National Review Online
Thursday, November 11, 2021
There’s no way to spin it: Wednesday’s inflation
report is bad news for the country economically and for the president
politically. The year-over-year overall increase was 6.2 percent, the highest rate in over 30 years. It wasn’t from any
particular category of expenditure, either. According to the Bureau of Labor
Statistics, the increase was “broad-based,” with significant increases in
energy, food, and shelter.
The standout category in this month’s report was energy,
which rose 30 percent overall since last year and — incredibly — 4.8 percent in
just the last month. More specifically, gasoline was up 6.1 percent since last
month and natural gas, used to heat homes, was up 6.6 percent. Energy is an
input into everything else, and higher energy prices mean higher prices
throughout the economy.
If you’re in the White House, this is the kind of report
that you have nightmares about. The inflation rate had seemed to plateau in the
last three monthly reports. From the administration’s point of view, it was
time for it to turn the corner and start coming back down. It did turn the
corner this month — but it’s going back up, and it’s in more categories than
before.
The sort of inflation we are currently experiencing is
different from notable examples in the past. Then the inflation was almost
entirely generated by the central bank, which merely had to correct itself. The
Federal Reserve should taper its asset purchases, but it cannot do much to
solve today’s problems. Given the historic level of federal debt, the Fed
doesn’t have much room to raise rates without significantly increasing
government interest costs. Furthermore, altering the money supply or raising
interest rates will not cause the Ports of Los Angeles and Long Beach to work
more efficiently. It will not create more trucks and truck drivers. It will not
make it easier to produce and transport energy.
Plenty of the underlying problems that have been exposed
by the pandemic recovery predated Biden’s presidency. But his party’s ideology
prevents him from being part of the solution. Democrats see the current
situation and want more government and more spending.
Biden didn’t miss a beat, saying Wednesday that “it is important that Congress
pass my Build Back Better plan.” But Build Back Better is non-responsive to
what ails the economy. There are plenty of things government can do to help,
and most of them involve getting out of the way.
We need more truck chassis, but current trade policy
creates a combined tariff of over 200 percent on importing them. Labor policy
designed in the early 20th century has allowed unions to entrench
inefficiency and freeze labor productivity in the transportation
sector. Environmental regulations in California have prevented the
expansion of port capacity. The federal government has prioritized transitioning
away from fossil fuels while begging OPEC to pump more oil. And
post-pandemic spending bills both created disincentives to work and
provided generous benefits, well beyond what most other countries provided.
Build Back Better either leaves those problems untouched
or exacerbates them. It sees government-created problems and prescribes more
government as the solution. It won’t work.
Our inflation is an outlier by global
standards. Now is not the time to take inflationary risks. Now is not the time
to experiment with green-energy policies, which will drive up prices. Now
is not the time to do a federal takeover of childcare, which will drive up
prices. The United States has bountiful natural, industrial, and human
resources. To fully mobilize them in response to the present inflationary
pressures, government needs to step aside, not insert itself into more places.
The president’s approval ratings show that the American
people have noticed that his policies aren’t working. They’ve noticed higher
prices at the grocery store and the gas station. As we head into winter,
they’ll notice higher heating bills.
Inflation won’t disappear if the White House pretends it
doesn’t exist. Yet again, it seems that a crisis has caught the president
asleep at the wheel. If prices keep rising and Democrats keep whiffing, the
governor’s race in Virginia might look like a mild reproach compared with the
wrath of the voters in elections to come.
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