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But this announcement from the DOJ is more than just a fishing expedition. It suggests that the mighty law enforcement apparatuses of the federal government are following Sens. Elizabeth Warren (D–Mass.) and Bernie Sanders (I–Vt.) into the fantasy world where the profit motive is responsible for inflation. That cockamamie conspiracy theory becomes less funny when the FBI is empowered to charge companies for “illicit profits” as they try to keep shelves stocked in an environment of scarcity.
Warren has been trying to blame corporations for inflation [4] since last year. She’s lobbed attacks at big oil companies and small grocery stores—a famously low-margin business [5]—for trying to take advantage of supply chain issues to screw customers. As if businesses suddenly became more greedy within the past year after previously not caring about profits, I guess?
This week, Sanders climbed into the clown car too, tweeting [6] that “Gas prices are at the highest level in 7 years” due to “corporate greed, collusion & profiteering.”
These are economically illiterate takes, though hardly unexpected ones. Warren is a broken record when it comes to blaming billionaires and corporations for everything from high college costs [7] to the lack of affordable housing [8] to the current supply chain problems [9]. Just as reliably, she ignores the role that government has played in creating or worsening those problems—by subsidizing student loans, imposing restrictive zoning laws, and implementing trade-limiting rules like tariffs and the Jones Act [10], for example.
Tunku Varadarajan writes about economist John Cochrane [11]. A slice:
He traces the present inflation to the pandemic and the government’s response. Starting in March 2020, “the Treasury issued $3 trillion of new debt, which the Fed quickly bought in return for $3 trillion of new reserves.” The Treasury then sent checks to people and businesses, later borrowing another $2 trillion and sending more checks. Overall federal debt rose nearly 30%. “Is it at all a surprise,” Mr. Cochrane asks, “that a year later inflation breaks out?”
He likens this $5 trillion in checks to a “classic parable” of Milton Friedman (1912-2006), the great monetarist at the University of Chicago, where Mr. Cochrane was a professor for 30 years before moving to Stanford in 2015. “Let us suppose now that one day a helicopter flies over this community and drops an additional $1,000 in bills from the sky, which is, of course, hastily collected by members of the community,” Friedman wrote in “The Optimum Quantity of Money” (1969). If they spent the money, inflation would result.
The Covid checks, Mr. Cochrane says, were “an immense fiscal helicopter drop. People are spending the money, driving prices up.”
David Henderson has an excellent idea for reining in ‘big tech.’ [12]
GMU Scalia School of Law professor Todd Zywicki warns that cancel culture is infesting banking [13]. A slice:
Vague regulatory standards bear little resemblance to the rule of law. The same regulators who devised these standards can prevent entry by new banks that might be willing to serve unpopular individuals and industries. The burdensome nature of these (and other) barriers to entry is evidenced by the fact that only 44 new banks [14], including state and federal banks, have been established since the financial crisis. Virtually all of these new banks are small, geographically circumscribed community banks that cannot fill the gap left by mega-banks.
Jesse Walker reports on the history of the vague term “neoliberalism.” [15]
“How the Coddled Kids Graduated But Never Grew Up [16].”
Juliette Sellgren’s latest podcast is with Gary Leff on airline travel and bailouts [17].
The Cato Institute’s Center for Educational Freedom celebrates its 20th birthday [18].