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Inflation and rising prices have emerged as major issues in the 2024 presidential election. Public anger over these issues and the general state of the economy could be the biggest obstacle to President Biden's re-election chances. According to a recent Harris poll: guardian We found that public attitudes about inflation and the state of the economy are greatly influenced by ignorance. In fact, although inflation has increased significantly in 2021-22, the current state of the economy is much better than most voters believe.
The poll highlighted many misconceptions people have about the economy, including:
55% believe the economy is shrinking, and 56% believe the United States is experiencing a recession even though gross domestic product (GDP), the broadest measure of the economy, is growing.
While 49% believe the S&P 500 stock market index has been down this year, the index is up about 24% in 2023 and is up more than 12% this year.
While 49% believe unemployment is at its highest in 50 years, the unemployment rate is below 4%, the lowest it has been in nearly 50 years.
The poll highlighted people's mixed feelings about inflation. The majority of respondents (72%) said they believe inflation is increasing. In fact, the inflation rate has fallen significantly from 9.1%, the highest since COVID-19, and has fluctuated between 3-4% per year.
In April, the inflation rate fell from 3.5% to 3.4%. This is a far cry from the 9.1% recorded in June 2022, which was the highest in 40 years. This sparked a stock market rally that pushed the Dow Jones index to an all-time high.
The poll found that 58% of respondents blame Biden for the economic situation. This is part of a broader pattern of people trusting and blaming incumbent presidents for short-term economic trends, even though the incumbent generally has minimal influence over them.
that much guardianis, of course, a left-wing media outlet, and that view may have influenced them in commissioning this survey. However, Harris is a generally respected polling company, so we don't believe there is a major flaw in the wording of the relevant questions in this survey.
Biden probably deserves some of the blame for the massive outbreak of inflation immediately after the pandemic. He supported massive increases in spending, which helped create a situation where there was a massive increase in the money supply in the economy that was not matched by increases in production. But much of that spending has also been supported by Republicans, including while President Donald Trump was in office in 2020-21. Biden also deserves criticism for continuing many of Trump's tariffs (which resulted in significant price increases and reduced consumer welfare) and adding tariffs of his own. Still, few of the policies that helped create inflation are those that Biden supports, but Trump would have done differently. He also said there was bipartisan support for the Federal Reserve to pump massive amounts of money into the economy during COVID-19.
The evidence from this poll is just the tip of a larger iceberg of public ignorance about inflation, prices and related issues. For example, a February poll found that 59% of Americans believe corporate greed is a “major cause” of inflation. Economists overwhelmingly reject this view. This is not because corporations are not greedy for profit, but because there is no good reason to believe that corporations are greedier during periods of high inflation, or that corporate greed somehow has a greater impact during such times. Corporate greed is constant and therefore cannot account for variables such as inflation or price fluctuations. In this case, public ignorance may help the Democrats because they place a much greater emphasis on curbing corporate greed than do the Republicans.
Ignorance may also explain why voters angry about inflation and high prices tend to support Trump as a result. In doing so, they ignore the fact that many of his policies will make price increases worse. For example, Trump's plan to impose a 10% tariff on all imports would drastically increase the prices of many goods, costing the average American household about $1,700 a year. This goes far beyond what Biden has proposed. However, his trading record is not great.
Trump's plan to deport undocumented immigrants on a large scale is likely to stimulate inflation more generally, as expected, by reducing output and raising prices across the economy. Contrary to public perception, these expulsions destroy more jobs than native workers create, making it more difficult for many families to make ends meet.
Trump also plans to undermine the independence of the Federal Reserve. If he succeeds, inflation is likely to worsen. Historically, independent central banks do a better job of containing inflation than central banks under political pressure.
Biden's record on inflation and prices is less than ideal. But Trump's policies are likely to be much worse. If voters who are focused on these issues understand this, they will move in a different direction.
Public ignorance about inflation and the economy is part of a broader problem of widespread political ignorance that reduces the quality of public policy. While ignorance in this case benefits Trump and the Republican Party, the problem is not limited to either side of the political spectrum and does not always benefit the political right rather than the left. There are many examples of ignorance and misunderstanding that are disproportionately more common among Democrats and the Left.
The fundamental problem is not that voters are stupid, but that a single vote is unlikely to decisively affect the outcome of an election. What this means is that it provides a powerful incentive for most voters to be “reasonably ignorant” about political issues and unable to properly evaluate the information they are presented with. learn. This issue affects voters across all parts of the political spectrum.
It's also worth noting that public ignorance doesn't just affect voters' decisions between available options, like this year's choice between Biden and Trump. It also affects the quality of the option itself. If political parties encounter more knowledgeable and discerning voters, they will have incentives to nominate better candidates, choose better policies, or a combination of both.
Instead, political parties and candidates are encouraged to exploit public ignorance to gain electoral advantage. Trump does this on a very large scale, and it was a key part of his rise to power in 2016. But more traditional politicians, including left-wing politicians like Barack Obama, also engage in such shenanigans.
There is no quick or simple solution to the problem of ignorance. In my opinion, the best approach to addressing widespread voter ignorance and prejudice is to empower people to make more decisions by “voting with their feet” and fewer decisions at the ballot box. no see. Voters on foot have better incentives to seek out and evaluate information objectively than voters at the ballot box. I review the strengths and weaknesses of different possible solutions in my book. Democracy and political ignorance And in this latest article.
Unfortunately, it seems unlikely that we will be able to make much progress curbing political ignorance in time for the 2024 elections. But at least it can raise awareness of the problem, which may make it easier to solve in the future.