NO ONE IS PERFECT
Last week, the notorious economist Larry Summers was interviewed by a Financial Times reporter about the state of the American economy. They spent quite a bit of time discussing the remarkable resilience of consumer spending and the ongoing strength of the job market, at the same time as price increases have finally slowed. Larry expressed some anxiety about the future but indicated that it was never really all that reasonable for anybody to have expected that unemployment had to increase in order for inflation to slow, commenting that: “No one should have thought that most of the route from 7 percent to 2 percent needed to be achieved in ways that were correlated with increases in unemployment.”
If that doesn’t sound like Larry to you, it’s because that remark about what “no one should have thought” is a sharp rebuke to what one Larry Summers was saying in June 2022. At that point in time, he in fact seemed to think the exact opposite, insisting (from a tropical vacation!) that “we need five years of unemployment above 5 percent to contain inflation–in other words, we need two years of 7.5 percent unemployment or five years of 6 percent unemployment or one year of 10 percent unemployment.” But now, no one should have thought this, says Larry… commenting about Larry.
Make it make sense.
working class Americans are severely rent-burdened than was the case 20 years ago. Almost one in five working-class renters pay more half their incomes to their landlords in rent.
approve of the government using price controls to address inflation. Seventy percent of women and more than half of Republicans express support for price controls.
is the change in US egg prices since last year, according to official government stats. The price of gas, airline fares, and other items have also seen recent declines.
Official economic data doesn’t always correspond to people’s sense of what they’re seeing in their own experience. Sometimes, that’s because our own individual experiences aren’t nearly as vast as we may like to imagine. Sometimes, that’s because economic data is full of generalizations and averages and weightings and adjustments that — while statistically useful — don’t map directly to real-world experience. Sometimes it’s both of those things.
But sometimes it all lines up, like in this graph of Federal Reserve data showing how people’s wages change from year to year, depending on whether they switched jobs or not. And just as you might imagine, there’s a consistent and very long-running pay premium that goes to people who switch jobs. In other words: yes, getting a better job is a thing, and it pays off. Which is perhaps why big employers are so intent on stifling the job market with non-compete and no-poach agreements that make it harder for workers to change jobs and make more money — and why the Biden administration’s middle-out approach to economic growth includes making sure we have strong, competitive labor markets that help workers get more money.
Many of the most valuable pharmaceuticals on the market are the product of medical research funded by the National Institutes of Health and other public agencies. But despite the fact that the financial support of the American public is critical to the development of so many drugs, giant pharmaceutical companies bank all the profit that results from all this publicly-funded innovation. Even worse: Americans often pay more for these lifesaving drugs than people in any other country.
In a recent underpublicized development, the Biden administration announced a groundbreaking plan to get at this problem. In short: if drugmakers don’t offer reasonable prices on drugs funded with government support, the government will step in and empower other companies to make the same drugs at a lower price. This transformational power was granted by an act of Congress back in 1980, but despite an extraordinary increase in pharmaceutical costs, it has not yet been exercised in the 43 years since.
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