This article was originally published in The Hill on July 2, 2021. You can see the original version here
Something essential is missing from the debate about the risks of inflation today and this is especially mind boggling because what is missing is the central insight of economics since Adam Smith — the role of competition. The last time inflation was a problem in the United States was in the 1960s, 70s and early 80s when large sectors of the economy were dominated by oligopolies and monopolies and competition was much weaker. Today, the near monopolies of that period are gone and the ability to raise prices in most sectors can last only until temporary bottlenecks are cleared.
To be specific, in the 1960s and 70s American steel companies raised prices in concert almost every year. When presidents Kennedy and Johnson spoke out against what they believed were inflationary increases, U.S. Steel (USS) and the powerful American Iron and Steel Institute (AISI) told the two presidents to mind their own business and the price increases usually stuck.
It was the same in the auto industry that dominated the post-World War II manufacturing sector. In the 1960s and early 70s the “Big Three,” GM, Ford, and Chrysler had roughly 90 percent of the U.S. car market. Their haughty CEOs and Republican congressional allies ridiculed legislators who had the temerity to criticize their pricing and design decisions. The Bi