The role of government in a globalized world

I read with fascination as government’s across the world attempt to convince their citizens that they are somehow in control of inflation.  Right now, a return to growth has seen an increase in the price of commodities with the price of a barrel of oil nearly doubling since the beginning of the year.  Other commodities are also increasing with the Commodities Price Index increasing nearly 35% over the last twelve months.  These are numbers that no national governments can control.

Then add in the effects of a fundamental increase in the demand for food as population grows and income levels increase around the world and you have a a perfect recipe for serious increases in the price of basic food products.

As far as I can tell, the price of raw materials, oil and food pretty much determine inflation levels – none of which are controllable by governments in a globalized and competitive economy.  That is obviously not to say that inflation is going to run out of control over the next year or two.  Prices dropped so significantly in 2008 that it will take time for inflation to become a problem.

But I really think government should come clean.  Their ability to control the key levers of their economies are reducing by the day.