Today on TAP: The Case for an excessive profits tax
By ROBERT KUTTNER
The Prospect’s special issue on the supply chain debacle should demolish the fable that the current inflation reflects too much stimulus. As we report, most supply and price pressure is the delayed result of deregulation and concentration of the global logistics system combined with far too much offshoring. It took only a crisis like COVID to expose the system’s fragility.
Want more evidence? Have a look at Europe. Inflation in the EU, which has nothing like the stimulus program of the U.S., clocked in at 5 percent for 2021, the highest in decades.
This statistic understates Europe’s true consumer inflation because Germany, the EU’s largest economy, cut value-added taxes for six months in July 2021, lowering net prices to consumers. Without that cut, the increase in consumer prices would have been even higher.