In 1980, when Ronald Reagan won the presidential election, I was eleven. Even at that young age, I could tell something was off when an admittedly telegenic former “B” actor – who promised to take from the poor and to give to the rich so that the poor could (somehow) get richer, who spun a hallucinogenic mist of patriotism and a return to American greatness, who proposed leading us further into a nuclear confrontation with the Soviet Union at the expense of programs that directly benefitted the American people, and who promised to somehow magically slay the great beast at the throat of all Americans: inflation – won the presidency in what the evening news termed “a landslide.” By today’s standards, it was a victory by a very large margin, but I couldn’t discount the 47+% of the country who had not voted for him.
So what happened? The American people had had enough of inflation. They couldn’t pay their bills. They felt weak and unsteady in their own lives. Many thought anyone would be better for them than the person who was currently in office. Donald Trump didn’t invent the line “Are you better off now than you were four years ago?” Ronald Reagan used it in the presidential debate in 1980. And it stuck.
What followed was not four years of supply-side economics, but 40 years of it. Tax giveaways went to the rich and corporations, with the outward justification that giving to them would somehow trickle down to us. Deregulation was part of this new religion. And Reagan famously dismantled the union movement in America, setting the tone of the decades to follow when he broke the 1981 air traffic controller’s strike.
When Americans saw scant gains from these policies, Bill Clinton asked a version of “are you better off” in 1992, and he won the election. His advisors coined the phrase “It’s the economy, stupid” to describe their path to victory. But after twelve years of trickle-down economic theory being fed to the American people like religion, the Democratic Party had no room to the left and so it continued down Reagan’s economic path, taking away direct benefits to people in need and giving business new avenues to wealth through lax anti-trust enforcement and easy approval of massive mergers.
Buying power has decreased and inequality has increased steadily since that initial shift in 1980. And yet, here we are again, doubling down on what made us not so great.
Why?
It’s the Inflation, Stupid
When I heard the first few exit interviews from the polls on the morning of November 5th, my gut told me Kamala Harris would not win. I had seen this movie before: person after person was saying that “inflation is out of control; prices are up; I can’t stand four more years of this.” I was hopping up and down mad at each one of them, because the president doesn’t control inflation. There’s no magic spigot the government can turn. Even the Federal Reserve has limited control (but don’t say that out loud, because pricing is all about psychology; say the word inflation too many times and it could get worse, just because you said “boo”).
I was also hopping up and down mad because this particular period of inflation was clearly caused by the supply chain interruptions of the pandemic, which affected the entire globe. Prices went up because it got hard to find things we all absolutely needed as factories shut down everywhere to save lives. No economic policy was at fault. A virus was. And today we are making our way out of the hole faster than peer nations.
Nevertheless, those voters are absolutely right about the prices. The situation has to change. But my gut tells me that many people are missing something fundamental – and it has to do with math.
Americans Don’t Like Math
In this election, Democratic messaging was saying that inflation is back under control. Fun fact: the rate of inflation is under control. It is very close to normal pre-pandemic levels, at just over 2%. But the American people were saying the prices aren’t back to pre-pandemic levels – which is also true. Both are right, and during this election, I’m convinced they talked past each other.
In my gut, I believe the American people think that when inflation comes down, prices come down. They think they’re the same thing. But that’s not what happens – especially in our free-market economy. Why would a seller unilaterally lower their prices to a level you’re more comfortable with, especially for items like food that you can’t go without, just because you’d like them to? They may be greedy, or maybe they’re just worried about prices, too – possibly even for the sake of their employees who rely on the business for their livelihoods – and so they charge what they can to make sure they can survive in the long term. After all, their competitors are doing it (assuming there are any).
