Enemy of the people: How high inflation is destroying our future

Highlights:

• Prolonged inflation is eroding living standards across Bangladesh.
• Rising prices are pushing families to cut spending on food, healthcare, and education.
• Inflation is driving millions into poverty and widening inequality.
• Reduced nutrition and education spending threaten children's long-term futures.
• Churchill's 1945 defeat highlights inflation's potential political consequences.
• Controlling inflation is crucial for Bangladesh's welfare-state ambitions.

Nobel Prize-winning economist Milton Friedman famously described inflation as a dangerous, sometimes fatal disease that -- if left unchecked -- can destroy a society. But how, precisely, does inflation bring about such destruction? The answer lies in the compounding consequences of persistently high inflation: it crushes the poor, wipes out savings, paralyses businesses, and severely erodes trust in public institutions. 

The prolonged inflationary pressure that Bangladesh's economy has endured for over four years continues to wreak havoc on low- and middle-income households, steadily eroding their standard of living and driving millions into new poverty. To cope with the surging cost of living, families across the country have been forced to slash expenditure on food, healthcare, and education as incomes fail to keep pace with rising prices. The latest fuel shock threatens to aggravate this vulnerability even further. Those who compromise on nutritional intake face long-term health consequences, while those cutting back on education are sacrificing their children's futures. As living standards fall, inequality widens, and social instability grows. High inflation is not merely an economic metric; it is an active threat to the state. 

Taka gains ground against Indian rupee, strengthens 11.6% in 2 years

This delivers an ominous warning to any government in power. History demonstrates that a sustained decline in the public's standard of living serves as a potent catalyst for political volatility—often culminating in dramatic disasters at the ballot box for incumbent regimes. 

A striking example of this phenomenon was the humiliating electoral defeat of war hero Winston Churchill in the British general election of July 1945. Churchill's defeat sent shockwaves through the political establishment and remains one of the greatest upsets in British political history—surprising even Labour leader Clement Attlee, who secured the mandate. Throughout the Second World War, Churchill's approval ratings had never dipped below 78 per cent, standing at 83 per cent as late as May 1945. Yet, just two months later, he faced an electoral debacle against Attlee, his former Deputy Prime Minister in the wartime coalition. 

What was the reason for Churchill's ignominious defeat?

Voluminous studies and analyses have analysed his defeat. One economist, William Beveridge, has prominently been featured for his landmark Beveridge Report. Commissioned by the wartime government, the report spelled out a system of social insurance, covering every citizen regardless of income and offered nothing less than a cradle-to-grave welfare state as people's living standard dipped to its lowest. The report designed to slay five "Giant Evils: Disease, Want, Ignorance, Squalor, and Idleness" was submitted to Churchill in 1942. Churchill largely set the report aside.

During the 1945 campaign, he asked the electorate for a strong mandate to finish the war efforts against Japan. In contrast, Attlee's Labour Party pledged to fully implement the Beveridge Report to rebuild society from the ruins of war. The promise of social protection resonated deeply with an electorate weary of sacrifice, propelling Labour to a landslide victory. 

Upon taking office, the Labour government implemented Beveridge's framework: flat-rate national insurance contributions funded comprehensive unemployment benefits, old-age pensions, maternity grants, family allowances, and the newly established National Health Service (NHS). 

As Prime Minister Tarique Rahman seeks to transform Bangladesh into a welfare state by introducing a lifecycle-based social security system within the next five years, William Beveridge Commission's report offers valuable historical perspective for his government.

If Bangladesh is to fulfill its constitutional promise and successfully transition toward a functional welfare state, defeating this "fatal disease" must be treated as the government's foremost priority.

Intriguingly,  William Beveridge who is widely considered as the architect of the modern welfare state, was born on 5 March 1879 in Rangpur --barely 100 kilometers away from Tarique's ancestral home district of Bogura.  

Less than two months before he became prime minister by leading his party to secure a landslide victory in the high-stakes February election, Tarique Rahman resided in London for 17 years. The country, UK, where he spent the formative period of the new version of Tarique Rahman, has shown the world how to transform a country into a welfare state from the ruins of war. No policymakers of his government have experience of living in a welfare state more than Tarique who now seeks to transform Bangladesh into a welfare state.

Around a hundred years after William Beveridge's birth, Bangladesh was born from immense sacrifices on 16 December 1971 following a nine-month war against the Pakistan army. In its constitution, which came into effect on the first anniversary of independence, Bangladesh pledged to build a welfare state.

In the preamble, it pledged that "it shall be a fundamental aim of the State to realise through the democratic process a socialist society, free from exploitation… a society in which the rule of law, fundamental human rights and freedom, equality and justice, political, economic and social, will be secured for all citizens."

Article 15, one of the fundamental principles of State policy, elaborates how Bangladesh will secure basic necessities for its people. It says "It shall be a fundamental responsibility of the State to attain, through planned economic growth, a constant increase of productive forces and a steady improvement in the material and cultural standard of living of the people, with a view to securing to its citizens – (a) the provision of the basic necessities of life, including food, clothing, shelter, education and medical care; (b) the right to work, that is the right to guaranteed employment at a reasonable wage having regard to the quantity and quality of work; (c) the right to reasonable rest, recreation and leisure; and (d) the right to social security, that is to say, to public assistance in cases of undeserved want arising from unemployment, illness or disablement, or suffered by widows or orphans or in old age, or in other such cases."

More than five decades later, despite notable socioeconomic progress, Bangladesh has yet to conquer its own versions of Beveridge's Five Giant Evils. Persistent governance challenges, alongside poor rankings on global indicators covering corruption, press freedom, and the rule of law, have continually hindered structural advancement. 

Today, persistently high inflation stands as the most immediate threat to public welfare and national stability. If Bangladesh is to fulfill its constitutional promise and successfully transition toward a functional welfare state, defeating this "fatal disease" must be treated as the government's foremost priority.