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Prices going up and things costing more are synonymous. This is textbook inflation. Policy makers have to look at things from different angles. Central banks re
by tootie 3y ago
Prices going up and things costing more are synonymous. This is textbook inflation. Policy makers have to look at things from different angles. Central banks really can't do much of anything about structural problems. They can only raise or lower rates. They will put some weight on the distinction of core prices and volatile ones, but really they don't have any levers to affect profits or wages directly.
That job goes to legislators and even then, they don't always have clear options. Windfall profits tax is a start, but what they do with the profits they collect is another. No one likes price controls, but taking short-term action or maybe enacting price stabilization could be very effective. And, of course, all legislation becomes a political minefield where vocal contingencies will simply disavow empirical evidence in favor of pushing an agenda.
I'd also caution against laying too much at the feet of "corporations". Absolutely anybody selling anything on the open market will be doing the same thing. Most homes are sold peer to peer and home prices are inflating like crazy. I wouldn't expect any rational home owner to sell their house for less than the maximum price they could extract because they think buyers deserve a break.
- whimsicalism 3y ago> Windfall profits tax is a start, but what they do with the profits they collect is another. No one likes price controls, but taking short-term action or maybe enacting price stabilization could be very effective. You are talking gravely serious interventions and I really think you are missing the knockoff incentive effects.
- tootie 3y agoPrice controls have a bad reputation from there enforcement by corrupt and reactionary governments of the past, but there's a very strong case being made by mainstream economists that there's a path to doing it properly: https://www.project-syndicate.org/magazine/inflation-targeted-price-controls-alternative-to-interest-rate-hikes-by-isabella-m-weber-2023-03 https://www.project-syndicate.org/magazine/inflation-targete...
- whimsicalism 3y agoUMass Amherst is a known center of heterodox economic thinking, her views do not reflect the mainstream at all. The problem with price controls is not that the government enforcing them is 'reactionary.'