For this reason and many others, prices won’t go down just because Donald Trump tells them to. There is no tool in the American government’s toolkit to directly reduce prices. No magic phone call. Why? Because we’re allergic to the words “socialism” and “rent control” and “price controls.” The country wants to solve everything through the “free market.” Fine, we can do that. But here’s what it will take:
The Free-Marketeer’s Guide to Fighting Inflation
(1) Every American will have to comparison shop and choose the cheapest alternative that still meets their needs. Taking your hard-earned money to the place that offers the better value is the most direct way to lower prices. Wait, you say: there’s only one grocery store in town, and it’s part of a national chain – they have me over a barrel. Or maybe you have two stores in town, but some items are cheaper in one and other items cheaper in the other, and to sort it all out would take a week with a spreadsheet, and by then the digital price tags will have caught on to you, and you have to start all over. Maybe clip coupons all day long like your grandma used to? What you have here is a lack of meaningful competition: if there were enough grocery stores or Internet providers or phone companies to choose from, at least one of them might break ranks and actually sell a good selection of items for less to gain market share. It might take time for you to find each other in the marketplace, but you’d have half a chance. But that’s not really happening because there aren’t enough providers, or the providers are owned by one corporate parent that can use algorithms and AI to extract the most out of you. If you think you can get out of it by shopping online, sorry: the algorithms are even worse there, the quality unknown until the item lands on your doorstep, and now you’re paying shipping or delivery costs, and maybe even a tip to the poor driver.
What could possibly cure this situation? Regulation, possibly starting with enforcement of anti-trust laws to break up monopolies, creating market competition among a larger number of smaller wholesalers and retailers, meaning you could finally, actually comparison shop. Not that you want to spend your precious time on Earth doing that, but it’s the cost of the free market. Just don’t try to comparison shop ambulance services while you’re bleeding out. You might prefer regulation for that. Just saying.
Fun fact: President Biden has quietly ramped up enforcement of anti-trust law over the course of his administration. So on this, you should have voted Democrat to fight inflation.
(2) Every American will have to raise their wages. That’s because the real problem isn’t the number on the price tag; it’s your inability to pay it. Wait, you say: how can I get my employer to pay me more? Well… you can ask. That’s step one. When that fails, you can get together with your fellow employees and ask again, this time under the threat of stopping your work until your demands are met. That’s forming a union, which is your right under (current) U.S. law. If that fails, which it sometimes does (or if Elon Musk takes that right away from you sometime soon), you can ask the government to redistribute some wealth from the very rich to the rest of us. That’s socialism, so you start to sneeze and your eyes tear up, but if you can handle your allergy symptoms, it is another way to go. But, you say: won’t work just go to someplace where there aren’t unions and high taxes? Like China? Or Texas? True, that can happen for some industries, but not all of them. Some things still have to happen here and now – like health care, and food distribution, and sports, and hospitality, and many more things that have stubbornly remained in the U.S. as manufacturing of objects has gone elsewhere. There is a limit to what can leave, even in a globalized world, and by now we’ve pretty much reached it. As China gets richer – and as China and other growing countries compete for cheap labor in those places where it still exists – the need to hire American workers will return. For now, before you vote to de-globalize the economy using tariffs and the trade wars that come with them, think about how much more expensive the things you buy will be if they are made in the U.S.A. – or still not made in the U.S.A. but subject to tariffs. If you’re trying to fight inflation right here, right now, that might not be your best bet.
Fun fact: President Biden has been the most pro-union president in recent memory. And Democrats have always been the ones to champion minimum wage increases, to back worker protections, and to maintain Social Security benefits while the other side would like to do the opposite. So on this, too, you should have voted Democrat.
Another fun fact: our buying power is on track to return to what it was without electing Donald Trump. Now that we have elected him, only time will tell which of his policies likely to raise prices (tariffs) and lower buying power (weakening labor protections; cutting benefits programs, Social Security, public works, and infrastructure spending; etc.) will actually come to pass. But the direction he presented in his campaign was the wrong one, assuming what you care about is your personal buying power. One or more prices may come down, and he will crow about it (probably gasoline prices, because they often bounce wildly over the course of any four year presidency – always an opportunity to say you had something to do with it). But my prediction is that the overall buying power of any normal American will continue the steady decline that started with supply-side economic theory under Ronald Reagan. We will know when we know. But if we’re scrambling even harder to make ends meet by then, we probably won’t know, because we won’t have time to pay attention. Much like now.
The Bad Deal
If there’s no way to know for sure that Trump’s policies will lead to impoverishment, why make such a big deal about electing him for a second term? Because of the things we are likely to lose.
Here’s a list of what we traded for the fantasy of 30 cents off the price of an egg:
- The environment. If the new administration succeeds at shrinking and reshaping the federal government as per Project 2025, you can kiss some of the protections you and your back yard enjoy, expect climate change to get much worse (destabilizing the world through crop failures and causing mass migration – sorry if that was your concern), for pollution to increasingly enter your air, water, and food, and for refuges in nature to become smaller and harder to find.
