According to Statistics Canada, January saw annualized Canadian inflation as measured by the Consumer Price Index surpass 5 percent for the first time since September 1991, clocking in at 5.1 percent. Within this increase are masked several separate components whose impacts on daily life depend on whether they are a major component of your consumer basket.

For example, shelter costs rose 6.2 percent whereas mortgage costs fell 6.8 percent. Fresh or frozen beef was up 13 percent and gasoline was up nearly 32 percent. Indeed, for those so inclined, Statistics Canada has thoughtfully even provided the ability for Canadians to calculate their own personal rate of inflation with a web-based calculator that allows you to break out your monthly expenses and see how you are doing.

The angst and attention over rising inflation have focused on whether it is transitory, and now more recently over the steepness of the current rise based on the economic history of the last thirty years. A longer view of Canada’s inflationary trends suggests that, while the current inflationary surge represents a marked divergence from the trends of the last few decades, when looked at over a longer time horizon we are in neither the best nor the worst of inflationary times.

The accompanying figure provides a snapshot of consumer inflation over the long haul—annual consumer inflation from 1870 to 2022. The period from 1870 to 1913 is data from the international Jorda-Schularick-Taylor Macro History Database. The period from 1914 to the present is from our very own Statistics Canada Consumer Price Index. As the chart illustrates, the current surge of 5.1 percent to date in 2022 is indeed the highest in nearly 30 years, and yet a glance further back shows that there have been other times when things have been much worse. What is also of interest is that the long-term linear trend of inflation is not flat like real per capita GDP growth but actually slightly upward sloping, suggesting a bias towards inflation in modern economies.

Those of us of a certain vintage can still remember the inflationary surge of the 1970s and 1980s which were also accompanied by rising unemployment and economic stagnation. Hence the term “stagflation”. The gradually rising inflation of the late 1960s and early 1970s resulting from a spending boom and looser monetary policy was given a steroid-induced push from the oil price shock brought about by OPEC in 1973.

Inflation surged as expectations of rising prices became ingrained into labour negotiating behaviour, and this inflation was ultimately tamed by the tightening of monetary policy—an increase in interest rates—in the early 1980s and repeated in the early 1990s. Whether inflationary expectations will again take off at present is unlikely given that during the late 1970s Canada’s rate of unionization was just under 40 percent whereas today it is closer to 25 percent, with much of that in public sector unions subject to government salary restraint legislation at present.

Going even further back, inflationary surges appear to be largely associated with wartime conditions of shortages and hardship, whether they be the First or Second World War era. The First World War was a period of economic crisis with the wartime production demands resulting in scarce labour, rising interest rates, and shortages of consumer goods that persisted into the years immediately after the war. While inflation was low in 1914 and 1915, it soared to 10 percent in 1916 and peaked at 18 percent in 1917 before diminishing to 10 percent by 1919.

However, in the post-World War I era, inflation was only tamed after the major recession of 1921 which saw deflation of over 10 percent. While World War II also saw inflationary pressures, the lessons of the first had been learned and inflation was kept under control by government price control policy. Nonetheless, war inflation managed to peak at about 6 percent in 1941 before declining.

Prior to the creation of the Bank of Canada and monetary policy, taming inflation and indeed price deflation was often the result of market forces in the wake of major economic downturns. Again, as the chart illustrates, there were major deflationary periods in the 1870s, the 1890s, the early 1920s, and then the 1930s. These were all major economic contractions. Indeed, the 1870s used to be known as a great depression experience until the great depression and property price collapse of the early 1890s which assumed that mantle until that of the 1930s occurred.

Large-scale price deflation has characterized consumer prices only on occasions prior to the onset of modern fiscal and monetary management by governments—a post-World War II policy development. The more freewheeling world of the late 19^th and early 20^th was accompanied by greater variation in economic indicators as demand and supply operated relatively unhindered to generate larger fluctuations in prices and incomes. When it comes to inflation, our current economic woes are relatively tame compared to days of yore and hopefully will remain so.

I wrote a column late last year for the National Post marking the thirtieth anniversary of the collapse of the Soviet Union. My main point was that the West’s combination of liberal democracy and market capitalism had been too powerful for the soullessness and inefficiencies of the Soviet system to ultimately keep up. 

