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Episode 191 - No [Price] Cap?: Inflation Truths (w/ Fadhel Kaboub) (Patreon)

Published:
2022-07-11 08:55:21
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2026-06
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Content

This week, economist Fadhel Kaboub returns to the podcast to follow up on a recent conversation about price controls with Richard Wolff. Are they really the solution? What are the pros and cons? How do you respond to people who point to Nixon's price controls as proof that price controls don't work? And what is the left's final word on how to respond to inflation?

Subscribe to Bad Faith on YouTube to access our full video library. Find Bad Faith on Twitter (@badfaithpod) and Instagram (@badfaithpod).

Produced by Armand Aviram.

Theme by Nick Thorburn (@nickfromislands)

Comments

Isaac

I'd love to hear a panel's thoughts on how to fix the economics academic system. Could we have a concerted push from student groups to hire/publish more leftist economist professors, similar to the divestment campaigns ?

Anonymous

This episode was great cuz it partially explained our economic history and what's been tried. Great! This episode felt like a pile-on of shit, knowing that NO ONE - not Sheepdog Bernie, not Twitter-Merch whores (AOC & the Skanks), not the D/R party - will do one goddamn thing. In the next few years, say hello to Fascism that is Out-n-Proud as opposed to the behind the scenes. The Propagandist MSM and their online guard dogs (TYT, Hasan Piker, Vaush, etc) are already blaming the "all powerful" Leftzilla as the reason everything is going to shit. It's our fault, when the Left is where the actual solutions are. I take Sundays off from ALL politics & news - listening to a Marlena Dietrich biography written by her daughter. Thanx Brie, for starting off my political depression with a bang this Monday!

Nathan Ngumi

Interesting proposals to tame inflation and unemployment... Will the President and those in Congress do what is necessary or will they just let these rip?

Jonathan Kadmon

Bob Hockett, who is a friend of Fadhel's, wrote a bunch of articles for Forbes many of which were based around a type of less heavy-handed price control called "price collaring" that is worth a look-see. The goal is to de-commodify and stabilize certain essential goods and services. These are worth a look and have a convenient audio feature if you don't have time to read it off a screen you can just listen on the go. https://www.forbes.com/sites/rhockett/?sh=c61ea01e54a0

Anonymous

This is what is hard for me to square. Economics is a very complex subject. Policies often have unintended consequences and models/theories, though useful, do not always give an accurate prediction of reality. Like he says, the vast majority of economic “experts” do not believe the remedies he proposes will work. He claims that’s because they have all been indoctrinated. The problem is, thats what every dissenter believes and most often they are wrong. Climate deniers will talk about the indoctrination of the majority of climate “experts”. I was listening to an Archaeologist who believed there was an ancient advanced civilization, 12,000 years ago, that was devastated by a natural disaster. He seemed to have a lot of evidence. He of course believed 90% of Archaeologists, who ignored him, were indoctrinated. Every single one of these dissenters will also claim they are being suppressed or silenced. 90% of economists don’t agree with Fadhel. Do you think all of these economists have it wrong? Or are they all just covering for the powerful? In most complex subjects we believe the consensus of experts. We have to because we just don’t have the time or capacity to do the research ourselves. So why in this particular case do you choose to believe the dissenting opinion? The one that claims the experts are all indoctrinated. There were plenty of scientists and doctors who raised red flags about the dangers of the covid vaccine. If you chose to believe those scientists you would be laughed at and called a science denier for not going with the consensus of experts. Is it possible you believe Fadhel because your politics align and you really really want him to be right? Not because the evidence is convincing.

Sifl

All of the best and smartest government interventions are just fingers in the dike because a unified OPEC+ is going to target a price of $100+ a barrel from here on out. Energy prices have been artificially low due to market shocks and Saudi market manipulation to win back market share from US frackers. Also, peak oil got moved back a few decades due to advances in tight oil recovery (fracking, horizontal drilling, etc.). But the days of cheap oil are gone. The Ukraine war could end tomorrow and oil prices would continue to stay elevated. The only way out is energy transition. That is not to say that we don't need short term measures like Kaboub and Wolff propose. We definitely do. But OPEC+ is beyond the ability of the US government to control. The only way to deal with OPEC+ is to quit oil and gas and transition to renewable energy. While I understand the left's sympathies with the working class who are hurt badly by high energy prices, it is a disservice and betrayal of the progressive movement to suggest to the working class that we can get back the gas under $3 a gallon if we just let Russia overrun Ukraine and tweak some antitrust laws. That is a fantasy. We need to get real and be clear that the only way out is a massive energy transition to renewables. And it is not just an economic necessity, it is necessary for the survival of life on Earth.

Luft Waffle

The best interview about economics in a long time. Perhaps you would consider bringing Michael Hudson on your show.

Anonymous
>>87461076

Have you read "Debunking Economics"? There's very strong evidence (mostly from primary source materials) that the majority of the tenants of neoclassical economics are based on ludicrous assumptions that are not based on anything that resembles reality. The whole "equilibrium" they base all of their theories on does not exist and the supply and demand curve look nothing like the really neat lines they use on those courses. When you go into a microeconomics or macroeconomics course, the underlying assumptions of these theorems are obfuscated and economics is almost taught like a hard science (Neoclassical economists like Milton Friedman have always wanted this outcome). The problem is that these assumptions are not directly engaged with until economists need to read the primary source material (the people that actually wrote the theories) which only happens at the PhD or late Graduate level. This is what Fadhel means when he says this school of thought was already debunked at the academics level during the 60s. It was also debunked again during the 2008 crisis which was completely impossible according to the Neoclassical school of economics that dominated all economic policy since Raegan and, funnily enough, to an even greater extent Clinton.

