Opinion: Unemployment Weakens a Government, Inflation Kills It

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How many charts have we economists and analysts, including myself, have not already shown that showcase how the health of the American economy was pulverising that of Europe? And how many official inflation indices have we not copied and pasted attesting, quarter after quarter, that price pressures were slowly but surely easing? And finally, why have the American media — which claims to be sophisticated and avant-garde — neglected to inform its own citizens that the situation in the United States was clearly more enviable than that which we are suffering in Europe? Those of us who experienced the inflationary episodes of the 1970s knew well that along with inflation comes various troubles and upheavals.

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In reality, real wage increases (in inflation-adjusted data) had virtually no psychological impact because — in the United States as in our country — the population does not care about the official indices published by the administrations. If there is a macroeconomic lesson to be learned from last week’s American presidential election, it is that inflation is a phenomenon felt on a cumulative basis, day after day, month after month, shopping trip after shopping trip. It is up to political scientists to realize that citizens do not care about the indices of INSEE or the US Bureau of Statistics, because they form their own opinion of the high prices as they shop, and do not feel concerned by what the experts tell them. A consumer is therefore not an economist.

Kamalanomics means inflation. Kamala Harris was the deciding vote that fueled it. pic.twitter.com/yVC6ZBwl0z

— GOP (@GOP) July 31, 2024

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Another valuable lesson: outside of an acute economic crisis and depression, inflation affects everyone, while unemployment, for its part, affects only a small part of the population. An example: despite the mega-crisis of 2008, 90 percent of Americans still had their jobs. We must therefore collectively recognise a fact that seems new and that will challenge certain dogmas, namely that Western citizens would prefer lower growth if the price to pay is the control of inflation.

In Other Words: Price Stability Comes Before Employment!

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A third lesson for future candidates in the next elections, if we are to believe the many American analysts who are trying to dissect the results of their last elections. Inflation is the fault of the President, the Government, while growth and unemployment are phenomena that they do not control, dependent on cycles and heavy trends closely linked to globalisation.

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The US economy was doing fantastically well: three percent growth over the last nine quarters, and massive inflows of international liquidity into the country! It doesn’t really matter, because the credit would go to the Musks, the Bezos, the big and small entrepreneurs – not the administration. As reported on ABC News, inflation has cooled dramatically over the past two years, now hovering near the Federal Reserve’s target rate of 2 percent. Even so, that progress hasn’t reversed a leap in prices that dates back to the pandemic. Since President Joe Biden took office in 2021, consumer prices have skyrocketed more than 20 percent.

Meanwhile, inflation? That was entirely blamed on Biden and his allies. Take note.

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A version of this article was first published on michelsanti.fr

For more on the author, Michel Santi and his exclusive opinion pieces like this one, visit his website here: michelsanti.fr

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