The government needs to do something about inflation, but it’s not clear what. Fed Chair Jerome Powell inched up the interest rate, but a wide swath of economists has cautioned not to undermine the pandemic recovery before it even turns expansionary relative to the historical trend. And yet people are hurting, especially at the gas pump—and if Democrats can’t come up with a compelling narrative, they’re likely to face the electorate’s ire in November. The consensus is that they’re screwed. If there’s a way out of this trap, policy-makers need to stop treating inflation like an angered deity to be appeased through sacrifice and more like an aggregation of different price trends.
Different kinds of inflation mean different things for different people, and for the public as a political body. Wage inflation is not in and of itself a problem unless you’re the one paying for it, and in general employers aren’t experiencing a “profit squeeze,” so they can, in general, stuff it. Used-car prices are a problem for buyers, but are not likely to be a long-term one. Acceleration in medical and education costs, recent inflation drivers, have slackened. Price hikes for luxury handbags, private jets, and super-yachts are not the public’s concern except insofar as they suggest there are too many rich people. It’s inflation in working people’s base costs like food, rent, energy, and transportation that demands government solutions, and at every level our representatives have levers they can pull.
Yet of the fiscal anti-inflation strategies ready to hand the most prominent is one I call “Make things worse to keep them the same.” It’s exemplified in the calls to fight gas prices by expanding domestic fossil fuel production—a suicidal move akin to heating the house via arson that, nonetheless, absent competing ideas, threatens to become conventional wisdom. More examples: the plan to increase mortgage rates to solve the problem of unaffordable houses and the one to resume student loan payments to cool demand, like healing broken fingers by cutting them off. Even if these tactics work to stunt price movement, they threaten to leave people more unhappy than they started.
Progressives and anti-monopolists have offered an alternative solution: Bring down prices by increasing competition. Led by the Twitter rabble and Elizabeth Warren, this group holds that corporations are riding transitory pandemic cost hikes to gouge on unrelated items. It’s a compelling story, with a good guy (consumers) and a bad guy (corporations), and it seems to have the president’s ear; Biden’s State of the Union address mentioned fostering competition as one of the four points in his inflation plan, particularly in shipping and nursing homes. But oil prices are set by an international cartel, and home rents by a multitude of landlords. Even if these days there’s no bad time for antitrust action, it’s hardly the panacea some claim.
To tackle the egregious gas hikes in particular, economist Dean Baker suggests that we reduce demand the simplest way possible: by paying people not to drive. In a blog post for the Center for Economic and Policy and Research, he ballparks that for $130 billion the federal government could reduce driving by 20 percent, a fast and pragmatic way to “find” 2 million barrels of oil a day without backsliding on our emissions goals. Instead of driving, people could take buses, which could run with expanded times and without charge for another $40 billion.
Fighting inflation by making the bus free is counterintuitive, but the provision of public services insulates people from the capricious market, which in turn exerts downward pressure on prices. Irish politician Cormac Devlin suggested the same thing, asking the country’s prime minister to consider an experiment with fare-free buses to shelter commuters from increased fuel costs and fight inflation overall.
If we think about the problem of inflation in terms of people’s overexposure to the existing market, the weapons chest expands. Just about any resource at any level could be leveraged to fight inflation. Put unused park land to work and it can sprout a new cohort of small farmers who will increase local food independence, like Prince George’s County, Md., is doing with the “Urban Farm Incubator”: Successful applicants get an irrigated half-acre to cultivate a start-up. Eviction moratoriums and increased protections at the federal and local levels have (literally) sheltered renters during the pandemic; extending these policies now, or even making them permanent, could quell expectations about acceleration in housing prices. In Los Angeles, the transportation authority is experimenting with a public rideshare program, at a token cost of $1. There may be no good one-size-fits-all solution to high inflation, but there are a lot of good specific ones.
To get a better sense of how local policy-makers are thinking about this issue—one that’s traditionally considered beyond their purview—I called Boston Mayor Michelle Wu. Elected in 2021, Wu is the country’s leading advocate for free buses, and I wanted to know if she saw herself on the front line against inflation. “So many communities are being forced to make impossible choices, whether to pay rent, buy food, or get medicine. Being able to put a little back in people’s pockets is important,” she said. “Under these circumstances, without free transportation, people have been forced to ration the trips they make instead of just doing what they need to do.” That’s a problem policy-makers can confront directly: Boston’s fare-free pilot has three bus lines, targeted toward working-class areas hit hardest by rising prices.
There is a Whac-a-Mole quality to this kind of inflation fighting; it lacks the occult, meteorologic power of Federal Reserve action. Free bus lines, for example, could lead to increased rents as landlords capture the benefit. Wu is aware of the potential problem, which is partly why she campaigned on the return of rent control to Boston. Her office announced a task force earlier this month that will recommend legislation for next year. “These policies are part of a common fabric,” Wu told me, “they reinforce each other to ensure that the city is for everyone.” The thicker this fabric, the harder it is for any of us to fall through it. Those sound like the terms of an inflation debate even a Democrat could win.
In a wider sense, it’s no one’s job to keep things the way they are—which is good, because in the 21st century that’s proving to be an impossible gig. Anyone who says they can do it, especially with regard to gasoline prices, is setting themselves up for very bad reviews. The alternative is to imagine that we live in a society that, in response to major world-historical changes, is flexible enough to shift how it functions in a thoughtful way. Even in inflationary times, that isn’t too much to ask.
In this World War II–era propaganda short, the devil teams up with Hitler to ruin the United States with inflation. Satan undermines the war effort by showing Americans how to evade price controls, hoard goods, use the black market, and sell war bonds. Watch it on YouTube until someone files an absurd takedown request.
“From the Bus”
Taking the bus liberates your hands, and in 1958 photographer Robert Frank used that freedom to take pictures of New York through the windows while he rode. The result is the classic series “From the Bus,” which you can see at the National Gallery’s site.