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Culture War Roundup for the week of November 7, 2022

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It seems to me politics are especially bad at countering inflation. People may be pissed off the "government isn't doing enough" to fix it. However, the levers the government can easily pull to fight inflation (raising taxes/interest rates, cut transfers/subsidies, lower consumption/wages) won't gain them any popularity points. Even worse, there are plenty of socially-desirable policies that'll make inflation worse: tax cuts, raises, loan forgiveness, more transfers. I'm grateful our system is even capable of doing unpopular things like raising interest rates. If monetary policy had heavier democratic influence, I'd worry high inflation would just be the long-term equilibrium.

Ontario's leader is under heavy fire for playing hardball and preventing educational workers from getting large raises. I don't know the details well, but couldn't one argue this is what fighting inflation looks like?

The question remains: what mechanism would be especially good at countering inflation?

Say we have an nRX-approved philosopher-king who holds absolute political power. What are his options if he decides to keep inflation level? It doesn’t seem amenable to single, decisive actions, so he’s left with the same interest rate, tax, or command economy options. I suspect those will cause roughly as much suffering/ if implemented decisively rather than by a democratic half-measure.

Then again, I’m not terribly well versed in economic history. How effective was austerity at fighting inflation? If it failed, was that due to wreckers political will, or to outside economic forces?

I feel like since an nrx government wouldn't have to buy votes for $10,000 a pop in handouts, inflationary spending wouldn't be a serious issue in the first place.

If prices started going up, the government's main lever would be sighing and delaying construction of the giant gold pyramid housing the AIngram of Charles I.

I don’t buy it.

Government spending isn’t the only (or main?) source of inflation; the whole process of lending adds money into the ecosystem. Even without any welfare or public payroll, if Charles I cranks down the federal funds rate, people will take advantage of “cheap” loans and circulate more currency. Whether or not that guarantees inflation...I’m not actually sure. I think so, assuming demand for goods doesn’t scale accordingly?