Baydoun: “To address the true drivers of higher prices, we must bring the concept of inflation back down to earth”
Washington, D.C. – In a new op-ed in OtherWords, Bilal Baydoun, director of policy and research at Groundwork Collaborative, argues that regulation and public investment are a better response to high prices than more interest rate hikes. This comes ahead of the October CPI report, which is expected to show that inflation continues to decline.
Key excerpts from the piece are below. You can read the full op-ed in OtherWords here.
“Even before the COVID-19 pandemic, Americans struggled to afford sky-high prices for homes, child care, college, and health care, as wages lagged far behind the rising cost of living. Treating all this as ‘inflation’ does more harm than good.
“But instead, for the last year and a half, we’ve largely looked to the Federal Reserve to lead our response to high prices. Unfortunately, the Fed wields one tool to deal with inflation: interest rate hikes. And they work more like a sledgehammer than a scalpel.
“There are at least two major issues with the Fed’s theory. First, inflation is coming down, our economy is growing, and unemployment is near record lows. As it turns out, you don’t have to grind the economy to a halt and sacrifice millions of jobs to slow down inflation.
“More importantly, these rate hikes fail to address the core drivers of rising prices today — and in many cases make the problem worse. The Fed can’t build more homes, break up price-gouging corporate monopolies, or lower the cost of prescription drugs. But it can make life even more expensive.
“To address the true drivers of higher prices, we must bring the concept of inflation back down to earth. Manipulating interest rates can’t make life more affordable for struggling families — but public investment and sound regulations that rein in corporate price-gouging can.
“Congress and statehouses must be in the driver’s seat of the affordability agenda, as only these democratic institutions can fund long-overdue investments in child care, health care, housing, and education. These investments are the seeds of a stronger, more inclusive economy.”
Email firstname.lastname@example.org to speak with Baydoun about inflation and the affordability crisis ahead of next Tuesday’s CPI report.