Prices will not drop for going against monopolies: Lawrence Summers

The Biden White House is promoting tougher antitrust laws to curb US inflation and ease public criticism, but a leading Democratic economist says that move is not the right fit.

“The emerging claim that antitrust laws can combat inflation reflects the ‘denial of science,'” wrote economist Lawrence Summers, a senior official in the Obama and Clinton administrations, on his Twitter account.

“There are many areas, like transitory inflation, in which serious economists differ. Antitrust as an anti-inflation strategy is not one of them, ”he said through his account.

Inflation in the United States soared. The annual rate measured by the consumer price index rose 6.8% in November. However, Summers noted that there has been little change in business concentration.

Before the pandemic, inflation had been unusually low for years, a sign that companies had very little power to raise prices. Prices rose on average less than 2% annually between 2010 and 2019, according to the specialized site MarketWatch.

“There is no basis to believe that monopoly power has increased in the last year in which inflation has accelerated enormously,” Summers tweeted.

Until very recently, the US Federal Reserve had viewed high inflation as a transitory phenomenon. Government officials have recently acknowledged that inflationary pressures will linger longer than initially expected, but they still believe that price pressures will fade by the end of 2022.

“Increased demand, with limited capacity and manpower, is totally sufficient” to explain the higher prices in meatpacking and other industries, Summers tweeted.

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Reference-www.eleconomista.com.mx

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