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**NOVEMBER 12, 2021**

Kuttner on TAP

Is Summers Owed an Apology-or Does He Owe Us One?

The policies that he promoted helped produce the supply chain crisis,
and his diagnosis of today's inflation is just plain wrong.

Politico ran a piece

the other day contending that the White House owes Larry Summers an
apology for dismissing and disparaging his warnings beginning last
February that Biden was spending too much and courting inflation.

Politico quoted a piece Summers wrote in

**The Washington Post** last February 4, as the $1.9 trillion American
Rescue Plan was heading for final legislative passage in Congress,
warning that macroeconomic stimulus of this scale could "set off
inflationary pressures of a kind we have not seen in a generation, with
consequences for the value of the dollar and financial stability."

Well, inflation just clocked in at a 6.2 percent annual rate, the
fastest in three decades. Ergo, says Politico, Summers was a prophet
whose advice should have been heeded.

The reality, however, is that the current bout of inflation has little
to do with Biden's recovery program-and is actually the result of
perverse policies that Summers and his confreres foisted on America over
three decades. As that Bolshevik, Fed Chair Jerome Powell, could explain
to Summers, the current inflation has little to do with macro pressures
and everything to do with bottlenecks resulting from the supply chain
crisis.

If you dig a little deeper, the supply chain mess is precisely the
consequence of economics according to Summers-deregulate, globalize,
ignore the risks and hyper-concentration promoted by unhinged finance.

The usual sources of macro pressure are not part of the story. Wages on
average are rising more slowly than prices.

The "inflation expectations" cited by Summers as supposedly feeding on
themselves are another myth of right-wing economics, as demolished in
this technical paper
by
senior staff economist Jeremy Rudd, published by that same citadel of
radicalism-the Fed.

Weirdly, Summers's most recent view is that neither the infrastructure
bill nor Build Back Better, with its emphasis on human caregiving, its
long-term payout, and its minimal impact on deficits, is inflationary.
"A lot of it is vitally needed investments in the future of the
country," he told Chris Cuomo on CNN. At least he has that right.

So-apology tally: The apology for the supply chain debacle and the
resulting shortages and price hikes is owed from Summers to us. Politico
also owes one to its readers.

~ ROBERT KUTTNER

Follow Robert Kuttner on Twitter

Robert Kuttner's latest book is
The Stakes: 2020 and the Survival of American Democracy
.

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