Among all the problems that one can be concerned with, the divergence in price among non-tradeables which exists across the US is not something which threatens to tear the union apart. What reason is there to think that price differentials will diverge at an accelerating rate in the US, rather than arriving at reasonably stable differentials?

This would, I take it, be involved in the fight against an explicit industrial policy in service of a tacit industrial policy which would be unlikely to be explicitly adopted? Since, after all, inflation and price differentials are more a consequence of the interplay between development of productive capacity and recreation of effective demand than they are of monetary policy. Monetary policy has an important supportive role, in the sense that a bad monetary policy can crippled development of productive capacity, but its certainly not a primary driver of price differentials.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.