Did “supply shocks” or “relative demand shocks” cause the recent inflation? Will tariffs raise inflation? Will deregulation and AI, by lowering costs, lower inflation? No.
Don’t confuse the price level with the inflation rate. Don’t confuse relative prices with the price level. These ought to be the first lessons of macroeconomics. But many economists, and most politicians and commenters get them wrong.
A short review of the principal work--with a suggestion of what future work should be done--of this years economics Nobel Prize winners.
That data also show the top one percent of taxpayers earned 26.3 percent of Adjusted Gross Income (AGI) but paid 45.8 percent of all personal federal income taxes. The top 0.1 percent of earners paid 24.7 percent and the top 5 percent paid 65.6 percent.
UPDATE: headline corrected. Thanks, Peter K.
Veronique de Rugy has, as usual, some excellent ideas. But I make the odds at about 1 in 10 even half of them get adopted in the next four years.
I certainly think its plausible to say that GLP-1 drugs may, at this moment, be a more important innovation than generative AI.
Arnold Kling explains.
Related, also by Kling: "The Oversized Conglomerate: An argument for limited government based on management principles".
And an earthquake is never good. (But presumably we don't have to worry about it for at least the next two years.)
. . . Or You Can Believe the Politicians. Either Way, Inflation Is Going Much, Much Higher."
I don't know if he's right--his track record seems mixed at best--but it's a perspective I think is worth paying attention to.
UPDATE: One of my former colleagues, Doug Pearce, Emeritus Professor of Economics at NC State, writes, "The graph is misleading because it attributes the sudden rise in M1 to increased spending. The Fed changed the definition of M1 to include assets that had previously been only in M2. These were accounts that had had limits on the number of transactions per month. These restrictions were removed when Covid hit. . . . The money supply certainly rose but the post's graph is misinformation." A graph illustrates this.
A principal reason why monopolization cases are often dopey is dopey market definitions. The FTC's case against the Kroger-Albertson's merger seems to a case in point.
That provides a FTC determined to win with a massive incentive to manipulate market definitions to make monopoly power appear even where it doesn’t exist.
"What if the key to solving our urban crises, such as housing shortages, traffic congestion, and wealth inequality, lies not in more government intervention, but in the principles of free-market economics? Market urbanism offers a bold vision for our cities, one that harnesses competition and individual choice to create livable, thriving environments."