Man, people really hate the economy.
It’s not a new story. In fact, the only thing interesting about it how not new it is. People hate the Clinton economy. People hated the W. economy. People really hated the Great Recession economy (go figure). People hate the Obama economy, even as it came roaring back better than before the Great Recession. People hated the Trump economy (less so, but that’s another story that’s the same story). People really hated the pandemic economy. People continued to really hate the Biden economy, even as it came back roaring better than before, well, anything seen in decades. And people continue to really hate the Trump 2.0 economy.
Trump’s poll numbers are in tatters, and somehow it’s not because of the misguided war adventures in the Middle East. Well, not altogether that. It’s because they think the economy is as bad or worse than it was before.
Memory is a fickle thing. People who study memory suggest that we tend to over-remember good things in our past and over-forget the bad. It’s why the best SNL cast is the one that was on when you were in high school. It’s why you keep getting back together with your toxic ex. I suspect it’s also why people seem to think the economy is worse than it used to be.
But it is a little different this time. Because, for six years now, we’ve had a new thing to blame our hatred of the economy on: inflation.
Now, Joe Biden didn’t create the inflation. Sure, people think that, but people think a lot of things. The long pandemic (combined with a little shipping lane seasoning) created the inflation. We had a massive disruption of the supply chain. Since everybody was either sick or trying not to get sick, nobody could get shit for years. Toilet paper (famously), but also a huge number of other products, inputs, services, were just plain gone, some for longer than others. You don’t need to pass Econ 101 to know that a major disruption of supply of every product on earth would increase prices dramatically across the board.
Of course, Joe Biden wasn’t even president the first year of the pandemic when most of these disruptions and price increases happened. But, thanks to extreme Terminal Civic Amnesia, people forget who was actually president. And Joe Biden wasn’t the first president to send out checks—Trump did it first, making sure his signature was on them even. What Biden was responsible for was a large-scale effort to rebuild the economy, and the conservative media hated that so much that they blamed all the inflation on it. Well, not the wage gains that were concomitant with it. No, the price increases were the fault of the Inflation Reduction Act. No worries if you notice that on a pure temporal level it makes no sense. Because it stuck: Joe Biden did the inflation.
Back during the recovery from the Great Recession, I used to opine that I thought it would be a good thing for the government to goose a little inflation if it would mean the economy grew faster. I wasn’t sure if I actually wrote that on this blog, so I combed through a bunch of old posts, but I couldn’t find anything. Maybe it got lost in the many, many posts that got lost during the transitions (so many posts). But, since I probably said it more than I ever wrote it (if I ever wrote it), I have to take a mea culpa on that opinion. Maybe the economy would have recovered faster (it almost certainly would have), but it would also have probably meant that Mitt Romney would have won in the 2012 election. Because people really fucking hate inflation more than I had thought, but now thinking about it more, I mostly understand why.
At a purely rational level, I don’t mind inflation. It means that prices and wages both go up. Things, in general, end up better for me. But on a more emotional level, I can sympathize with the hate. Sure, maybe my wages go up a little more than the prices, but it sucks going to the store to find the prices are up again. We had decades of stable prices—for most things they stayed relatively the same, for some things they went up, and for many others, they even went down. You grow up coming to expect it.
I’ve come around to why people hate inflation, why people think it’s bad for the economy even if is actually good for the economy. When the economy is actually bad, when unemployment is elevated, it affects maybe 7% of people in the labor force in a recession, 10% during the Great Recession, or up to 25% during the Great Depression. Truth be told, during times when the economy is extremely fucked, it just doesn’t really affect that many people. During the Great Depression, the vast majority of people who wanted to and were able to work were working. Sure, there were knock-on effects, but they weren’t destitute.
On the other hand, inflation—specifically higher prices—affects every single person in the economy: not just the labor force, but every single consumer. Jeff Bezos has to pay more for his yacht; Jane Middleclass pays more for her home; Larry Paycheck pays more for his groceries. So, taken together, a period of elevated prices would negatively affect far more people than a period of elevated unemployment. But, the former is fine for the economy; the latter is far worse.
Inflation is a combination of higher prices and higher wages. You would think that people would be fine with higher prices if it meant even higher wages. Sure, in the abstract. But, people don’t tend to operate or think like that. They also don’t intuitively connect them. For most people, inflation means solely higher prices. But even if they inflation meant both, they also separate them in their minds as thus: higher prices are the government’s fault, but I earned my higher wages. We all tend to do this in one way or the other: the good things we get are ours because we deserve them, the bad things are due to government failure. I built a great business, the roads, infrastructure, stable legal environment, clean air had nothing to do with it.
Now, you would think that Donald Trump, who people for some reason (Terminal Civic Amnesia) thought would be good for the economy, would be doing everything he can to stop the overall increases in prices. (Now, you can’t do things to lower prices because that would destroy the economy.) In fact, we had a nice slowdown in the second half of the Biden presidency, but nobody cared or gave his administration any credit. No, only Donald can fix it. So of course, our very smart, very intelligent president has gone on to do everything he fucking can to increases prices. Tariffs (literally higher prices on everything), immigration crackdowns (increase prices on construction, food, well, most things really), a fucking war in Iran (remember our little shipping lane seasoning earlier?). But I’m sure after everything finally falls down (I mean, it’s bound to at some point), everybody will look back on this area, with their Terminal Civil Amnesia, as the good old days, the days when somebody who was good at economy was doing things that were good for economy.
