Taming Inflation with Robert Hockett

** Be sure to check out the transcript for each episode of this podcast on our website, where you will also find an “Extras” page with links to related resources. realprogressives.org/macro-n-cheese-podcast **

Robert Hockett drops into the Macro N Cheese clubhouse to talk to Steve about the usual stuff: inflation, monopoly capitalism, the massive scale of global inequality, and the climate crisis barreling down on us at an ever-faster speed. It is our ninth episode with Bob, this one spurred by his recent article, the alliterative “Prices, Preclusive Purchases, and Production: Some Forgotten Solutions to Forgotten Inflation Problems” (Forbes, 13 May 2022), which diagnoses the current inflation as three supply side dysfunctions – short, medium, and long term.

Folks like Larry Summers focus on labor costs, in hopes of encouraging a further clampdown on labor, while executives are boasting record profits and chortling about marking up prices under cover of inflation.

Isn’t this just the reality of capitalism? Can it be tamed – and if so, what would that look like? If we can’t yet get rid of capitalism, are there workarounds? Bob suggests identifying those products and services that are essential to leading decent, peaceful lives and removing them from the profit-maximizing system altogether. He goes into the history of public involvement in healthcare and home finance. Another area is food:

“Here's a case where we allow the private sector beneficiaries of that socialization, namely big agriculture, to profit enormously … The agricultural sector is subject, of course, to the vagaries of weather, meteorological conditions, and so forth. Furthermore, it's subject to the potential for overproduction of exactly the kind that Marx and some other political economists in the 19th century predicted. And the only way, it turned out, to keep them in business and keep them producing was for the federal government to promise to buy any of the surplus.”

There has been a lot of talk about supply chains, which Bob welcomes, ironically, for including the word “supply,” because it has been missing from American economic discourse for quite some time.

“But one problem with that phrase is, it lumps together two distinct things, right? On the one hand, you have to have the production of that which is to be supplied, and then on the other hand, you have to have the delivery of the supplies. And the phrase ‘supply chain’ seems to lump those two things together.”

Steve brings up the fact that exporting production means exporting pollution. In addition to exploiting cheap labor abroad, outsourcing production has allowed companies to evade US environmental regulations. The discussion leads to the need for a Green New Deal and the possibilities therein. They also talk about the IMF and World Bank and ask if the US is held to different standards. (It is.)

A Bob Hockett episode is as much a conversation as an interview. These two old friends don’t just look at problems, they peer down the path to solutions – some possible, some not. Whether you agree with either of them, it’s worth a listen. Tell us what you think.

Robert Hockett is the Edward Cornell Professor of Law at Cornell Law School, Adjunct Professor of Finance at Georgetown University’s McDonough School of Business, and Senior Counsel at Westwood Capital, LLC.

@rch371