Long ago and far away, when Bill Clinton was running for president, his campaign manager, James Carville, famously said, “It’s the economy, stupid.” Carville felt that focusing on a sluggish economy was a winning political argument. In those days, he appeared to be right: Clinton won the election because of a lackluster economy under George Herbert Walker Bush. Under Clinton, the economy was so good that the electorate was willing to overlook his troubling personal indiscretions in order to give him a second term.
But now, in 2023, we find ourselves navigating the paradox of strong economic indicators—GDP, employment, wage increases—in an age when, no matter how rosy the national economic outlook, ordinary folks are still struggling to pay their rent, pay for fuel, and put food on their tables. A good economy has not yet offset the fact that none of us feel that we are getting ahead; at best, we are treading water.
While I understand that Joe Biden has every right to tout the strong economy that he wrested from the shambles created by Donald Trump’s massive tax cuts for the wealthy and the devastating COVID pandemic, we are still in trouble. By purely economic measures, Bidenomics has been a success, but galloping inflation, offset by increasing interest rates, have overshadowed otherwise strong economic indicators and served to suck the wind from the sails of the S.S. Biden.
So what is the solution? The theory of supply and demand is that by reducing consumer spending, supply will outstrip demand and prices will fall accordingly. There are several problems with this theory, however: First, there are plenty of people so economically challenged that they spend most of their income almost exclusively on the basics—food, shelter, and fuel—and these are not discretionary purchases. So it would be difficult to reduce consumer demand for essentials. Second, when it comes to discretionary spending, we have become so habituated to the instant gratification created by buying things—whether the purchases are truly necessary, or whether one can afford the purchase or not—that curing our addiction to acquisition may be an insurmountable problem.
I happened to grow up with parents who were debt-averse. They never, ever carried a balance on their credit cards, and admonished that if I could not pay cash, in full, for what I wanted, then I shouldn’t be buying it. Those sentiments seem hopelessly old-fashioned these days. Credit card debt, and the crushing interest rates levied against those who carry a balance, seems to be an entirely acceptable way of managing one’s money these days. Ergo, most of the country is in debt.
Our voracity for shiny, new products is fueled not only by relentless media advertising and easy access to goods via the internet, but by manufacturers deliberately building obsolescence into their products. The cell phone that worked perfectly well yesterday now barely works at all, thanks to planned obsolescence. I have lost count of how many electronic devices I have owned that had to be replaced, not because they were broken, but because of product manipulation. While I still own and use the first iPod I ever purchased, subsequent iPods, cheaply manufactured in China and sold for hundreds of dollars each, had a shelf life of one year. The culprit? Bad batteries that swelled and made the product useless in a matter of months. The same practice of planned obsolescence is true of TVs, computers, and even kitchen appliances.
Villainous manufacturers aside, the biggest culprit is us. We are gullible, easily bored, and greedy for newness. In short, inflation is being driven by our insatiable lust for more, more, more. Every time the Fed raises interest rates, they do so in order to curb our out-of-control spending. In other words, inflation will prevail until we all develop some discipline and stop spending money we really don’t have on stuff we really don’t need.
So far, we are failing to get the memo. We are spending beyond our means and accruing debt at record levels, apparently unable to break our ineradicable addiction to consumer goods.
Over the holidays—the annual season of unrestrained excess—our manic consumerism continued unabated and took a back seat to the time-worn principles of thrift. Perhaps in the new year, when we all resolve to eat less and exercise more, we will also resolve to spend less and save more.
Until that happens, it’s not the economy, folks—it’s inflation, and that inflation is being driven not by Joe Biden, but by us.
