Inflation

Michael Kinsley on inflation in the new Atlantic:

My specific concern is nothing original: it’s just the national debt. Yawn and turn the page here if you’d like. We talk now of trillions, not yesterday’s hundreds of billions. It’s not Obama’s fault. He did what he had to do. However, Obama is president, and Democrats do control Congress. So it’s their responsibility, even if it’s not their fault. And no one in a position to act has proposed a realistic way out of this debt, not even in theory. The Republicans haven’t. The Obama administration hasn’t. Come to think of it, even Paul Krugman hasn’t. Presidential adviser David Axelrod, writing in The Washington Post, says that Obama has instructed his agency heads to go through the budget “page by page, line by line, to eliminate what we don’t need to help pay for what we do.” So they’ve had more than a year and haven’t yet discovered the line in the budget reading “Stuff We Don’t Need, $3.2 trillion.”

“When some foreign nation restrains … the importation of some of our manufactures … revenge … naturally dictates retaliation.” Some trade union protectionist? A politician backing restrictions on imports so as to “save jobs for American workers?” Actually, this was written by Adam Smith in Wealth of Nations, the bible of free traders. And once restrictions are installed, “freedom of trade should be restored only by slow gradations” to avoid throwing lots of people out of work.

Smith, of course, saw retaliation as a means of forcing a trading partner to end its own restrictions in a process of bilateral mutual disarmament. Now, battles over trade policies gets played out in the World Trade Organization, and against a background of mounting Sino-U.S. geopolitical rivalry.