Bernie Sanders wants to break up the oligarchy and the billionaire class. He has publicly named three people as culprits.
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I too find that there are three oligarchs in our nation, but my three are significantly different from Sanders’s. The real oligarchs causing the biggest impact on affordability and the cost of living are the federal government, state governments, and local governments.
That’s a trifecta for sure, but with one key difference. Bernie’s anger is aimed at the private sector, where most Americans can choose to buy or not buy. That same decision is not available for citizens of a government oligarchy except at the state and local levels.
For instance, even Gavin Newsom understands that a wealth tax at the state level is disastrous, but he supports it at the federal level. He fully understands, and has seen, mass migration from California to less burdensome states. He clearly understands that a citizen can mitigate the oligarchy of the state and local government but not of the federal government.
The affordability crisis due to government is hidden in the form of price increases due to higher taxes and fees on the products and services we buy. When Americans talk about inflation, they usually talk about prices when we should be talking about affordability, which includes the government-imposed oligarchy costs.
What does a gallon of milk cost? A dozen eggs? Gasoline? Rent? A new automobile? That makes sense. Inflation measures, such as the Consumer Price Index (CPI), are designed to measure changes in the prices consumers pay for a basket of goods and services, and it has been rising recently.
The real question we should be asking is, what if the price of what we choose to buy is only part of the changing cost of maintaining a household or a standard of living?
Consider something as ordinary as a steak. If its price becomes too high, consumers have choices. They can buy other types of foods to replace it. They can shop at another store. They can eat less of it or stop buying it altogether. It is the substitution effect. That ability to choose is an essential part of a real market economy, where consumers have choices.
On the other hand, consider your property tax bill. If it increases 8 percent, you cannot tell your municipality or school district that you have decided to purchase 8 percent less this year. Local governing bodies develop their budgets, and we, the taxpayers, are the reluctant beneficiary of the “balanced budget” equation, with little to no input from us except at election times.
This distinction deserves more attention because the Consumer Price Index is not intended to measure every change in the financial burden placed upon a household. For example, federal and state income taxes and Social Security payroll taxes are not included in the CPI because they are not considered payments for consumer goods and services. Property taxes are not directly treated as consumer expenditures, either, although they do influence housing affordability.
That doesn’t make the CPI wrong or suggest that it should not be tracked. It means the CPI is answering a particular question. However, we should consider all aspects of the economic equation of the cost of living and affordability, which includes substantially more than just consumer prices.
For instance, how has the total financial burden of maintaining an American household changed? That question becomes particularly interesting when we examine costs over which households have relatively little short-term control. That lack of control is my primary concern about the oligarchy of federal, state, and local government.
Social Security provides a good example. Each year, Social Security benefits are adjusted through a cost-of-living adjustment intended to help beneficiaries keep pace with inflation. Just recently, a 3.6-percent increase was announced as the cost-of-living adjustment for retiree benefits. But many retirees also have their Medicare Part B premiums deducted directly from their Social Security checks. In 2021, the standard monthly Medicare Part B premium was $148.50. In 2026, it is $202.90. That is an increase of approximately 37 percent in five years.
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Over the same Biden years in which Americans experienced substantial increases in food, housing, energy and other prices, what happened to state and local taxes, which affect affordability just the same? Government oligopoly costs include property taxes, regulatory fees, water usage rates, state and local income taxes, and other hidden taxes that are listed on bills (such as phone, electric, gas, and the like) but are not easily understood by our fellow Americans.
To be clear, government is a significant participant in the American economy. Including mandatory transfer payments and taxes (i.e., Social Security), the U.S. economy at the federal, state, and local levels is at 40 percent, approximately, of GDP.
Federal, state, and local governments employ people, construct buildings and roads, purchase health care, buy equipment, consume energy, contract for professional services, and compete with private businesses for labor and resources, which causes even more inflation pressures in a full-employment economy. Government spending therefore does not occur in some separate economic universe.
At the same time, government finances its activities through regulatory permits, taxes, fees, and borrowing. Those costs ultimately matter to households, businesses, and future taxpayers. These taxes and fees show up in the prices we pay for goods and services.
Economics is considerably more complicated than what is measured merely by the CPI. When we examine inflation and purchasing power, we should at least examine what has happened to the cost of government itself and how that impacts affordability.
The solution must include tracking the impact on affordability of the oligarchy of government, which is a big culprit in the inflation battle as consumer prices.
President Trump, for instance, is struggling to reduce federal overreach, such as by stripping the Department of Education, but he has much work to do to make the transition to smaller government. The public screamed at the DOGE cutbacks so it will take time to sell the idea. States and localities are not so constrained, at least not yet. Developing a measure of government oligopoly–caused inflation will go a long way to that end.
That distinction of not being able to escape (easily) all three levels of government-imposed oligarchy is so critical if we hope to defeat the tragedy of socialism and communism and to eventually reduce the inflationary effects of a government oligopoly.
Traditional inflation statistics remain enormously valuable, but perhaps we should place another measurement beside them. Start with household income, and then examine taxes and other compulsory obligations to determine the impact on disposable income. If incomes are rising faster than consumer prices, yet disposable income is declining, the real culprit is the government-inspired oligarchy. Yet in almost all cases, the consumer and citizens and mainstream media blame anyone other than the principal cause of the affordability crisis.
That would not replace the CPI; it would complement it, and it might help explain something policymakers sometimes struggle to understand. Official inflation can moderate while households continue to say they do not feel better off. Perhaps those households aren’t misunderstanding economics, but rather not clearly seeing that affordability is more than what the Consumer Price Index measures.
Let’s make government as accountable for the affordability crisis, because the socialists and communists are proposing larger government, which would merely make the problems worse.
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