On Inflation, Where’s the Ingenuity?
Terry H. Schwadron
June 15, 2022
OK, Americans are seeing more lemons than lemonade these days. And Joe Biden is getting the blame — apparently even to the point of spurring inside politics discussions about whether he should seek reelection.
Inflation, high gas and food prices, ever-spiraling prescription drug and medical costs and a perception that criminals increasingly are having their way on the streets have been setting Biden back quite a bit as a matter of politics — especially because steps he has taken is not stopping a more powerful set of economic trends.
The only problem here is that most of what ails us is beyond Biden to be able to fix unilaterally. Blame fixes nothing. Supply and demand might, but both are under serious pressure without intervention.
The politics of a split Congress, particularly in an election year that looks promising for the Republican opposition, the mindless war in Europe, the long, complicated supply chain foul-up left in the aftermath of covid and even the stubbornness of the disease to leave the stage have combined to make Biden look less in control that his words would offer.
Obviously, impatient Americans don’t care if economic fundamentals are in their best health in years if we can’t afford to fill the gas tank. And so, there is an incessant desire to blame in all on an overwhelmed and weakened Joe Biden as a statement of public anger.
If the Federal Reserve moves ahead this week with a sizable boost in borrowing rates, we’ll be complaining that money is too tight, and that layoffs are looming.
In any event, we’re talking only about the bluntest of monetary tools.
Are We Learning Anything?
But isn’t it apparent by now that the U.S. president, regardless of name and party, has little to no control over prices at the pump or at the supermarket?
The economic positives that Donald Trump’s claimed were the result of ten years of economic rebuilding, and largely a continuation, though spurred by a big corporate tax cut and a wholesale campaign to dump regulations.
By extension, an op-ed column in The New York Times argues, our current inflation rise and stock market uncertainty is the natural outcome of at least a decade of easy-money policies by the Federal Reserve. That bill is now coming due, exploded by the global combination of covid effects, war and high consumer demand that doesn’t quit even in the face of reduced supply.
We’ve seen gas and oil prices zoom in recent weeks, driving up the cost of transportation for goods of all sorts.
Even if you feel that Biden policies on drilling and a diminishing future for fossil fuels in general had contributed over his two years in office to sending the price of gas from $2.50 to $3.50, even $4 a gallon, he has done nothing new to prompt the almost daily changes pushing the price beyond $5 on average nationally and much more in California.
Biden’s ordered release of a million gallons a day of strategic reserves to keep prices from going up yet more, his appeal to the Saudis and U.S. drillers to produce more now, his aggressiveness in pushing alternative energies all is falling politically flat before an American public that wants lower prices right now. Analyses underscore that oil companies see little incentive in adding new drilling sites with the prospect of electric cars starting to turn real. We don’t care about understanding the problem, just about getting it moved out of our way.
At the same time, oil companies are showing huge profits — on the scale of nearly doubling profits from 2021. I see no widespread public protest about corporate price-setting or decisions by refiners to favor jet fuel and diesel products over more refined gasoline. There has been relatively little discussion about corporations finding it safer to avoid production increases or starting new drilling on allowed lands.
But then, why should they, when people will blame someone other than them.
Where’s Our Ingenuity?
I’ve been curious to watch how more effort is put into blame than in creating carpools and extending work-at-home policies. I’ve wondered why consumers are not building on their communal power to stop spending to force a better price break from corporations.
What is interesting to me is that when faced with a problem, Americans who salute themselves constantly for adaptive ingenuity, refuse to want to make even changes about their summer vacation plans in the face of a bad situation. That refusal comports exactly with those Americans who found that public health measures were too much to ask because it might involve making personal and even uncomfortable adjustment.
Where exactly do we find this American Exceptionalism that we hear bandied about?
Instead, we hear loud complaints for someone to fix things and see people putting anti-Biden stickers on gas pumps; we see opposition Republicans making plenty of campaign ads about Democrats causing problems that are hitting worldwide.
The Federal Reserve, for whom managing the economy is the main function, has acknowledged that its slow-cooling policies are not proving effective, and now we’re hearing talk of faster rises in basic borrowing rates to gain control over inflation.
Certainly, we ought to be concerned about a White House that finds itself bumping from crisis to crises, from supply shortages in one critical line to the next, while preaching a long-term outlook for everything from transitioning to alternative energy sources to finding a new world diplomatic order. That the president is going hat in hand to the Saudis to plead for more oil production now is out of line with a slate of concerns that do not concern oil prices, yet the economic demand of the day is prevailing.
The constant demand for cheap gas in the face of limited world supply should be raising bigger questions about matching our expectations with reality.