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January 27, 2022

Macro View: Experts weigh ideas to combat US inflation

There are no easy solutions but plenty of options for the White House to combat high inflation like breaking up companies and putting a stop on spending, say experts.

Darrick Hamilton

Darrick Hamilton, an academic is currently the Henry Cohen Professor of Economics and Urban Policy and a university professor at The New School for Social Research, retweeted an article shared by Lauren Melodia, the deputy director of macroeconomic analysis at the Roosevelt Institute, on inflation US inflation pointing to many socio-economic problems, including Covid-19, underinvestment, and the economy’s structure. Experts weighed in 12 ideas to target inflation at its root causes.

Independent experts from across the ideological spectrum using antitrust to break up large companies, stopping the spending, controlling the coronavirus pandemic, relaxing the trade war with China, and scaling among US manufacturing production, among other proposals can help the country tackle high inflation.

While some experts blamed the Biden administration for boosting the economic demand, others stated that concerns over inflation have been overblown. For instance, Robert C Hockett believes that US policymakers have been talking about supply chains two years after the pandemic, which they should have ideally done in early 2020. In addition, they are discussing improvements in domestic transport links in those chains, not about the production of what is being consumed.

Hockett believes the country has an opportunity to reverse inflation in a way that it can restore its production and leadership in industries, such as the semiconductor industry and electric vehicles and lithium-ion batteries. Therefore, the US can now reverse not only inflation, but also four decades of decline since it massively began outsourcing in the 1980s and 1990s.

Steve Hanke

Steve Hanke, a professor of applied economics at the Johns Hopkins University in Baltimore, Maryland, shared an article on pandemic fatigue spelling the end for French President Emmanuel Macron. An Ifop poll suggested that the public confidence in the government’s ability to fight Covid-19 had dropped to 41%.

Macron leads in the polls ahead of the April election, but he remains wary about the Covid-19 crisis derailing his campaign. Though experts state that he could win the second term as France’s president, his supporters are concerned about the rising infections caused by the Omicron variant and people growing weary of the two-year old crisis and associated restrictions.

Macron and his government have been struggling to limit the pressure on hospitals from Covid-19 patients, while meeting popular demands of easing restrictions to control the spread of the virus. Prime Minister Jean Castex recently stated that some of the Covid-19 restrictions will be relaxed next month despite infections rising to more than 400,000 per day as per the health ministry data.

Chris Giles

Chris Giles, an economics editor for the Financial Times, shared a discussion with Flavio Toxvaerd, an associate professor at Cambridge University, on the importance of combining economics and epidemiology to tackle the Covid-19 pandemic. Giles tweeted that when an economic backwater goes into the frontline, it becomes important to understand what the best approach to effective disease control and economic success can be, as both the economic community and medical experts have never worked to understand the problem together.

For instance, missteps such as the UK’s ‘eat out to help out’ scheme, reflects how closely managing the virus crisis and boosting the economy are linked. Toxvaerd and his team of economists and epidemiologists have been studying the association between the spread of Covid-19 and strategies to curb it through measures such as vaccines, treatments, and social distancing.

Toxvaerd and his team believes that appropriate behaviour is very important in Covid-19 as against other diseases than can be managed by individuals themselves without making a difference to others or economic expansion at large. Additionally, he believes that a credible cost-benefit analysis framework could help understand the trade off between lives and livelihoods, which exists in most countries but has not been applied to Covid-19.  

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