When I stand at the meat counter looking down at a pack of sirloin that is about 10% more expensive than it was two years ago, it does not occur to me to blame Larry Summers. Yet for David Dayen — a journalist whose work I admire — inflation is caused by free markets, and it can be particularly blamed on economist Laurence Summers (and via guilt by association, on Milton Friedman who is allegedly Summer’s greatest influence).
In his “Larry Summers Shares the Blame for Inflation” in today’s NYT op end section, Dayen blames Summers for everything that’s currently going wrong in the economy, with a particular emphasis on supply chain disruptions and the somewhat related price inflation.
If the government completely ran the economy, would supply chain disruptions have been avoided? Given that the government totally blew our response to the coronavirus, leading to hundreds of thousands of unnecessary deaths, it’s preposterous to assume that any government agency could have anticipated a shortage of microwave ovens, Barbies or Cadillac Escalades. And that would apply even if FDR had been President in 2019.
Much of Dayen’s critique is on point. Market concentration in key industries has reduced competition, hurt workers and raised prices. It has also corrupted the government, as corporate influence has come increasingly to guide policy.
But deregulated capitalism and free markets did not cause container ships to back up in the ocean or lead people to not want to drive semi trucks. Supply chains got disrupted because the world got slammed by a pandemic, poor government response to the pandemic, and unanticipated multiple waves of virus variants.
The government can be blamed for not being prepared for a global pandemic that had been predicted by many experts. Let’s hope that we will now be stockpiling masks, ventilators and PPE, and that we continue to generously fund public health programs and agencies that can develop vaccines and monitor the world for the net pandemic.
Government cannot be expected to plan ahead of time to avert shortages of chicken legs, Lazy Boys and used Camrys.