Thoughts on a New Civic Contract
Yesterday I noted G. Elliott Morris’s argument that the extremely poor consumer confidence in the United States is now a mystery if one looks closely at what Americans mean when they talk about prices and inflation. In short, just because prices stopped rising during the second half of Joe Biden’s presidency doesn’t mean the public stopped being furious about them rising (and continuing to rise) during the first half of his term. I’m pretty sure this explains a lot of what sank the Biden presidency and the dynamics of the 2024 election. But does it explain what’s happening now? When I wrote the post yesterday, TPM Reader SB agreed, but argued that it goes beyond that – that still-declining consumer confidence and the extremely sour public mood go beyond the post-COVID inflationary shock. This is also extreme wealth inequality, SB argued. Then, this morning, Paul Krugman began what he says is a series of posts on his Substack in which he says that while he agrees with the “price gouging” framework, he’s not sure it’s a sufficient explanation.
Krugman didn’t really explain what exactly he was thinking. Like I said, he said he would talk about it in a series of posts. But the bottom line is that there is a broader political-economic explanation that goes beyond how long people stay crazy about prices. Krugman says he thinks the growing sense of economic gloom is because the public was unhappy with inflation, voted to go in one direction and then asked the newcomer to do virtually everything he could to fuel more inflation in the economy and generally steered the economy in twenty different directions for a series of bizarre and obscure ideological fascinations.
