this post was submitted on 10 Nov 2023
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Politics
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The simple reality of the past year or so is that America has accomplished what many, perhaps most, economists considered impossible: a large fall in inflation without a recession or even a big rise in unemployment.At this point, however, with a soft landing looking ever more plausible, it seems as if the council, while it underestimated the size and duration of the shock, got the basic story right.
Unfortunately, we don’t have consumer sentiment data for the 1940s, although some political scientists believe that the economy actually helped Harry Truman win his upset election victory in 1948.
Also, it seems worth noting that many voters have demonstrably false views about the current economy — believing, in particular, that unemployment, which is near a 50-year low, is actually near a 50-year high.
And everything we know from history suggests that trying to impose deflation — falling prices — on large parts of the economy would have had disastrous effects on employment and output, something like the quiet depression Britain inflicted on itself after World War I when it tried to go back to the prewar gold standard.
What I can say is that if you believe that Biden made huge, obvious economic policy mistakes and could easily have put himself in a much better position, you probably haven’t thought this thing through.
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