What Americans Should Know About the Politics of Inflation | Opinion

With May's inflation report illustrating an 8.6 percent year-over-year increase in prices, the hope that inflation is transitory and that it peaked months ago can now be safely put to rest. Instead, we now see that even Treasury Secretary Janet Yellen has come to admit that high levels of inflation are likely to persist for some time. This is devastating news to Democrats, politically, given how well economic indicators tend to predict the electoral fate of the party in power. However, the bitter truth is that the bulk of the inflation we are now experiencing is beyond the control of both our political institutions. That isn't to say we're powerless, but a clear-eyed analysis of the issue makes it difficult to see any short-term way out.

Putting politics aside for the moment, it's beyond the scope of debate to assert that inflation of this magnitude is a pernicious sap on the wealth of a nation. That it comes on the heels of long sought wage gains is all the more depressing, particularly for working class Americans. That the electorate has become most concerned with inflation above all other issues is a perfectly reasonable reaction and it makes it all the more important that the issue is discussed honestly, not exploited for short-term political gain.

To that end, Americans should know that inflation is currently a worldwide phenomenon, with American rates thereof being in the "middle of the pack" by comparison. President Joe Biden and the Democrats in Congress do not set policy for India or countries in the eurozone, yet our inflation rates are on par with them all. This fact alone should inform us that the vast bulk of the inflation we are experiencing is not a direct result of our domestic politics.

The reality is that Democratic policies such as the last COVID-19 stimulus plan, which sent out $1,400 checks to all Americans in the first half of 2021, likely had a near negligible effect on current inflation rates. What's more, the alternative to that stimulus was risking a far more prolonged and tepid economic recovery, as was seen in the wake of the Great Recession. Republican leaders blaming this stimulus for inflation is a classic example of politicians seeking to feed the American public comfortable lies for their own electoral benefit.

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A help wanted sign is displayed. PATRICK T. FALLON/AFP via Getty Images

So, if it isn't Joe Biden and the Democrats at fault for our inflation woes, what is driving it to such disconcerting heights? For one, despite the return to normal life for most Americans, COVID's havoc on supply lines is far from over and isn't expected to be back to normal until at least 2023. To that end, China's insistence of maintaining a "zero-COVID" policy will continue to result in logistical interruptions that are sure to keep the global economy in a precarious position for the time being.

The latest and perhaps the most pressing driver of high inflation is of course Russia's invasion of Ukraine, which has thrown global oil and food markets into disarray. Russia, in blocking Ukrainian ports, is virtually assuring the world that food prices will keep going up and that hundreds of millions of people in the developing world will experience famine while those in developed countries will be stuck with uncomfortably higher grocery bills. With the very real possibility that the war could go on for years, it is difficult to imagine any domestic policy that could give Americans a break in the near term from the inflationary effects thereof.

It's worth noting that Republicans have no real plan to combat inflation outside of Senator Rick Scott's (R-Fla.) now abandoned idea to raise taxes on the poorest 40 percent of Americans. The GOP only wants to simplistically cast blame for a complex issue on Democrats for their own political advantage. They aren't interested in actually fixing the problem.

Nicholas Creel is an assistant professor of business law at Georgia College and State University.

The views expressed in this article are the writer's own.