Kudos to them but those few are not the face of the national Democratic party. Even the writer of this piece can't let go of leftist tropes like price gouging. Inflation is cause by monetary and fiscal policy gone wild plus disruptions caused by COVID lockdown and endless war. The Democratic party owns that (now that the Republicans have exorcised Bush and Cheney). I took a trip down memory lane the other day regarding RFK Sr. Although he was unmistakably the left wing of the Democratic party in those days, he opposed LBJ's Great Society based on Catholic social policy, specifically the doctrine of subsidiarity. It boggles the mind to imagine a major figure in the Democratic Party doing such a thing today.
The leveraging of corporate monopoly power to create mark-ups that push up the price level as an explanation for sustained inflation is not mutually exclusive with an explanation that accounts for the aggressively expansionary monetary and fiscal policies enacted in the pandemic butting up against scrambled supply chains. Indeed, the most accurate view is that they both were key variables in the same phenomenon.
The lockdowns halted spending by the general populace, and the stimulus applied at the time--from what we can stell from the post-pandemic stats--increased household savings, and allowed households to pay down debts, increasing their financial position and creating a huge pool of pent-up demand. When the lockdowns were ended, all that demand was unleashed onto global supply chains that had been completely scrambled during the pandemic; this, at the very least, can be seen as the incipient spark of the inflation.
But the explanation for the sustained, 'sticky' inflation that persisted after much of the supply chain had been physically restored can be attributed to the actions of the corporate sector. Remember that the corporate world is not perfectly competitive; it is oligopolistic, with certain firms having much greater monopoly power than others. Large corporate firms with lots of monopoly power can--especially once an inflationary spark has been lit--use this power to push mark-ups far enough past the cost of production to sustain an inflationary wave even after supply recovers. There are a bevy of motives for doing this, but perhaps the three biggest reasons are: 1.) to squeeze the profit margins of smaller firms with less (or no) monopoly power, who can't raise mark-ups without losing customers; 2.) to devalue the purchasing power of wages, which allows you to re-exert control over labor (in the pandemic's case, the control lost during 'The Great Resignation'); 3.) to devalue corporate debt obligations, which are always set in nominal, not real, terms.
This accords pretty well with the corporate behavior seen during prior waves of inflation, particularly during the immediate post-WWII period, and during the stagflation of the 1970s.
In the aggregate the whole episode looks more like the WWII wave rather than the '70s, though, judging by the dollar's behavior. There was a dollar devaluation--a 'true' inflation--from 2020-2021. Yet we didn't see consumer price inflation in this period. And during the most robust period of consumer price inflation from 2021-2022, we saw monetary *deflation*--the dollar *rose* in value during this time and hit a twenty-year peak in October 2022. This is similar to the post-WWII period, rather than the 1970s, where the price inflation coincided with the dollar devaluation created by the end of Bretton Woods.
As always, good analysis. Democrats should have seen the warning signs when Bernie Sanders was out-drawing Hillary in 2016.
I predicted, you'll recall, in JUNE that Trump would win 312 EVs, win the popular vote, and that Rs would take the Senate. I did much of this based on voter reg changes nationwide. I'll be blunt: Democrats dodged a bullet. Rs easily should have won 4 more senate seats (some incompetence, but also some fraud involved there---but that's where we are: Rs must win outside the margin of fraud for now. Perhaps not longer with Trump. A lot of winnable House races slipped away---three in CA with "extra counting days" which, for the good of the country MUST be ended.
Even so Ruy, you haven't really addressed the three Democrat civil wars I have identified as shattering the party and preventing any kind of "populist" left:
*Hamas/Palestinians vs. Israel/Jews. The American Jews sill never, ever abandon the Democrats, so shifting hard Hamas doesn't hurt Ds except in the minds of the overall American Public.
*Illegal Immigrants vs inner city residents, mostly black. Trump has already won this issue and will have it for the next four years. Even Pritzker and Johnson have backed down. Chicago is ripe to go R, not "populist D."
*AI tech vs. greens. Democrats such as Noah Smith are STILL clinging to this insane green future. The future is oil, gas, and nukes. Every AI CEO knows this and as it filters into the environ-woke rank and file, another huge swath will be stolen away by Trump, then J.D. Vance.
Until or unless Democrats address these three issues, much of the economic stuff---which is right in the MAGA wheelhouse---won't matter as much.
Good analysis. Among other issues I am a green voter, a "granola". But I abandoned the democrats over covid vaccine mandates (I am against). Around the same time I had come to realize that the whole "green" transition to save us from climate change was more about money for big solar, big wind and private equity companies than about actually protecting the environment. Not saying Trump with Musk and Andreesen will be better, but they can't be worse. I live in NY state so I have seen the "green" policies at work. No subsidies for composting, no plastic bottle bans, but giant subsidies for solar farms on farmland with no clean up plan for when the panels are broken.
" ... Democrats succeed when they are rooted in their communities, focused on economic opportunity, and doggedly opposed to outsourcing, corruption, and profiteering." -- Justin Vassallo
In short, when they have successfully not just distanced themselves from, but denounced, the incompetent, uncaring corrupt and money grubbing outgoing Biden Administration. That does not add up to enough Democrats to improve the party's fortunes.
I feel sorry for Nebraska Dem Leader, Jane Kleeb (Dan Osborne refused to run as a Democrat). But she still tweets daily about abortion, abortion, abortion and LGBQT LGBQT and LGBQT along with Trump (or any R for that matter) is an authoritarian threat to Democracy. People are so over that tired message....
