Robert Reich: Don’t Worry About Inflation

From his blog:    

The Inflation Bogeyman

WEDNESDAY, JULY 14, 2021

Friends,

You’re hearing a lot about inflation these days. Don’t buy it. Every time the economy gets a bit of wind in its sails and workers get a little wage increase, conservatives scream about inflation and price increases.

In reality, there’s no inflation. The economy still has huge room to grow without pushing up prices. We’re still 7 million jobs short of where we were in January 2020. Retail and office space is empty. Factories aren’t near capacity.

In addition, companies can easily outsource extra production they need. Meanwhile, unions are so weak as to negate the possibility of wage-price inflation.

The price increases we’re witnessing now are because of supply bottlenecks, as supply catches up with pent-up demand.

To the extent we need to worry about anything, it’s industrial concentration. Too many US industries are dominated by a handful of corporations, which have the ability to push prices higher. That requires antitrust enforcement.

But inflation itself – structural, accelerating price increases – is a total mythology.

Don’t fall for the scare-mongering.

Remember also that the past century has shown that when Democrats are in charge the economy does much better and is much more stable than economies under Republican leadership. Just a quick glance at the last 30 years shows that to be true. 

Bush 1, Bush 2 and then the disastrous Trump all drove the economy to the edge where Bill Clinton, Barack Obama and Joe Biden have had to come in and save the country and in the case of Obama, the world, from catastrophic consequences of Republican leadership. 

While current inflation is annoying like Robert Reich says it is most likely short term. There are much more concerning economic problems, especially the continuing concentration of capital. As you may know, President Biden has already marked this concentration for special attention.

About Dave Bradley

retired in West Liberty
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