Mr. Rattner served as counselor to the Treasury secretary in the Obama administration.
While the extraordinarily strict sanctions imposed on Russia constitute an admirable policy response to its appalling invasion of Ukraine, we should not be complacent about the potential boomerang effect on the global economy.
The shunning of Russian petroleum has already caused oil prices to jump. Prices of corn and wheat, major exports of both Russia and Ukraine, have been soaring — in the case of wheat, to levels not seen since 2008.
That comes as we already endure the highest inflation in 40 years. Last Thursday, the Labor Department reported that prices in February were 7.9 percent higher than a year ago, an acceleration from the previous month.
More inflation likely means slower growth. On the demand side, the bite of inflation will leave households with less money to spend. On the supply side, already stretched supply lines will be further challenged by repercussions from the war in Ukraine.”
David Lindsay: I have always liked Steve Rattner, as a responsible voice from the right. I realize now he was the Counselor to the Secretary of Treasury, which is the same position my father had for about three years in the Eisenhower administration. I liked the comment about raising taxes on the wealthy as part of the solution. Eisenhower raised the top tax rate to 92 or 93? Many economists say 70% is the magic number in Europe.
Here is a comment I endorsed:
David E, Concord, MA 7h ago
Well, as I read this, I wonder if we’re missing the forest for the trees. What I think more about is the potential impact of a Sino-Russian partnership. If China opts to support Russia’s war and strengthens its alliance, assuming we don’t turn a blind eye, this will drive a massive adjustment on the supply side of our economy. Independent of the obvious “blind spots,” I believe globalization is credited with fueling significant wealth for the top half of the US population. A transition to a more mercantilist economy, anchored in a strong US/Europe/UK alliance that significantly diminishes trade with China may mean accepting a lower standard of living. Personally, I’m comfortable with that if it’s the price to pay for condemning dictators and autocrats around the world and standing up for our values. And maybe it will accelerate the transition to greener, cleaner future.