Weeks ago, the president of the Federal Reserve, Jerome Powell, appeared before the United States Congress to talk about
the progress of anti-inflationary policy.
The United States has just experienced the highest inflation rate in 40 years
when it reached almost 10% at the end of the pandemic and Powell raised the interest rate at the fastest pace in precisely 40 years.
Now inflation has gone down – last Tuesday the data for February came out, it was 3.2% – but it is still higher than expected and with this the chances disappear that this week the Fed, when it meets, will announce its decrease as the market discounted in December.
Everything indicates that we will have to wait and it is not clear how long, because if anything emerges from Powell's speeches, it is that the Reserve's economists see, review and monitor more and more data to make a decision.
Until climate change.
“Insurance of various types, home insurance, but also auto insurance and things like that, has been a major source of inflation in recent years
,” Powell said to explain the rise in prices.
According to data published this week by the Bureau of Labor Statistics, which produces the consumer price index in the US,
auto insurance increased 20.6% in one year.
Yes, you read that right: 20.6%.
Now, according to experts,
the factors driving the increase in insurance prices are climate change and auto parts, Bankrate said this week
.
'The science of details' by Nicolás Ajzenman and Florencia López Boo and 'Proxi + 50', by the experienced Sebastián Campanario
Powell was clear.
Raising the interest rate is not enough to lower inflation and suggests that when economists thought they had fully understood a phenomenon, perhaps this is not the case and there are new complexities.
What does inflation have to do with the climate?
It is
the PanchoIbañización of the economy
, would say the journalist, economist and author Sebastián Campanario (and competitor of this column on Sundays in La Nación).
Pancho Ibáñez, TV host of El deporte & el hombre and Tiempo de sowing in the eighties and nineties, said “everything has to do with everything” to refer to the fact that there is indeed an interrelation between factors.
“And more and more
,” explains Campanario, who in the last decade has been moving his expertise from behavioral economics towards innovation, creativity and well-being in adulthood and old age, and now has just released his new book
Proxi +50 : 50 ideas for your next 50 years
, which refers to these complex systems phenomena.
“It is an entire discipline from the sixties, first in physics and mathematics then in biology and social sciences, which involves seeing reality as a series of nodes connected to each other: society, markets, the human body,”
Pancho says about the principle. Ibanez.
“Today's world is more complex than that of a decade ago due to different technologies that relate everything, such as
the Internet and blockchain, which makes improbable events more likely: a summer with record heat due to climate change, inflation and UFOs
.
”
The greater interaction and uncertainty caused, explains Campanario in his book, that in recent decades the average age of company CEOs, Nobel Prize winners and presidents of countries increased significantly.
Being old is not about not having a future but about having more possibilities to know details and accommodate contexts to decide better.
A recent book on behavioral economics also talks about the latter, by economists Nicolás Ajzenman and Florencia López Boo,
The science of details: simple tools to improve your behavior and that of society
.
The authors present 'The architecture of the decision', that is, how “small contextual factors can have a relevant and effective effect on micro decisions.
Even for Ajzenman and Boo, these nudge policies sometimes
avoid the need to implement more fundamental structural reforms that are costly.
Take small steps.
All this leads to another reflection.
If the complexities, interrelationships and nerve endings of a society and economy are greater than before, will the best way to make structural reforms such as those that, for example, the Argentine political leadership is debating this summer, is to limit and close the decision-making process? of decisions?
or is this a simplification?
Democracy, in short, can be understood as a complex decision-making system.
Perhaps to lower inflation it is not enough to have a DNU or a law but also to understand other phenomena that economists may lose sight of.
Like climate change.