But I also warned that it wasn’t self-evident that we still have the collective energy, resolve, and sense of purpose to respond to new and emerging threats. Western decadence may be materially plentiful, but it also makes us increasingly vulnerable to confident, focused, and strong-willed foes.  

I was writing mainly with China in mind. I didn’t anticipate that the foe would be our old Cold War rival, Russia, which as Boris Rassin recently outlined at The Hub, dominated Eastern Europe for several decades through its combination of authoritarian tactics, mechanistic collectivism, and totalizing ideology. 

There’s something striking that Russia’s invasion of neighbouring Ukraine was launched so soon after the major anniversary of the Soviet Union’s demise. It’s as if while we were writing columns commemorating the end of the Cold War, Russian President Vladimir Putin was systematically planning to relitigate its outcomes. 

A revanchist Russia will be alien to those for whom the Cold War is mostly an abstraction. As the passing of time creates growing distance from that tense era, younger generations in Canada and other Western countries have come to lose a sense of both the inherent tyranny of communism and a world marked by conflict and struggle.

Former Prime Minister Stephen Harper warned about this historical innocence in a 2014 speech to a Tribute to Liberty fundraiser. As he put it: “My fear is, as we move further into the 21^st century, Canadians, especially new generations, will forget or will not be taught the lessons hard-learned and the victories hard-earned over the last 100 years.”

Harper’s concern is well-founded. After all, more than 40 percent of Canadians were barely born before the Berlin Wall fell in November 1989. Our collective memory and understanding of what he described as a “poisonous ideology” will fade away as older generations pass on. There’s no reason to think that provincial education curricula, which these days seem more focused on faddish ideas than foundational facts, or the broader culture, which has succumbed so much to frivolousness, will reverse these worrying cultural and intellectual trends. 

But the problem isn’t merely about our lack of historical awareness. It’s the deeper drift into decadence that undermines our capacity to withstand major challenges and defend our ideas, interests, and values. The COVID-19 pandemic is a good (or bad) example. 

There was a time early in the pandemic when it seemed like our collective survival instinct would kick in. There was a fleeting moment of national unity, political solemnity, and innovation and dynamism. Early polling in Canada and elsewhere showed that people were prepared to set aside differences, make sacrifices, and do big things. 

Although the extraordinary progress on the vaccines is the most obvious expression of this momentary burst of anti-decadence, it also manifested itself in simple acts like the clanging of pots and pans for health-care workers, a global surge in volunteerism, and a renewed appreciation of the contributions of so-called “essential workers” like grocery clerks, delivery drivers, and long-term care staff. 

The departure from decadence however wasn’t lasting. We soon fell back into the destructive habits of identity politics, sclerotic state action, and cultural shallowness. The persistent yet highly-debatable public health restrictions in Canada and poor vaccination numbers in the United States were a case of our societies snatching defeat from the jaws of victory. 

It now seems clear that the outcome of the pandemic experience won’t be to galvanize our societies out of our collective stupor, but instead to exacerbate the socio-political pathologies that have wrought it. We are bound to emerge from the pandemic more attenuated, more divided, and in turn less capable of confronting future challenges like the next pandemic or responding to geopolitical threats including Russia and China. 

Where do we go from here? We must start by seeing these recent developments with a clear eye. Putin’s excursion into Ukraine is a bet that the West no longer has the wherewithal to stand up to his provocation. There’s no doubt that China is watching closely to see if his bet is right.

If there was ever an action-inducing event, one would think that the first instance of a major power trying to conquer a sovereign nation in 80 years ought to be it. Yet early pronouncements from Western leaders aren’t promising. That the Italians reportedly sought the exclusion of luxury goods from European sanctions is symptomatic of the West’s cultural malaise. 

Let me end with another anniversary of sorts. Late last month, neoconservative thinker Irving Kristol, who passed away in 2009, would have celebrated his 102^nd birthday. Kristol used to define the intellectual movement which he helped to found as a group of idealists “who had been mugged by reality.” Western societies must similarly face reality sooner rather than later or risk sliding irreversibly into decline.