George Selgin: preference

Transcript context

…George, you’re a big champion of the productivity norm, where you’d have the price level gently fall as productivity growth accelerated. If we happen upon an AI true boom, do you actually see a world where policymakers would allow this type of productivity-driven deflation to emerge? Or would they be too afraid of it? My favorite policy or my ideal about prices falling as unit costs of production of goods falls is a long-run ideal in that I don’t think you can just jump into that policy because people now have expectations about trends and prices and costs. So, you’d have to gradually work into this. You would gradually work towards a policy where prices often, actually, are allowed to fall. Do I think that the people at the Fed or any other central bank in the world today are ready to start heading towards such a policy? I don’t. I don’t. I think we still have a long way to go just to convince them that they shouldn’t be targeting a positive inflation rate. Until we’ve moved away from that, at least moved towards some kind of agreement on nominal income stability, only then will it be possible to start talking about allowing a long-run downward trend in prices if productivity continues to improve. Yes, in the front row. First you, then you.…

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