Politics Visits the Dismal Science

A lot of people, myself included, avoid serious dealing with economics. You hear their gurus make pronouncements clouded with jargon, impenetrable concepts, and fixed ideas. They frequently disagree and like to argue. Many disdain the world of politics, though that is a living part of economics.

Now Larry Summers, the king of controversy, has joined with Ezra Klein on his show in a long but surprisingly enlightening discussion about the present inflation, how it developed, and what to do about it. This may be intimidating to some of you, yet very illuminating if you choose to get into it.

The problem both of them confront is the heavy downside of the strong U.S. economy. Both seem to agree that Biden’s American Rescue Plan was needed and welcome. But “it ran the economy hot.” Notwithstanding obvious benefits to the labor market, Summers believes, our virulent inflation resulted. Planners seemingly ignored the long-term consequences of runaway demand.

And the doctor who prescribes you painkillers that make you feel good to which you become addicted is generous and compassionate, but ultimately is very damaging to you. And while the example is a bit melodramatic, the pursuit of excessively expansionary policies that ultimately lead to inflation, which reduces people’s purchasing power, and the need for sharply contractionary policies, which hurt the biggest victims, the most disadvantaged in the society, that’s not doing the people we care most about any favor. It’s, in fact, hurting them.

For Summers this echoes and replays what happened in 1982, when Paul Volcker came in and instituted draconian reforms that finally tamed record inflation, though at the cost of a recession. There was outrage among many of the lefties, but the medicine worked. Now, once again, demand is out of whack, meaning too much money chasing too few goods. Ezra Klein seemingly accepts this but asserts that supply disruptions have played a role too: Ukraine and China and Covid have had their effects.

I think they both agree that the Fed must act soon and strongly. There is really no other instrument to control what seems likely—a long-term inflation of some 6% a year. The politics of all this become pretty obvious. Politico tells us:

Democrats worry about growth-killing [Fed] rate hikes in the middle of a midterm election year. But inflation is even worse for them politically. Recent polls show that price spikes are by far the top concern among voters. An NPR/Ipsos survey showed that 40 percent of Americans are worried about higher prices and 94 percent are aware of rising costs for food, energy, housing and other items.

One aspect of all this struck me. Left-leaning Democrats typically look for immediate relief to help the beleaguered victims (and counter the upcoming threat of the midterms). Bernie Sanders and others have proposed windfall excess profits taxes on Big Oil. Others want to rescind the federal gas tax.

More conservative Democrats like Larry Summers look for longer-term, painful fixes. I’m reminded of the blowback President Biden received for speaking his mind about Putin. He took a lot of undeserved flak for that, much of it from his own administration, which “overreacted and undercut him.” The State Department and the Kremlin both signaled unhappy long-term consequences from his remark.

Not everyone is on the same page regarding Putin, and unfortunately not everyone is on the same page regarding inflation. Summers and Klein did try to bridge that gap in a good, reasoned exchange.

More from Houston: Bullshit Runs Deep in Texas

Abbott and Trump: look at their hands.

Heidi Schneider, our Houston correspondent, unwraps some indecent political behavior in Texas. Quick to blame others, these folks have no competence and no shame. On a related note, I highly recommend to you Ezra Klein’s recent podcast, “The Texas Crisis Could Become Everyone’s Crisis.” Three smart people talk not only about the Texas debacle but how climate change will change all of us.

We tried-and-true Texans are taught to “Remember the Alamo” and the flag slogan “Come and Take It” from our earliest fight for independence. But since the 1990s the Texas GOP has fractured our exemplary and fabled image with sanctimonious messaging and agendas. Fast forward to the present day and it’s clear that Texas’s image as a sovereign utopia needs a dramatic facelift.

Just last week the Texas Attorney General, Republican Ken Paxton—who has been under a federal indictment since 2015—took a page from Senator Ted Cruz’s playbook and snuck off to Utah with his Texas state senator wife Angela, paying no regard to the non-legislative Texans left behind during a statewide weather catastrophe. Just two days after the historic freeze arrived, he left town, claiming his absence was due to important official meetings.

More important than millions of frozen constituents? Do you remember that in late 2020 Paxton’s department joined the Stop the Steal con by drafting a lawsuit against four other states? Dispatched to the Supreme Court, the case was quickly dismissed, as the justices instructed Texas conservatives to play in their own sandbox. Upstanding folkloric judicial leader, or total self-serving schmuck? You decide.

Just days ago, the Lone Star state’s conservative Lt. Governor Dan Patrick went on record insisting on a thorough investigation into the state’s energy failure. He claimed this would not be a finger-pointing expedition, then immediately placed blame for the magnitude of frozen failure on ERCOT, the Energy Reliability Council of Texas, which manages the power grid. Should we tell him a similar investigation was done in 2011 after an extreme cold snap? Moreover, the recommended updates were never pursued by the legislature. Crawl back under your rock, Dan. Your expertise is in gender-neutral bathroom policing, not power grids.

In the past several years, changing weather systems have brought horrific flooding and damaging winds to my home state. In 2017, Hurricane Harvey became the second-costliest tropical storm on record, costing 127 billion dollars in damage. I remember newscasts where Houston Mayor Sylvester Turner pleaded with Governor Abbott to release his Ebenezer Scrooge grip on the state’s rainy-day fund to help flood victims. That fund, currently around 10 billion dollars, was originally created after the oil and gas bust way back in the 1980s. Instead, Abbott used his executive power, as he has done for last week’s storm, and declared a state disaster, so Texas could qualify for federal assistance. So much for national overreach and state sovereignty.

The legislature just began another biennial session in January. After a dysfunctional year of pandemic quarantines, disturbances from 2020 election deniers, and a frozen national disaster, voters should expect them to address our most pressing statewide issues. There is nothing exceptional about literally polarizing segments of our state and victimizing the most vulnerable. Meaningful infrastructure and inclusive policies are what will move our state forward, not gaslighting from our majority surrogates in Austin.

As my no-nonsense husband George puts it, “If you are a partisan asshole, own it, and stop talking out of both sides of your mouth.” For me, I sum it up simply as: bullshit runs deep in Texas.