Summers: Gouging Legislation ‘Dangerous Nonsense’ That Can Create ‘All Kinds of Shortages’

During an interview aired on Friday’s edition of Bloomberg’s “Wall Street Week,” economist, Harvard Professor, Director of the National Economic Council under President Barack Obama, and Treasury Secretary under President Bill Clinton Larry Summers said that blaming inflation on price gouging “is to economic science what President Trump’s remarks about disinfectant in your veins was to medical science. It is dangerous nonsense.” And that while gouging legislation can’t have any meaningful impact on inflationary pressures, “it can cause and contrive all kinds of shortages” and “inhibit the supply responses that are what’s ultimately the best way to overcome inflation.”

Summers said, “The price gouging at the pump stuff, the more general price gouging stuff, is to economic science what President Trump’s remarks about disinfectant in your veins was to medical science. It is dangerous nonsense. There is no material prospect that, in any enduring way, gouging legislation can have any substantial effect on inflationary pressure. But it can cause and contrive all kinds of shortages. It can distort a complex network of flows between crude and refined product. It can inhibit the supply responses that are what’s ultimately the best way to overcome inflation. This gouging talk is a diversionary confusion. It’s something that tends to happen when we have inflations. But we only make progress once we move through that and we understand that the real determinants of inflation have to do with the total level of demand that’s being stimulated by policies.”

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