Inflation is a word that has dominated the political discourse in recent years, particularly in the wake of the economic upheaval caused by the Covid pandemic. Politicians of all stripes have seized on the issue, using it as a convenient talking point to garner support or deflect blame. They promise to fix it, to reverse it, or even to bring prices “back down” to where they were before. However, these claims are based on a misunderstanding of both the causes of inflation and the role politicians play in addressing it.
The Reality of Inflation: Causes and Consequences
Inflation, as we’ve seen in the last few years, is largely the result of a perfect storm of factors. During the Covid era, factory closures, disrupted supply chains, and remote work led to a shortage of goods. At the same time, government stimulus programs poured money into the economy, boosting consumer demand. Meanwhile, low interest rates made it easier for people to borrow money and spend more. This imbalance between supply and demand sparked a surge in prices.
Fast forward to today, and the situation has largely stabilized. Supply chains have recovered, production has caught up, and government spending has cooled off. As a result, inflation has dropped to a much more manageable 2.4%, a far cry from the sky-high numbers we saw just a couple of years ago. So, why do politicians continue to harp on inflation as if it’s still the devastating crisis it once was?
Wages Have Outpaced Inflation
What’s often left out of the conversation about inflation is the fact that wages have been rising too. According to data, since 2019, wages have increased by 21%, outpacing the 19% rise in overall prices. In other words, even with inflation, most people are still better off today than they were a few years ago. Prices have gone up, but so has income. That means purchasing power hasn’t diminished as much as some would like you to believe.
Yet, politicians continue to frame the situation as a dire economic crisis, painting a picture of an economy in peril. They want voters to believe that “higher wages and prices” is the same thing as “a bad economy.” But in reality, this couldn’t be further from the truth. A growing economy is one where wages rise alongside prices. If wages were stagnant while prices rose, that would indeed signal a problem. But that’s not the case here.
The Fallacy of “Bringing Prices Down”
One of the most egregious political promises floating around is the idea that a sitting president—or any political leader, for that matter—can “bring prices back down.” It’s an absurd claim. The reality is that prices in a market economy are determined by the forces of supply and demand, not by the whims of politicians. No amount of political maneuvering can simply make prices drop across the board. Sure, policies can influence inflation to some extent, but attempting to artificially lower prices is a fool’s errand.
Price increases are a natural and acceptable part of a functioning market economy. Businesses adjust prices based on costs, demand, and other economic factors. In a competitive market, prices should generally reflect the cost of producing and delivering goods and services. If companies are raising prices without a legitimate reason, competition should keep those increases in check. The idea that greedy corporations are solely to blame for rising prices is a convenient narrative, but it’s not grounded in reality.
Take grocery stores, for example. A recent deep dive by NPR revealed that, despite the uptick in prices, grocery stores haven’t seen any extraordinary profits from the inflationary period. In fact, many have been struggling with increased costs themselves, passing some of those costs onto consumers. The problem isn’t corporate greed; it’s the ripple effects of the pandemic, supply chain disruptions, and a global economy that’s still recovering from a major shock.
The Misleading Political Narrative
It’s easy for politicians to play on people’s frustrations with rising prices, especially when they don’t fully understand the economic forces at play. They know that a simple promise to lower prices can be an effective campaign slogan, but it’s a promise that cannot be delivered. Moreover, it distracts from the real issues that affect the economy, such as ensuring fair wages, investing in education, and creating sustainable economic growth.
Unfortunately, the continuous blurring of inflation and wage growth into the same category of “economic problems” perpetuates a misunderstanding of how economies function. Instead of focusing on vague promises to reverse inflation, politicians should be educating the public about the complexities of economic systems and the factors that contribute to price changes. More importantly, they should be addressing the underlying issues, such as wage stagnation, that have historically kept many Americans from seeing the benefits of economic growth.
A Better Understanding of Inflation and Economics
Ultimately, the most productive way to approach the inflation debate is to acknowledge the fact that inflation is not inherently bad. It’s a natural part of a growing economy. What matters most is whether wages are keeping up with prices, and in this case, they are. By focusing on the bigger picture—such as improving productivity, fostering innovation, and ensuring that wages rise in line with inflation—we can build a stronger economy that benefits everyone.
Politicians who continue to promise easy fixes for complex economic issues are misleading the public. Instead of focusing on trying to “bring prices down,” they should be working on policies that ensure long-term, sustainable growth. The truth is, inflation isn’t the problem—poor wages, lack of access to opportunities, and economic instability are.
In the end, a more educated electorate will be better equipped to see through the political promises and understand the real economic forces at work. Instead of worrying about the price of goods today, we should be focusing on building an economy that supports higher wages, better jobs, and sustainable prosperity for the future.
