By: Veronique de Rugy (Reason)
Politicians, the Federal Reserve, and Fed and administration apologists like to claim that the inflation we face is caused by supply constraints. This claim goes against the facts on the ground. According to the World Trade Organization, even though there was a collapse in trade at the beginning of the pandemic, trade in intermediate goods—critical inputs in finalized products—quickly recovered despite port and shipping bottlenecks. Sure, it increased at a slower rate than before, but trade was still rising.
In addition, data from the main U.S. ports show that after declining at the beginning of the pandemic, ports soon recovered and operated at pre-2020 levels. There were chokepoints, but supply chains were far from “cut off” in the way that President Joe Biden likes to assert.
To the extent that there are real obstructions in supply chains, they started long before the pandemic. For these, there is a lot that the administration and Congress can do…
