Why innovation could stop inflation

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It seems that nearly every economic conversation these days resolves around inflation. Each question seems to lead to another. Is it transitory? Will it get worse? If so, when? And for how long? Which of the many factors — including soaring post Covid-19 demand, supply chain shortages, fiscal and monetary stimulus, energy politics, or all the many changes in how we live, work and play post pandemic — should matter most as we try to build a picture of what’s happening?

In all the debate, one point gets very little discussion: the role of technology as arguably the most important variable in what might happen to inflation over the coming several years.

For every inflationary factor, from labour shortages to transportation bottlenecks, fuel costs, or even longer-term pressures like an ageing population, there is a looming technological change that could shift the calculus around pricing in ways that are hard to predict.

Consider the clean…

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