In his column in the Washington Post Fareed Zakaria is frustrated that President Biden isn’t doing more to reduce inflation:
President Biden says that combating inflation is his “top domestic priority.” But he certainly isn’t acting that way. He has in plain sight several measures that would reduce inflation significantly, and yet appears hesitant to take them.
In March, the Peterson Institute for International Economics produced a study estimating that reversing most of the Trump tariffs would reduce inflation by 1.3 percentage points. Lawrence H. Summers, a Post contributing columnist who has been prescient on many things in this economic crisis, endorsed that study, concurring that trade barrier reduction was the single biggest microeconomic measure “by far” that could be taken to alleviate inflation in the near term.
He also wants the president to allow more immigration into the United States. On the other hand in her WaPo column Megan McArdle expresses gratitude that President Biden isn’t doing more:
Since the thing that actually works is politically foolish, Democrats such as Warren are resorting to conspiracy theories and quack cures. The conspiracy theory is “greedflation,” which blames rising prices on corporate greed. (They’re right, of course, that corporations are greedy, but they didn’t all of a sudden get massively more greedy in January 2021.) The quack cure is simply forbidding firms to raise prices under threat of legal sanction.
This is a stealth variation on the wage-and-price controls imposed by President Richard M. Nixon in 1971, early in the country’s last great bout of inflation. Even Nixon appears to have understood that they wouldn’t work, since they didn’t actually address the underlying problem. But he was facing reelection and wanted voters to see him doing something about one of their most pressing problems. Nixon won in 1972, but his series of “temporary” freezes caused shortages and other economic distortions, without fixing the problem. In 1974, with inflation at a two-decade high, the failed controls were allowed to expire.
Nixon resigned in disgrace not long afterward. Now, I don’t suggest that the cynical economic manipulation led directly to Watergate. (Though one wonders if the economy had been in better shape, would the Nixon campaign have been tempted to burglary?) But it does go to show that there are worse things than being a one-term president. So please, Mr. President, keep right on embracing the healing power of inaction. Be the do-nothing president America needs.
I found both columns endlessly baffling. Cutting 1.3 points from inflation when it is running at 8.3% is a spit in the ocean. The difference would barely be noticed. And I simply do not understand how increasing consumption in the U. S. will correct inflation. In the long term more immigrants might, indeed, produce more but they will begin eating, living, buying stuff, and using safety services immediately. Won’t increased immigration actually exacerbate inflation in the near term? And I’m afraid that Ms. McArdle is in denial. As the midterms near the pressure on President Biden to do something will be irresistible. Unfortunately, the direction in which his instincts, his own party, and the media are pulling him is almost entirely wrong.
I can’t see President Biden taking microeconomic steps that would reduce the problem. e.g. reduce government benefits, can you?