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Blame Larry Summers

Lawrence “Larry” Summers, former U.S. Treasury secretary, speaks during a question-and-answer session with the media at a workshop hosted by the Bank of Japan (BOJ) and the Bank of Canada (BOC) at the BOJ headquarters in Tokyo, Japan, on Friday, Sept. 30, 2016. Photographer: Kiyoshi Ota/Bloomberg

I would like to blame Larry Summers for everything because he is a terrible human being. David Dayen blames him for the current inflation issue:

Any honest Democrat will admit that we are now all Friedmanites,” Larry Summers wrote in The Times in 2006. Mr. Summers comes from a family of left-leaning economists who saw Milton Friedman as a “devil figure.” But as he moved into the upper echelons of the family profession, Mr. Summers came to have “great admiration” for the conservative thinker and his work.

The transformation reflects how elite economists in both parties reached a rough accord on the importance of free markets, free trade, and restrained regulation. Each side believed they could harness these forces for liberal or conservative ends. And there was little disagreement about the means.

Virtually every American feels the consequences of this today, whenever we visit a grocery store with empty shelves, or do a double-take at the price of an appliance. For decades, economists like Mr. Summers advanced policies like globalization, deregulation, and markets that valued efficiency over competition. They promised that these trends would deliver lower prices. And they did, for a time. But they also left the system vulnerable. During the pandemic, when demand burst beyond what the system could handle, prices for shipping soared, ports clogged, trucks and railroads lacked manpower, and underinvested companies scrambled for logistics workarounds and warehouse space. Increased shipping and distribution costs have undeniably raised prices.

Mr. Summers has been focused on a different story, warning that government spending could increase inflation. With prices rising at the fastest rate in 40 years, he has been lauded for making the right call. “Does the WH owe Larry Summers an apology?” Politico asked last November.

The problem with this reading is that the economy hasn’t really overheated. Real gross domestic product and employment are still lower than prepandemic projections, according to government statistics. Yes, consumer spending patterns have shifted from services to goods, but that began two years ago; the fact that our supply chains still cannot adjust reflects a bigger problem with how they were designed.

Mr. Summers’s claims don’t express an economic truth. They seem designed to deflect blame. A leading economic adviser in the Clinton and Obama presidencies, Mr. Summers is prominent among the fraternity of mainstream economists who are deeply implicated in building the system at the heart of our current predicament and setting up our economy for failure. If engineers constructed a bridge this prone to collapse, they’d be fired. But with our accountability-free elites, being an economist means never having to say you’re sorry.

Larry Summers never says he’s sorry.

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