Economists like Larry Summers continue to force the middle-class & poor to pay the price for the failures of our economic system and its benefactors.
Larry Summers continues to fail us.
It never gets any less upsetting when I listen to politicians and economists toe the line that Larry Summers and other economists put out. It is not only a failed narrative, but it is immoral.
Fareed Zakaria quoted a Paul Krugman article titled “I Was Wrong About Inflation,” where he addressed both economists Larry Summers and Dean Baker. Krugman said that those who said inflation would rise were right for the wrong reasons. Here is the probative part of his piece.
But while inflation was confined mainly to a relatively narrow part of the economy at first, consistent with the disruption story, it has gotten broader. And many indicators, like the number of unfilled job openings, seem to show an economy running hotter than numbers like G.D.P. or the unemployment rate suggest. Some combination of factors — early retirements, reduced immigration, lack of child care — seems to have reduced the economy’s productive capacity compared with the previous trend.
Even so, historical experience wouldn’t have led us to expect this much inflation from overheating. So something was wrong with my model of inflation — again, a model shared by many others, including those who were right to worry in early 2021. I know it sounds lame to say that Team Inflation was right for the wrong reasons, but it’s also arguably true.
One possibility is that historical experience was misleading because until recently the economy was almost always running a bit cold — producing less than it could — and inflation didn’t depend much on exactly how cold it was. Maybe in a hot economy the relationship between G.D.P. and inflation gets a lot steeper.
Also, disruptions associated with adjusting to the pandemic and its aftermath may still be playing a large role. And of course both Russia’s invasion of Ukraine and China’s lockdown of major cities have added a whole new level of disruption.
I believe Krugman was too humble and deferential. Maybe it is that even as he is a very left-of-center economist, he still believes in an ethical functioning of the mythical market. Krugman is correct that only a narrow portion of the market should have been rocked by inflation. What he did not say explicitly is that those with pricing power went on an immoral price-hiking rampage that hurt the poor and middle-class by choice, not by shortages. And while he included lack of child care and lousy immigration policies as factors, he did not stress that many of our “inflationary” problems would not exist absent those factors.
When confronted with Krugman’s statement, Larry Summers was true to form.
“There wouldn’t have been nearly the same kinds of supply chain problems if huge amounts of money had not been put in people’s pockets that enabled them to spend,” Summers said. “If we weren’t giving people who were laid off unemployment insurance, that was far more than the salaries they had been earning., if we weren’t mailing checks willy nilly to families, there would have been less spending that would have meant less bottlenecks.”
In other words, screw the poor and the middle-class. They have not gotten a raise in 40+ years. If the government asking Americans to stay home from work and compensate them with a barely minimum living wage is inflationary, we have a failed economic system. They should have been making a living wage in the first place.
Summers said that it was predictable that injecting money would increase demand. It was also predictable that corporations would gouge all of us in this corrupt economic system with just a few having pricing power. And the evidence is in their increased profits, executive bonuses, and more of your stolen money available for dividends for wealthy stockholders.
We never had these discussions when corporations and the wealthy were getting tax cuts and quantitative easing. It is only a problem when attempting to implement policies benefiting the poor and middle-class. Have you had enough? It is time to assert our worth and elect those who will right the wrongs of this economic fraud.
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