Progressives Never Learn

Poor Joe Biden. You almost have to feel sorry for him, surrounded as he is by a multitude of disasters. But since they are largely the result of President Biden’s policy choices, we should feel sorry for the citizenry that is paying the price for his incompetence. It’s actually worse than that because while Candidate Biden promised to govern as a moderate, he is being led around by Bernie Sanders (VT-Rolling Stone)

Let’s face it, Mr. Biden’s  staff puts a speech filled with happy talk in the teleprompter. He proceeds to read it and by the end of his remarks it is clear to sentient beings everywhere that Mr Biden doesn’t have the slightest idea what he is talking about.  

Consider the inflation situation. Back in June of 2021 when the inflation rate was racing ahead at 5.4% here is what President Biden had to say

“The vast majority of the experts, including Wall Street, are suggesting that it’s highly unlikely that it’s going to be long-term inflation that’s going to get out of hand,” Biden said. “There will be near-term inflation, because everything is now trying to be picked back up.”

Leave aside the horrific grammar that seems to be endemic among ex-Senators. Also leave aside the minor fact that there is zero evidence that the “vast majority of experts”, by which he presumably means economists (other than the cheerleaders at the Fed) have actually signed on to this particular piece of economic incoherence. The fact is that the inflation rate, which was 5.4% in June is now 7.5%. And the word transitory, as least as it pertains to inflation,  has been shoved into the memory hole. 

In the wake of todays report of the highest inflation rate in 40 years President Biden gamely soldiered on. He announced that “While today’s report is elevated, forecasters continue to project inflation easing substantially by the end of 2022.” 

A better way to put is that those forecasters continue to be flat out wrong, and for the same reason they have been wrong all along. They are relying on a 70 year old model based on the Phillips Curve that is a relic of a different era. That model posits the idea that there is a predictable trade-off between the unemployment and inflation rates. As inflation goes up, unemployment goes down and vice-versa. Policy makers merely have to pick the optimal trade-off point as they set interest rates.  

That idea was wrong when it first surfaced in the late 1950s and it is still wrong today. But bad ideas never die; they just lie in wait for the next opportunity. So progressive policymakers who should have but didn’t learn from the experience of the 1970s  when President Jimmy Carter (and Presidents Nixon and Ford) made the same mistakes, have seized the opportunity to mess things up royally. 

And so here we are with 7.5% inflation and shortages on grocery store shelves. The shame of it is that this was an avoidable disaster. And it shows no signs of getting better anytime soon, pace Mr. Biden. 

The reason why prices are soaring is because of the policies championed and implemented by Mr. Biden and his Progressive buddies. They have been spending money like drunken sailors (with apologies extended to drunken sailors) and show no sign of remorse. Instead they continue to tout themselves as modern Messiahs who will right all wrongs in the pursuit of justice. 

Back on planet earth it is (or ought to be) crystal clear that soaring prices are the result of constrained supply brought about by lock-downs, transfer payments from savers to spenders, and the re-imposition of a regulatory regime focused on social justice goals rather than economic efficiency. At the same time the Progs have thrown scads of money hot off the Fed’s printing press at every conceivable social justice cause thus pumping up aggregate demand. 

We have constrained supply and increased demand. And we did it on purpose. It was integral to a disastrously failed anti-Covid strategy. Of course prices soared. What in the world did they think was going to happen? And they will continue to do so until the policy regime is reversed. But that would amount to a repudiation of the policy regime brought to us, or I should say, imposed on us by Bernie Sanders, Joe Biden, Chuck Schumer, Alexandria Ocasio-Cortez, Elizabeth Warren and the whole crowd of collectivists who currently own the Democratic Party. 

And since they are not about to admit the obvious, namely that they are simply flat out wrong, they will have to be asked to give up the reins come November. And then we will have a brand new bunch of economic illiterates to deal with. 


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