The Local Causes of Inflation

While it may be easy to blame the federal government for rising inflation, Alex Yablon, writing in Vox, argues that “many of the worst bottlenecks making the pandemic economic recovery so painful were put in place by political actors much lower down the food chain, from governors to city councilors to everyday citizens.”

“State and local jurisdictions, not the Fed or the feds, determine how much housing is built and where, when to permit cheap clean energy sources and vital energy transmission lines, and whether to expand ports and logistics infrastructure. Across the country, local legislators, executives, and public authorities have declined to spend more to improve economic capacity, or placed additional hurdles in the way of badly needed new development.”

Yablon outlines three areas where local governments have exacerbated the situation, as well as suggestions for how to reverse the negative impacts: energy and transportation, where local officials can support the transition to renewable energy; housing, where local decisionmaking about zoning and land use affect supply; and logistics infrastructure, which is often controversial at the local level. Too often, major infrastructure projects cross multiple jurisdictions and agencies with competing interests and priorities. As Yablon writes, “These efforts require a level of coordination and prioritization policymakers haven’t practiced in decades.”