Why is inflation so low?
I have a new piece on low inflation in US News and World Report:
Surprisingly, the recent undershoot of inflation had occurred during a period when the Fed has been raising interest rates, a policy that is normally aimed at slowing, not increasing, inflation. It’s as if a ship captain responded to persistent headwinds by turning the rudder in the wrong direction.
Off topic, a couple National Review pieces caught my attention:
In Rome in 1973, a grandson of the richest man in the world, J. Paul Getty, was kidnapped. In All the Money in the World, director Ridley Scott’s bizarre take on this story, Getty is the villain, while the kidnappers are simply dutiful professionals tasked with carrying out their unfortunate mission as best they can despite Getty’s intransigence about paying them ransom.
They don’t use the term ‘nepotism’, but that’s what this is all about. Nepotism is frowned on in the US and Northern Europe; indeed favoring your relatives at the expense of society is viewed as completely unethical. In most of the world things are exactly the opposite; it’s viewed as unethical not to favor the well being of one’s grandchildren over the best interest of society.
I doubt that many Sicilians would agree with me, but my utilitarian value system forces me to view Getty as a hero, not a villain. The world would be a better place if everyone viewed things as I do, and no one paid ransom to kidnappers. (That doesn’t mean I’d refuse to pay ransom, just that I’d be a hero if I did. I never claimed that I’m a hero.)
Hollywood often promotes utilitarian values, but this is less true in the case of economic issues. In those cases, Hollywood focuses on the “seen”, not the “unseen”.
Here’s the excellent Ramesh Ponnuru in the National Review:
Many Republicans credit Trump for presiding over a strong economy, too. It’s a point that requires some context. Job growth has not been quite as fast as it was in Obama’s last year, but you’d expect it to slow after an expansion this long.
That’s a defensible argument, but only if you assume that the entire alt-right/Trump campaign was built on a pack of lies. Recall the economic “carnage” that Trump referred to in his inaugural address. Recall the claims of 30% to 40% unemployment. Recall the claims that downtrodden unemployed workers in West Virginia, Wisconsin, Pennsylvania and Michigan voted for Trump out of desperation.
So yes, it’s possible that job growth slowed in 2017 because Obama left Trump with an American job market that was already “Great Again.” I’m not going to take a position either way on this issue; just point out that Trumpistas can’t have it both ways.
US News has a new article pointing out that the legalization of pot in Colorado did not lead to the total disaster predicted by drug warriors:
Over at Econlog I have a recent post discussing Portugal, which has decriminalized the use of all drugs. Heroin addiction has fallen sharply, again just the opposite of what the drug warriors predicted.
I’d have a tad more respect for conservative Republicans like Jeff Sessions if they spent less time gloating over tax cuts for corporations, and instead expressed a bit of remorse over the millions of lives they have ruined with their punitive policies. Policies that we now know were ineffective. Here’s one example from Reason magazine:
About a year later she was picked up in another undercover sting. This time, having turned 18, she was arrested for prostitution (a misdemeanor) and possessing a small quantity of marijuana (a felony). The conviction shattered her dreams of someday becoming a nurse.
Now, she says, “I’m a single mother with a felony and I will be labeled a loser and a whore for the rest of my life.” Mere months ago, she was being exploited. Today, for the same behavior, she’s a criminal.
HT: Ben Cole