The Inflation Approach We Need
December 16, 2022
Stiglitz and Regmi on why the Fed should pause interest rate hikes.
The Roosevelt Rundown features our top stories of the week.
The Fed’s Using the Wrong Tool
As expected, the Federal Reserve’s final meeting of 2022 produced another interest rate hike.
It’s time for those to pause, Roosevelt’s Joseph Stiglitz and Ira Regmi argued in a webcast about their new research.
“Policy has to be adaptive to the source of inflation,” said Stiglitz. “Raising interest rates may exacerbate some aspects of the problem because it will impede the investments we need to address the remaining supply-side bottlenecks.”
The right response: “fiscal policy and other targeted measures that increase investment, curtail market power, and ensure the provision of essential services that will not only address inflation but also provide long-term benefits to people,” said Regmi.
Watch the full webcast below, and read more from Stiglitz in “All Pain and No Gain from Higher Interest Rates.”
How to Implement Industrial Policy
The last year has seen unprecedented legislative wins for green industrial policy. Now, the conversation has turned to implementation—and what the Biden administration can do even in a divided government.
In a new issue brief, Joel Dodge, Joel Michaels, and Roosevelt’s Lenore Palladino and Todd N. Tucker explore how, “with or without cooperation from Congress and state and local government,” the Defense Production Act (DPA) can facilitate clean energy projects.
DPA powers, they explain, can be used to “accelerate the clean energy transition while constraining corporate extraction and building worker power—in particular by overriding contrary federal, state, and local laws that privilege corporate short-termism.”
A Whole-of-Government Approach to Worker Power
“The declining power of workers is a national crisis with both economic and sociopolitical consequences,” Roosevelt fellow Hiba Hafiz writes in a new issue brief.
“In the past, when economy- or sector-wide crises emerged in other areas—whether in system-wide national security failures before 9/11 or regulatory breakdowns leading up to the financial crisis—scholars and policymakers understood that discrete regulation by separate agencies was insufficient: A broader, whole-of-government effort was necessary.”
That’s the approach we need to increase worker power and market competition.
What We’re Reading and Listening to
Are Twitter’s Troubles the Beginning of the End of Social Media? [podcast] – The New Republic’s The Politics of Everything