This is about the American economy and its now far-from “transitory” (nice try) inflation, which has become thoroughly destructive inflation, with the added fun of stock market woes, and the now real threat of recession; and doesn’t even touch upon the crime problem, tent cities, the mental health crisis, world order, trade, China, or anything else. Those things are for another day. But articles about those things could all share the first three words of the WSJ headline.
It’s really about the beast called the progressive. And the beast is ubiquitous throughout North America today. Other related species thrive in Europe and Australia and New Zealand too. And although they’re speaking of the American variety here, see if this Wall Street Journal editorial (here’s a free link) doesn’t sound like a fitting description of the Canadian progressive.
…Why were those warnings ignored? The answer is a combination of politics and mistaken economic models. Democrats ran all of Washington and wanted to justify a huge expansion of the welfare state. Their economic household remedy is always more government spending and easy monetary policy. Most of the press endorsed the Democrats’ $1.9 trillion spending blowout in March 2021 as necessary, though the economy was growing rapidly at the time.
While the Federal Reserve was making its monetary mistakes, progressives didn’t object. They embraced the fad of Modern Monetary Theory that low interest rates could finance any amount of government spending more or less forever.
All of this has been another failure of progressive economics. By focusing solely on macroeconomic demand, while ignoring supply-side and regulatory bottlenecks, their policies fueled the inflation we have today. They also ignored the role of excess money, forgetting economist Milton Friedman’s famous lesson…
The editorial goes on a bit more about this, and mentions the professors and other such “experts” who all signed onto the massive government spending plans of the Biden progressive set. But this is a hugely important point that they make almost in passing at the end:
One hallmark of our era is the collapse of public trust in government and experts of all kinds. But it’s hard to fault the public when so many experts and their policies have failed in such spectacular fashion. The inflation that progressives helped to cause, failed to anticipate, and then ignored is one more example of earned public distrust.
And it wasn’t just on economics that they lost our trust. For me, it is nearly every single thing they touch.
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