send a child to school. Steel, electricity and concrete prices rise as factories are built, and the surrounding cities are created from nothing. Before, they rode bicycles; now they have a beat-up used car. Fuel needs surge. Each incremental person adds only the slightest bit to demand. But it is our belief there are more than a billion people making this transition, aided by governments in China, India and elsewhere that are eager to stoke a wealth-producing trend.

“From a moral standpoint, poverty reduction is obviously a good thing, though we don’t want to leave the impression that we have reached some sort of utopian ideal. Massive populations now have a chance to work very hard to start climbing out of poverty, rather than remaining on the endless treadmill of subsistence living, disease and famine.”

In the long run, this is a good thing: “If we are anywhere near right about the 800 million to 1.5 billion new entrants to the lower middle class,” Grisanti writes, “they represent a tremendous new market for goods and services that can help offset slower growth in the developed world. Soon they will buy hamburgers from McDonalds, watch movies from Hollywood and use electricity generated by General Electric turbines. Eventually they will buy copies of Microsoft Office and fly in Boeing aircraft. This is admittedly a long-term proposition, but it is powerful nonetheless.”

I’m clearly not in Grisanti’s league when it comes to economic and geopolitical analysis, but it seems to me that he basically is saying that the demand-driven inflation with which we all are dealing is of our own making. We’ve been talking about spreading democracy and capitalism to the rest of the world, and go figure, it ends up that we did a pretty good job of it. Now, it also ends up that things haven't gone precisely as planned – the US no longer is the center of the universe, there are new and enormous stresses on our economy, and we suddenly find ourselves having to compete on the home turf of the rest of the world, rather than having the rest of the world compete on our terms. That’s certainly a challenge we’re capable of meeting…the question is whether we have the political and moral will and imagination to recognize the fundamental problems we face and deal with them in serious and innovative ways.

Grisanti uses a familiar image to drive his point home: “Those of us of a certain age used to collect UNICEF donations on Halloween. Many of the ultimate recipients of those donations in countries like China, Brazil and Vietnam now have children who are helping to drive up the price of oil, corn and copper. It’s hard to get too upset about that.”

For MorningNewsBeat Radio, I’m Kevin Coupe.

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