Side Effects of Inflationism: Rat Meat, Horsemeat and Fake Tuna Scandals

Due to price instability brought about by inflationist policies, one of the major nasty side effects has been to encourage a decline in quality of products (value deflation) or even promote fraud in the marketplace in order for many to survive.

As the great Murray N. Rothbard explained (bold mine)

By creating illusory profits and distorting economic calculation, inflation will suspend the free market's penalizing of inefficient, and rewarding of efficient, firms. Almost all firms will seemingly prosper. The general atmosphere of a "sellers' market" will lead to a decline in the quality of goods and of service to consumers, since consumers often resist price increases less when they occur in the form of downgrading of quality.  The quality of work will decline in an inflation for a more subtle reason: people become enamored of "get-rich-quick" schemes, seemingly within their grasp in an era of ever-rising prices, and often scorn sober effort. Inflation also penalizes thrift and encourages debt, for any sum of money loaned will be repaid in dollars of lower purchasing power than when originally received. The incentive, then, is to borrow and repay later rather than save and lend. Inflation, therefore, lowers the general standard of living in the very course of creating a tinsel atmosphere of "prosperity."

Take for instance the recent horsemeat scandal that hit Europe. UK’s The Guardian offers the origin: (bold mine)

Supermarket buyers and big brands have been driving down prices, seeking special offers on meat products as consumers cut back on their spending in the face of recession. The squeeze on prices has come at a time when manufacturers' costs have been soaring. Beef prices have been at record highs as has the price of grain needed to feed cattle. The cost of energy, heavily used in industrial processing and to fuel centralised distribution chains, has also soared. There has been a mistmatch between the cost of real beef and what companies are prepared to pay.

Such price mismatching gives credence to the economic logic that inflationism encourages value deflation or fraud. The next question is what causes such mismatches?

There has also been reportedly growing incidences of mislabeling of tuna and other growing seafood fraud in the US from 2010-2012.

In China, food scams has become a recent fixture. Some of what has been sold as lamb meat have been substituted with rat meat.

From Washington Post:

BEIJING — Chinese police have broken up a criminal ring accused of taking meat from rats and foxes and selling it as lamb in the country’s latest food safety scandal.

The Ministry of Public Security released results of a three-month crackdown on food safety violators, saying in a statement that authorities investigated more than 380 cases and arrested 904 suspects.

Among those arrested were 63 people who allegedly ran an operation in Shanghai and the coastal city of Wuxi that bought fox, mink, rat and other meat that had not been tested for quality and safety, processed it with additives like gelatin and passed it off as lamb.

The meat was sold to farmers’ markets in Jiangsu province and Shanghai, it said.

Despite years of food scandals — from milk contaminated with an industrial chemical to the use of industrial dyes in eggs — China has been unable to clean up its food supply chain.

There seems to be a coincidence: China’s food scandals emerged at the same period where accounts of seafood fraud in the US surfaced. 

From the same article

The supreme court said 2,088 people have been prosecuted in 2010-2012 in 1,533 food safety cases. It said the number of such cases has grown exponentially in the past several years. For example, Chinese courts prosecuted 861 cases of poisonous food in 2012, compared to 80 cases in 2010.

And all these likewise coincides with accounts of Ponzi and pyramiding scams in the Philippines and the world.

Media predominantly points the finger on individual aberrations or the lack of regulations as source of such misdemeanor, misdeeds or iniquities. Yet such would only signify as dealing with the superficial or the symptoms rather than the cause.

Media either have deliberately overlooked or have been ignorant of the incentives brought about by social policies that has led to such repulsive erosion of the public's moral fiber. Like price controls, culpability has been shifted to the private sector to justify more politicization when such logic gets it backwards. 

In reality, these offenses represent the unintended effects from the distortions of price signals brought about by monetary inflationism, which central banks have employed and which has been growing at accelerating scale, since 2008. (chart from Tradingeconomics.com)