The Corner

Economy & Business

Oversimplifying the Inflation Debate at The New Republic

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For the last eleven years or so, I’ve been writing that monetary policy is too tight. During this period, it has sometimes been a little too tight, sometimes a lot. I’ve been skeptical of claims of impending inflationary doom, and my skepticism continues to this day.

So I’m on board with the starting point of Bruce Bartlett’s New Republic article: that worries about inflation are exaggerated. I don’t agree, however, with where he takes this idea. He thinks inflation hawks are self-interested capitalists and their conservative lackeys, all of them deathly afraid that wage-earners will see raises. A looser policy would have better served both capital and labor over the last decade, in my view, and it’s been mistaken ideas that have kept it from being adopted. Those ideas are not merely stalking horses for narrow economic interests. Bartlett explains that he has revised his view of Karl Marx’s thoughts on political economy upward. I don’t think the shift has improved the quality of his analysis.

Bartlett has a stray reference to me that is a little odd. His readers might think, based on the surrounding context, that I am one of the conservative inflation fearmongers he has in mind. Perhaps he is himself under the impression that I am one, in which case he is mistaken. (Whether I am a running dog of capital, I’ll leave for others to judge.)

The context for the reference is Biden’s suggestion during the 2020 campaign that the Fed, which has a statutory mandate to promote stable prices, high employment, and moderate interest rates, should also “aggressively target persistent racial gaps in jobs, wages and wealth.” As Bartlett notes, I wrote a column saying this was a bad idea. There’s not much the Fed can do directly about these gaps, and it would be a mistake to compromise the objective of macroeconomic stability to try to affect them.

Bartlett counters that racial discrimination reduces our potential economic output, and that Fed governors could give the issue a lot of publicity. I am less persuaded than Bartlett that this would be a useful exercise. But in any case, it’s not what Biden was talking about, or I was writing about, last year.

Ramesh Ponnuru is a senior editor for National Review, a columnist for Bloomberg Opinion, a visiting fellow at the American Enterprise Institute, and a senior fellow at the National Review Institute.


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