I'm watching commentary on Bloomberg Television and CNBC revolving around the question of whether current inflation is "transitory" and will subside as the lingering effects of the Coronavirus gradually disappear; or whether corrosive inflation is here to stay. For politicians, especially President Biden and the Democrats, they better hope it is the former and not the latter.
Rising prices, without a corresponding rise in wages and compensation, is the kiss of death for politicians. Unlike unemployment, which affects a relatively small proportion of the overall population, inflation is a direct "tax" - it's an erosion of purchasing power keenly felt by everybody. The political fallout from inflation translates directly. (It's no accident that President Biden's approval rating is currently below 50 percent. Inflation, and the feeling of helplessness people are experiencing, is certainly a factor.)
For those old enough to remember the 1970's, inflation had a direct [political] impact. By 1975, when he was gearing up to run for a full term as President, Republican Gerald Ford recognized that high [persistent] inflation was a serious problem. Recognizing the unhappiness among voters and the general public mood, Ford's "solution" to the problem was a slogan: "WIN" - which stood for "Whip Inflation Now". (Ford even had a WIN button made that he wore on his lapel.) Inflation was not whipped, but Ford was. In a very close election, he and Bob Dole were rejected at the polls in favor of Democrats Jimmy Carter and Walter Mondale.
Inflation continued to be a problem (and an issue) throughout the latter part of the 1970's. Jimmy Carter gave his infamous "malaise" speech
https://slate.com/news-and-politics/...ply-chain.html
which was interpreted (by many) as a lame attempt to blame inflation and the economic doldrums on peoples' poor attitudes. Carter was soundly rejected at the polls in favor of Ronald Reagan who promised that he would do something about inflation. It took a painful recession and record high interest rates, but Paul Volcker, Reagan's Chairman of the Federal Reserve, applied "shock therapy" to the economy which eventually succeeded in getting the inflation monster under control. For keeping his promise to tame the inflation beast, Reagan was rewarded with reelection in 1984.
The challenge Biden and the Democrats now face is whether they can take on (and defeat) the inflation monster - or whether the inflation monster will swallow and spit them out.
Inflation is not just an "economic" issue - it's also a political issue.
