The Economy and Presidents

Presidents are usually blamed for a bad economy, but never get credit for a good economy. Inflation in particular is blamed on presidents. The current one was due to the pandemic, and was world wide.

Jobs, ecomomic growth and so on are calculated and tabulated. They are used in election ads.

Obama won two elections. I think he won the second one in that we had recovered from the disasterous Bush recession and healthcare was taken care of. But he was not making any waves past the first two years.

Now we are in a democratic term. Inflation did happen. Big corporations, two or three of whom control any particular product category (phones, diapers, toilet paper, baby food) fix prices. A smaller player (10% of the market) could sell at a lower price. But could never sell enough to make  a difference. 

Would they hesitate to raise prices? No. It will be blamed mostly on the current president. They want the republican elected, so that he can reduce corporatre tax. Once he is elected, will they reduce prices? (After their taxes are cut). No. Corporations never lower prices.

Corporations have paid 20-30% tax in recent times. It is apparently worth the trouble to buy as many senators and presidents as you can for even 5%. And then also have someone like Trump who defund the IRS so they can't collect tax.

So Trump does seem to be able to funnel money and manipulate people. His understanding of the economy for the rest of us is poor. He does not understand tariffs and balance of trade, for example. And he rarely does anything for you or me. At the end of his term he insisted on signing the covid checks. I don't think he would approve those again. Corporations were bailed out and will be again.

How does the voter figure out what is going on? They do not. They respond to prices going up, but never follow how much their salary goes up at the same time. Luxury good prices go up almost immediately when inflation starts. Small snacks at the gas station go up more than a bag of flour. Voters note a few things, ones they buy most often. Voters also do not remember very well how they were financially four years ago. It's just not something that can be measured by the consumer very well. If all the people around are complaining about prices, they conclude they were better off a few years ago.

The human mind is somehow guided by rules of thumb to make a decision in all everyday things. It it is not really set to collect all kinds of data to make that decision. If you are shopping, you just remember the previous time you bought a similar item. Most of us decide by the minimal infomation on hand. You look at the items on the shelf. Maybe check the Amazon price. A credit card allows many to overpend when shopping. You only realize you overspent when the bill arrives.* When you have a good liar like Trump repeatedly tell them they are worse off, they begin to believe it. Whatever the voter believes about the economy under Trump or Kamala, it is based largely on gut feel. There is no rational mechanism needed.

(*On line banking does allow better control than before.)

Some more economy comments at the end of my newer entry:

https://esapolitics.blogspot.com/2024/09/its-still-low-information-voter.html

OCTOBER 14th

NYT polls now show Hispanics and Blacks are moving to the right. Somehow elitism and a misunderstanding of presidents and economies (the incumbent is always blamed) led to race being less important than class and current economic situation. Possibly also shortage of housing.

A part of the morning letter (David Leonhardt):