Kudos to them but those few are not the face of the national Democratic party. Even the writer of this piece can't let go of leftist tropes like price gouging. Inflation is cause by monetary and fiscal policy gone wild plus disruptions caused by COVID lockdown and endless war. The Democratic party owns that (now that the Republicans have exorcised Bush and Cheney). I took a trip down memory lane the other day regarding RFK Sr. Although he was unmistakably the left wing of the Democratic party in those days, he opposed LBJ's Great Society based on Catholic social policy, specifically the doctrine of subsidiarity. It boggles the mind to imagine a major figure in the Democratic Party doing such a thing today.
The leveraging of corporate monopoly power to create mark-ups that push up the price level as an explanation for sustained inflation is not mutually exclusive with an explanation that accounts for the aggressively expansionary monetary and fiscal policies enacted in the pandemic butting up against scrambled supply chains. Indeed, the most accurate view is that they both were key variables in the same phenomenon.
The lockdowns halted spending by the general populace, and the stimulus applied at the time--from what we can stell from the post-pandemic stats--increased household savings, and allowed households to pay down debts, increasing their financial position and creating a huge pool of pent-up demand. When the lockdowns were ended, all that demand was unleashed onto global supply chains that had been completely scrambled during the pandemic; this, at the very least, can be seen as the incipient spark of the inflation.
But the explanation for the sustained, 'sticky' inflation that persisted after much of the supply chain had been physically restored can be attributed to the actions of the corporate sector. Remember that the corporate world is not perfectly competitive; it is oligopolistic, with certain firms having much greater monopoly power than others. Large corporate firms with lots of monopoly power can--especially once an inflationary spark has been lit--use this power to push mark-ups far enough past the cost of production to sustain an inflationary wave even after supply recovers. There are a bevy of motives for doing this, but perhaps the three biggest reasons are: 1.) to squeeze the profit margins of smaller firms with less (or no) monopoly power, who can't raise mark-ups without losing customers; 2.) to devalue the purchasing power of wages, which allows you to re-exert control over labor (in the pandemic's case, the control lost during 'The Great Resignation'); 3.) to devalue corporate debt obligations, which are always set in nominal, not real, terms.
This accords pretty well with the corporate behavior seen during prior waves of inflation, particularly during the immediate post-WWII period, and during the stagflation of the 1970s.
In the aggregate the whole episode looks more like the WWII wave rather than the '70s, though, judging by the dollar's behavior. There was a dollar devaluation--a 'true' inflation--from 2020-2021. Yet we didn't see consumer price inflation in this period. And during the most robust period of consumer price inflation from 2021-2022, we saw monetary *deflation*--the dollar *rose* in value during this time and hit a twenty-year peak in October 2022. This is similar to the post-WWII period, rather than the 1970s, where the price inflation coincided with the dollar devaluation created by the end of Bretton Woods.
As always, good analysis. Democrats should have seen the warning signs when Bernie Sanders was out-drawing Hillary in 2016.
I predicted, you'll recall, in JUNE that Trump would win 312 EVs, win the popular vote, and that Rs would take the Senate. I did much of this based on voter reg changes nationwide. I'll be blunt: Democrats dodged a bullet. Rs easily should have won 4 more senate seats (some incompetence, but also some fraud involved there---but that's where we are: Rs must win outside the margin of fraud for now. Perhaps not longer with Trump. A lot of winnable House races slipped away---three in CA with "extra counting days" which, for the good of the country MUST be ended.
Even so Ruy, you haven't really addressed the three Democrat civil wars I have identified as shattering the party and preventing any kind of "populist" left:
*Hamas/Palestinians vs. Israel/Jews. The American Jews sill never, ever abandon the Democrats, so shifting hard Hamas doesn't hurt Ds except in the minds of the overall American Public.
*Illegal Immigrants vs inner city residents, mostly black. Trump has already won this issue and will have it for the next four years. Even Pritzker and Johnson have backed down. Chicago is ripe to go R, not "populist D."
*AI tech vs. greens. Democrats such as Noah Smith are STILL clinging to this insane green future. The future is oil, gas, and nukes. Every AI CEO knows this and as it filters into the environ-woke rank and file, another huge swath will be stolen away by Trump, then J.D. Vance.
Until or unless Democrats address these three issues, much of the economic stuff---which is right in the MAGA wheelhouse---won't matter as much.
Good analysis. Among other issues I am a green voter, a "granola". But I abandoned the democrats over covid vaccine mandates (I am against). Around the same time I had come to realize that the whole "green" transition to save us from climate change was more about money for big solar, big wind and private equity companies than about actually protecting the environment. Not saying Trump with Musk and Andreesen will be better, but they can't be worse. I live in NY state so I have seen the "green" policies at work. No subsidies for composting, no plastic bottle bans, but giant subsidies for solar farms on farmland with no clean up plan for when the panels are broken.
Ukraine war is the biggest threat. First time in 30 years I have worried about nuclear war. And this time it is NATO aggression at fault.
NATO marched into Ukraine? I don't recall seeing that in the news.
I guess you missed the 2014 coup
" ... Democrats succeed when they are rooted in their communities, focused on economic opportunity, and doggedly opposed to outsourcing, corruption, and profiteering." -- Justin Vassallo
In short, when they have successfully not just distanced themselves from, but denounced, the incompetent, uncaring corrupt and money grubbing outgoing Biden Administration. That does not add up to enough Democrats to improve the party's fortunes.
I feel sorry for Nebraska Dem Leader, Jane Kleeb (Dan Osborne refused to run as a Democrat). But she still tweets daily about abortion, abortion, abortion and LGBQT LGBQT and LGBQT along with Trump (or any R for that matter) is an authoritarian threat to Democracy. People are so over that tired message....