Famed economist Larry Summers is stepping up his criticism of President Biden’s attempts to fight inflation – warning this week that his administration’s embrace of “hipster” antitrust policies could drive prices even higher.
Summers, who served as Treasury Secretary during the Clinton administration, noted the antitrust crackdown led by Biden’s Justice Department and Federal Trade Commission carries “real risks” during a period of persistent decades-high inflation.
“Policies that attack bigness can easily be inflationary if they prevent the exploitation of economies of scale or limit superstar firms,” Summers said in a Twitter thread.
“Likewise, policy focused on protecting competitors or communities or limiting layoffs are likely to raise costs & prices,” Summers added.
The remarks marked the latest broadside from Summers, a prominent voice in Democratic circles who has nevertheless taken the Biden administration to task for its response to rising inflation.
Summers previously warned against the Biden administration’s antitrust push last December after the president and top advisers signaled plans to crack down on the largest meat producing firms and oil companies.
Summers’ Twitter thread expanded on remarks he made during an earlier interview on Bloomberg Television, where he sounded the alarm on what he described as a Biden-led “hipster antitrust” push.
Summers was reacting to a recent speech by Assistant Attorney General Jonathan Kanter, who called for enhanced antitrust enforcement and warned that “corporate power has grown to levels that leave our fellow citizens concerned and confused.”
“What is badly misguided and potentially dangerous to our economic future is the set of doctrines that people jokingly refer to as ‘hipster antitrust,’” Summers said.
Summers added that an overly aggressive antitrust policy that loses focus on protecting consumers “tilts very easily into a kind of dangerous populism.”
Biden has responded to critics who say his economic policies have contributed to the inflation surge by declaring that bringing prices down is his top domestic priority. But gas prices have skyrocketed to fresh records this week and Federal Reserve interest rate hikes have yet to yield much progress.
Summers further elaborated on his stance in an interview with Axios on Monday, telling the outlet that the Fed holds the “primary responsibility” to address inflation but the Biden administration’s policies could also impact prices.
“There are micro-policies that also matter,” he added.
Biden and his team argue that a lack of competition in key sectors has allowed major players to jack up prices on consumers. But Summers disagreed with the view, warning in December that the administration’s proposed actions were “more likely to raise than lower prices.”
“The emerging claim that antitrust can combat inflation reflects ‘science denial,’” Summers wrote on Twitter. “There are many areas like transitory inflation where serious economists differ. Antitrust as an anti-inflation strategy is not one of them.”
However, Summers has also defended the Biden administration from criticism on economic policy at times – most recently last week, when he said that Amazon founder Jeff Bezos was “mostly wrong” when he dismissed the president’s push to raise corporate taxes to lower inflation.
[Written in collaboration with other media outlets with information from the following sources]
