My friend who reads the New York Times alerts me to an article that appears today on the front page of the paper’s business section. In my friend’s words, the piece “gently but unmistakably calls out Democrats for trying to blame inflation on corporate greed.” He adds:
The piece underplays the administration’s responsibility for inflation via energy policy. It does, however, quote economists who puncture Democratic explanations for inflation, and who even blame excessive federal Covid relief for the problem.
The title of the print article is of interest: “As Inflation Rises, Democrats Pin Blame.” This may be as close as the Times will ever get to an attack on the Democratic Party. I guess it makes sense that it appeared in the business section.
The article is here, albeit with a different title. This is a sampling:
As inflation proves stubbornly sticky, administration officials and prominent lawmakers have refined their message to focus more blame on corporations, especially those in concentrated industries with a handful of powerful firms, like meat processing or gas. . . .
But economists have pointed out that in many cases, blaming big firms for worsening inflation is overly simplistic. Industries have been relatively concentrated for years, but businesses now have the wherewithal to charge more because consumers are spending strongly. That owes partly to government stimulus checks and other benefits that have put more money in shoppers’ pockets.
It’s what you would fully expect when demand goes up,” said Jason Furman, a Harvard economist and a former chair of the White House Council of Economic Advisers during the Obama administration.
The laws of supply and demand have not stopped many on the political left from calling companies out. . . .
[S]everal economists said that, for the most part, blaming business profit seeking for today’s price increases does not make sense. Corporate concentration has been high for years, but inflation had been low for decades.
Any rational company would want to raise prices without hurting sales: The pandemic, and the government’s response to it, have given today’s firms the ability to do so.
“It is the compound effect of the COVID disruptions and the stimulus package at the same time,” said Thomas Philippon, an economist at New York University who studies corporate concentration. “The firms were always greedy.”. . .
“I don’t really see any great evidence that businesses are raising prices by any more than you would expect, given the rising cost of inputs and labor,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.
Whom to believe, Elizabeth Warren and Jen Psaki or leading economists including the head of the White House Council of Economic Advisers during the Obama administration? Even for the New York Times the answer is obvious.
Team Biden’s excuse for runaway inflation is neither plausible nor consistent with the view of leading economists. It’s unlikely to wash with voters, either.