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Can policy change inflation?

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This week, U.S. Representative Peter Meijer addressed skyrocketing inflation from the House floor. The Grand Rapids Republican called on lawmakers to craft legislation addressing rising inflation. But what can politicians do?

“The prices are fundamentally a function of the fact that too many people want goods and there’s not enough of them available.”

Paul Isely is Associate Dean in the Seidman College of Business at Grand Valley State University.

“This is the Babe Ruth baseball card.”

“People know that those things are worth more than the exact same baseball card that doesn’t have Babe Ruth on it.”

“That’s what we’re seeing right now is there’s too many people with too much money trying to buy too few goods. And therefor, the price gets bid up.”

The pandemic created supply chain bottlenecks and the influx of federal pandemic relief aid pumped too much money into the economy. And that excess money, when added up, has created trillions of dollars in extra individual wealth.

“So, what do we have to do? We have to somehow help with supply chain. And so, that might be thinking about how do we increase the ability of transportation firms to transport goods.”

Politicians can create policy helping moving away from long relied upon supply chains in China and Russia to “friend sourcing” from Japan, India, Europe and the U.S. – they could also raise taxes.

“If you tax people more they have less money to spend. That’s obviously not a politically viable solution.”

One other option is capping prices.

“If we cap the price on things, so many people can purchase it. It’s the people who can wait in line. The people who can click the fastest to try an get their Xbox, who are the ones who get the goods as opposed to the people with the most money.”

What is certain, lawmakers can provide safety nets for people whose incomes aren’t keeping up with basic necessities.

Patrick joined WGVU Public Media in December, 2008 after eight years of investigative reporting at Grand Rapids' WOOD-TV8 and three years at WYTV News Channel 33 in Youngstown, Ohio. As News and Public Affairs Director, Patrick manages our daily radio news operation and public interest television programming. An award-winning reporter, Patrick has won multiple Michigan Associated Press Best Reporter/Anchor awards and is a three-time Academy of Television Arts & Sciences EMMY Award winner with 14 nominations.
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