Anonymous

The establishment of the wealthieat most powerful global corporate/political monopolists always knew that education was at the root of their power, bc by controlling & limiting access to knowledge or different schools of thought [by preventing the hiring of professors who would teach alternate economic models that contradict the monopolist orthodoxy] you disrupt any competition (in any organized form) that might one day learn how to truly democratize economic power & thus dissolve the seemingly impenetrable concentration of international-ruling power held by the current global monopolist class. This is #EducationOverPolitics & why #EducationSavesDemocracy.

Anonymous
>>87461076

I believe the problem that causes these type of already debunked schools of thought to permetiate is exactly the argument you're trying to make. We have limited time and attention so we default to believing whatever the cultural hegemon of our society believes because it's the "consensus" among the people with the most cultural capital. Remember that some of our biggest society failures were at one point considered "consensus" positions among the elite. The Irak War was supported by all media and experts and the minority that opposed the war was delegitimized. Civil Rights was also an unpopular fight. My challenge to you would be to try to engage with the arguments and engage with the evidence and theories of both the mainstream and dissenting voices without the predisposition that the consensus must be correct because it is the consensus. What Fadhel is saying is not that far from the Keynesian economics that brought us out of the Great Depression during the 1930s which, at one point, also became the consensus.

Anonymous

Listen to this episode (which was great) and ask yourself after each of Kaboub’s answers “maybe this is why Yellen is acting as she is?”. On the one hand, Kaboub’s solutions, which I broadly and generally would love to agree with, are 40 year solutions. Should Yellen just take a powder until we’ve transformed our government and education systems? I don’t see how his solutions can be implemented in a time frame that anyone would recognize as “progress” in the short or even medium term. Basically, things would get bleaker and bleaker and worse and worse until, suddenly, we’d have the necessary pieces in place and THEN things can get better. I’m not saying he shouldn’t be doing the work he’s doing, it’s important and necessary, but it’s just not relevant to governance TODAY. Furthermore, I was somewhat frustrated with Kaboub’s level of detail. Sure, he sort of seems to give a somewhat “detailed” response (not answer) to the question about meat price controls but doesn’t he then have to talk about controlling the inflation pressure points on feed and then drill in from there. Then he has to control the inflation pressure points on energy and drill in from there. And land, steel, lumber, etc, etc, etc. It may seem like he’s getting more focused as to what needs to be controlled but I suspect he’s really saying that everything needs to be price controlled or it won’t work. And while we may say “yeah…we need price controls on everything”, wouldn’t that require a Maoist/Stalinist approach to implement? And, while some of us may say “yeah…we need a Maoist/Stalinist approach”, I’m not sure any of us would really want to live through such a thing. Maybe I’m ultimately just a neoliberal chud when it comes down to it but I don’t relish living through a purge or gulag system or any such thing. And I do recognize that our system does require some similar results for large portions of society, I’m just really not sure the scales are comparable (what a depressing thought). In other words, if you’re someone who might defend Stalin’s famine (for example) as “necessary” or even “important”, do the results we see in the modern U.S. really compare unfavorably? Did Stalin’s famine work? Where the results really as you would like to see? Do you think we could achieve Kaboub’s approach without comparable brutality? I offer these as good faith questions because I really do wonder about this stuff and I find it hard to get a straight answer. Maybe I’m just not asking the right questions or maybe I’m too indoctrinated in our neoliberal system, I just haven’t heard a real way out. And I suspect Brianna’s frustration in trying to get an answer to “but why is Janet Yellen doing this?!?!?!?” is a reflection of the same.

Anonymous
>>87461076

No I haven’t read that, thanks for the recommendation. The point of my post was not to encourage blind acceptance of whatever the consensus view is at the time. And of course you have to consider the incentives of the group holding the consensus view. My point was that people will often condemn others for going against the consensus of experts while doing the very same thing. And it’s not like they have dedicated their lives to the subject and are carefully weighing the evidence. It’s often just that the dissenting view is politically appealing. Progressives can spot this tendency in conservatives very easily. They want something to be right, because if it was, their political views would be vindicated. Forgive me if you are a professional economist, but when people from outside the field use words like “debunked” it always sounds so arrogant. Someone who has not seriously pursued economics can hobby-read economics critiques and confidently conclude that thousands of very smart people at MIT, Harvard and Chicago have dedicated their lives to studying and believing bunk. The true answers are so obvious that the average person can pick up a book and plainly see it, but all those experts are blind. Isn’t it more likely that the picture is a bit more complicated than that? Perhaps there is a lot of value in the consensus and it’s not entirely nonsense. It’s fine to question, but can we start with an assumption that these experts are intelligent and rational? If I can easily dismiss a well studied and accepted theory, I should start by assuming that I am missing something and spend a lot of time reading what proponents of the theory write. I am open to the idea that our consensus understanding is not perfect. It clearly isn’t. Economics is definitely not a hard science. Sometimes I wish it was. We do not come to a mathematically certain answer and then move forward with absolute confidence. We have models and theories and make policy decisions hoping they will work. The consensus changes and evolves over time. I am suspect when someone is saying we need to make massive, across the board changes. Economic policy decisions tend to have harsh unintended consequences and big changes naturally carry more risk. In a field of study with so many variables and so much uncertainty, evidence in support of a theory is hard to come by. What the consensus camp can say is that, for all the problems we have (and there are many), this is the most dynamic and productive economy humans have ever created. Maybe let’s be careful with our interventions.

Anonymous

This ep was sooooo fascinating thank you!

Anonymous

Hey hey Brie. Any chance this ep gets unlocked or I can pay for this specific ep to send to some friends/family?