- Women’s rights, starting with abortion but possibly continuing to birth control and a general societal shift that aims to put women back in the household and out of the job market (so men can have more buying power – just ask J.D. Vance).
- LGBTQ+ people’s rights, including the right of Trans people to exist as such. You may have only cared about prices, but this was part of the bargain. Not worried about it? Just hope that the next group of people traded to the wolves isn’t one you’re part of. It started here.
- Ukraine. If the fate of 40 million people and the ownership of one of the world’s primary grain growing regions doesn’t concern you, well, good luck. The price of bread went up around the world because Putin thought he should spend a long weekend taking over a sizable country. If we don’t deter that sort of thing, wars like this will cost you in the future. Oh, and freedom.
- Gaza. If the fate of two million people and the ownership of beachfront property shifting from Palestinians to Israel and, potentially, Trump family members doesn’t concern you, well, see above for “It started here.” Trump was conspicuously silent on the campaign trail concerning Palestinians, so don’t expect a change of heart from his first term. This nasty business may not raise your prices directly, assuming Israel gets away with it, but blowback is inevitable, and that will cost. Oh, and two million people.
- Democracy. This time, you elected him, so he won’t have to steal the election in the courts or claim it was stolen from him or trigger a march on the Capitol that risks hanging a disloyal vice president and taking over the country in a coup – but you just put your seal of approval on someone who attempted all those things, demonizes and metes vengeance upon anyone who opposes him, lies with impunity, and enriches himself personally while in office. He’s so “creative” with our institutions that he would be a fool not to float eliminating term limits for himself (Putin did, so why not?). Nice going. No loss there, if you think that’s what politics should look like in a democracy, but I think we could do better. Kamala may not have floated your boat, but we all could have worked with her and pushed her to be better.
- Whatever else comes up. We weren’t expecting Covid, but it hit while Trump was president, and we lost over one million American citizens to a half-witted understanding of medicine and public health – more on a per capita basis than any other developed nation. We expect hurricanes to get worse, and no doubt will have some bad ones over the next four years, and they won’t be deflected by a Sharpie, so look out for that and be ready for a newly-reduced government to not respond well. And what else could possibly happen? Maybe an asteroid needs deflecting? Or a war needs preventing? Are we really in good hands? Time will tell. I’m watching and will give you no end of grief for all the failures I think will come.
Recap
So you had amnesia about Trump. You can’t afford to make ends meet, so I get it: it’s hard to think back eight years ago, or four years ago, and put all the pieces together when you’re working two jobs, you’re tired, and you can’t pay the bills. When you’re that strapped, it’s also hard to keep in mind that inflation coming down doesn’t mean prices will come down, and it’s really no fun to think that getting back your buying power might involve you. But next election – if there is one – please, please, please don’t believe anyone who says they will fix inflation for you. That wasn’t the reason to elect him this time, and it won’t be in the future.
Enjoy your cheap egg.
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Related articles from elsewhere:
NY Times – Morning Briefing – 11/8/2024 – How Inflation Shaped Voting
The Guardian – I spent hours trying to persuade US voters to choose Harris not Trump. I know why she lost. (primary source)
Washington Post – The Real Story of Inflation – Pandemic-Era Stimulus Isn’t the Culprit (pandemic relief not to blame)
En passant links gathered from this article:
Harvard Kennedy School – Are You Better Off That You Were 4 Years Ago? (brief abstract)
Wikipedia – 1981 Professional Air Traffic Controllers Organization strike (overview)
Brookings – The US recovery from COVID-19 in international comparison (commentary with graphs and data)
U.S. Department of the Treasury – The U.S. Economic Recovery in International Context (commentary with graphs and data)
On Point with Meghna Chakrabarti – Biden’s FTC took on big tech, big pharma and more. What antitrust legacy will Biden leave behind? (extended interview transcript / recording)
Letters and Politics – How Google Monopolized Almost Everything (fascinating audio interview with Barry C. Lynn, touching on his article “The Antitrust Revolution”)
NY Times – Wages Have Outpaced Inflation. But Not for Everyone. (nuanced accounting of wages, inflation, and who is doing better and worse at this point in time).
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