The Debate and The Economy
Since Thursday night’s presidential debate, all the pundits seem to be talking and writing about the performance rather than the substance. Admittedly, it was difficult to watch. Trump ignored the moderators’ questions and, with few exceptions, simply repeated the lies and half-truths he used to stoke audiences at his campaign rallies. Biden attempted to respond to Trump’s assertions while responding to the moderators’ questions and ended up not doing a very good job of either. He sometimes stumbled over words, misspoke numbers, and came across as less than eloquent.
The analysts seem to ignore Trump’s reaffirmation that he will not accept the results of the 2024 elections unless he wins, and if elected, he will rule the nation as a repressive, revengeful, vindictive autocrat rather than a president. He also hinted at a deal with Putin, similar to Reagan’s Iran-Contra deal, that includes Putin’s release of a political prisoner and the U.S. abandonment of Ukraine. For the corporate media, none of this is newsworthy, so they have focused on Biden’s inability to respond with fluency to Trump’s rantings.
Biden, and those who advise him, should know by now that Trump doesn’t do anything according to the rules. He does whatever he wants, regardless of the situation—unless someone has the authority and courage to stop him. Regardless, the moderators allowed him to pontificate rather than debate. Biden should have answered the moderators’ questions, rebutted Trump’s record on the issues, and ignored Trump’s ranting. Biden has an excellent record of accomplishments that he must be better prepared to defend in the next debate.
On the issue of inflation, Biden could have simply pointed out that wages have risen faster than prices since 2020, despite the COVID-19 pandemic that disrupted the global economy and plunged the nation into an economic recession in 2021. According to the Bureau of Labor Statistics, consumer prices are up 21.0% but wages are 22.7% higher than in 2020. Per capita disposable incomes, which includes all sources of income, are 7% higher, after adjusting for inflation, than in early 2020.
The initial increase in inflation in 2021 was due to disruptions in domestic and global supply lines, which severely limited supplies of virtually everything for an extended period of time. The first COVID relief package, signed by Trump in 2020, resulted in a 10% increase in consumers’ disposable incomes in one month, January 2021—before Biden took office. A second COVID relief package signed by Biden in March 2021 triggered another major increase in disposable incomes. These and other economic stimulus programs have contributed to price inflation only in that they have given low- and middle-income consumers the ability to pay the inflated prices for food, clothing, fuel, and other necessities resulting from the COVID-19 supply chain disruptions.
Inflation has persisted since 2021 only because of a lack of effective competition among the large, multinational corporations that dominate today’s domestic and global economies. These corporations haven’t lowered their prices back to pre-COVID levels even though supply chains have returned to functioning normally. There are no competitors left who are capable of forcing them to do so. The large corporations have been allowed to gain the economic power to block any new competitor from gaining access to enough consumers to affect overall market prices.
The shared monopolies that control today’s economy are not Biden’s fault, at least not any more than any other Republican or Democrat who has served in Congress since the government quit enforcing antitrust laws in the early 1980s. Biden is at least trying to change the rules of enforcement to restore competitiveness to markets.
Trump brags that he intends to continue to deregulate everything. It’s a basic economic fact that capitalist economies are not sustainable in the absence of government regulations to maintain the competitiveness of markets. Trump may understand the art of economic extraction and exploitation, but he either doesn’t understand or chooses to ignore basic economic reality.
Meanwhile, the press continues to feature stories of consumers complaining about high prices. The reporters pick a specific item, particularly a food item, that has increased far more than the overall level of inflation and ask consumers how they feel about being forced to pay such high prices. Some reports add that overall inflation, including for food prices, has returned to at least near pre-COVID levels, but other reporters don’t bother. These stories fuel the perception that if you are a wise shopper, you should be complaining about high prices. And by implication, you should vote against Biden, because his policies have caused the high prices.
I believe there is a natural bias to think that we work hard and deserve any increase in wages, salaries, or other benefits we receive but that someone else is unfairly raising prices or taxes to take away our well-deserved benefits. Sometimes that is true, but other times our higher wages, salaries, and benefits are inseparable from higher prices. Prices are higher only because we collectively have enough money to pay them. We are only worse off when our increases in disposable incomes don’t keep pace with increases in prices. That has not been the case since 2020.
Admittedly, the vast majority of people in the world today are not as well off economically as they would have been in the absence of economic disruption caused by the COVID-19 pandemic. Regardless, Americans overall are better off economically today with Biden as President than in 2020 when Trump was president. This is an economic fact but apparently isn’t newsworthy.
John Ikerd