Fact-Checking the Media’s False and Misleading Claims Blaming Americans for Rising Prices, Supply Chain Crisis

COMMENTARY Budget and Spending

Fact-Checking the Media’s False and Misleading Claims Blaming Americans for Rising Prices, Supply Chain Crisis

Nov 18, 2021 3 min read
Joel Griffith

Research Fellow, Thomas A. Roe Institute

Joel is a Research Fellow in the Thomas A. Roe Institute for economic policy studies at The Heritage Foundation.
Gas prices over $5.00 per gallon are displayed at a Shell station on November 17, 2021 in Hercules, California. Justin Sullivan / Staff / Getty Images

In recent days, prominent media commentators and various media outlets have taken up this false attack on the very people suffering from the bad decisions being made in Washington. In particular, a New York Times piece published Tuesday laid the blame for the state of the economy, the labor shortage, supply chain problems and inflation not on irresponsible policy choices in Washington, but at the feet of hardworking Americans trying to support their families.

Joel Griffith, research fellow at The Heritage Foundation’s Roe Institute for Economic Policy Studies, corrects the record on the blatantly false claims made by the Times:

Claim No. 1: The Fed is not to blame. “Monetary policy takes a long time to affect consumer prices, so it’s not a given that the inflation situation would be terribly different now if the Fed had started raising rates already.”

Rating: Misleading

Griffith: “Without a doubt, Federal Reserve policy is contributing to the very large burst of inflation. The central bank has ‘purchased’ trillions of assets (with new digitally 'printed' money), effectively financing much of the explosive federal spending by buying government debt. These funds flow throughout the economy. One of the most inflationary federal government actions financed courtesy of the Fed was the government paying businesses not to fire people, paying banks not to evict people, paying mortgage companies not to take people’s houses, and paying people not to work. Government spending stoked demand at a time when restrictions, valid health concerns, and fear suppressed supply. Bad government policy should not be understated when discussing root causes of the skyrocketing inflation Americans are experiencing.”

Claim No. 2: American demand for products is to blame for the supply chain crisis. We should lower our expectations. “Supplies of many goods actually are higher than they were before the pandemic. The problem is that demand is up even more.”

Rating: False

Griffith: “Blaming ‘high demand’ for the supply chain crisis is absurd. Government policies are indeed suppressing the supply of goods. For instance, the extensive bottlenecks this year—including ensuring delivery of that turkey from the farm to your table—are caused by continued COVID vaccine mandates; tightening environmental regulations on the trucking industry; older diesel trucks increasingly being banned from the roads in California; worker shortages among drivers, warehouse workers, and retail staff (caused by government policies); and onerous distancing and capacity restrictions on processing plants. A tsunami of government spending contributed to the rise in demand, while government policies simultaneously impeded the supply and transportation of these goods. Government basically suppressed supply while stimulating demand with copious spending.”

Claim No. 3: The pandemic is to blame because it shut down the global economy. “When the pandemic shut down the world in 2020, operations managers at companies concluded: We need to do whatever we can to survive.”

Rating: False

Griffith: “The pandemic did not ‘shut down the world.’ Governments shut down large parts of the world. Companies were forced by governments to abide by oppressive restrictions, driving many out of business. Erratic, unpredictable, arbitrary decisions by government bureaucrats made planning even for the short-term nearly impossible. Of course, some state governments reopened their societies quickly—or refused to impose shutdowns. These areas enjoyed a much better economic environment, from Florida, Utah, Georgia, and Texas, while the rest of the nation remained mired in deep recession, especially New York, California, New Jersey, and Hawaii.”

Claim No. 4: Americans are to blame for the labor shortage after choosing to exit the workforce. “Many of us elected to stop working, or work less.”

Rating: False

Griffith: “This is like the arsonist blaming the fire department for not arriving at the scene of the fire fast enough. Governments forced many businesses to shutter completely or dramatically reduce operations. Many of these employees hardly ‘elected’ to stop working. Instead, their jobs disappeared due to governments criminalizing their employment. Schools in many parts of the nations closed their doors for much—if not all—of the academic year or imposed spontaneous, unpredictable interruptions. This made employment difficult for many parents. In addition, many of those formerly working in the childcare industry left. Once again, parents hardly ‘elected’ to stop working.

“Further, federal unemployment bonuses combined with state unemployment benefits resulted in the majority of unemployed Americans earning more off the job than on the job—acting as a powerful disincentive to returning to work, especially when combined with multiple federal stimulus checks. Now, private vaccine mandates and a threatened federal mandate are pushing many more out of the labor force. In short, misguided government policies shrank the number of people willing to work. This artificial shortage is driving up the cost of labor.”


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