OPINION
PAUL
KRUGMAN
Economics in a Post-Truth Nation
June 24,
2021
Paul
Krugman
By Paul
Krugman
Opinion
Columnist
If a tree
falls in a forest but nobody is there to hear it, did it make a sound? If we
have a rapidly expanding economy but much of the electorate refuses to
acknowledge it, is the country experiencing a boom?
Despite
some growing pains, the U.S. economy is clearly on a
vaccine-and-stimulus-fueled tear, with just about every measure indicating
rapid recovery from the pandemic slump.
Yes, supply
bottlenecks have caused some inflation, although recent data seems to validate
the view that this inflation is transitory: Lumber prices have fallen sharply,
industrial metals have also come down, and used car prices seem to have peaked.
Yes, some employers seem to be having trouble hiring enough workers to keep up
with surging demand, but this will almost surely be a temporary problem.
Overall,
we’re clearly in a much better place economically than we were just a few
months ago.
Yet
according to the long-running University of Michigan survey of consumers, on
average self-identified Republicans assess the economic situation much less
positively now than they did before the 2020 elections.
You may be
tempted to say that this was only to be expected. After all, almost two-thirds
of Republicans believe, completely falsely, that the presidential election was
stolen, and around a quarter agree that the world is run by Satan-worshiping
pedophiles. Why be surprised to see the post-truth state of mind extend to the
economy, too?
But claims
about election fraud and the QAnon cult are conspiracy theories, assertions
about secret actions by cabals. The state of the economy, by contrast, is right
out there in the open. People, you might think, can judge it by their own
experience or that of their friends and families.
And just to
be clear, the Michigan number I’m referring to is the current economic
conditions index rather than the index of consumer expectations. That is, it’s
supposed to be about how things are now, not about what people think will
happen. So this isn’t a matter of Republicans believing that Bidenomics will
destroy prosperity in the future; it’s about them believing, in the teeth of lived
experience, that it already has.
But hasn’t
partisanship always colored perceptions of the economy? And doesn’t it happen
on both sides? Well, yes — but not to this degree.
If you look
back at Michigan surveys from a dozen years ago, you don’t see anything like
today’s partisan polarization. In June 2009, Democrats and Republicans had
similar views about current conditions, although Republicans were more
pessimistic about the future.
Nor do the
parties behave symmetrically. Democrats did mark down their economic views after
the 2016 presidential election, but not that much. The real question about the
2016 election aftermath is why Republican assessments became so much more
favorable, even though not much had changed. Indeed, there was no significant
break in the economy’s performance, certainly nothing comparable to the current
postpandemic boom.
One
possibility is that Republicans’ views about the economy are driven by the
belief that things are terrible for other people even when they themselves are
doing OK. That is, it may be like the right-wing narrative on urban violence.
Tucker Carlson and his ilk have been peddling the vision of a nation all
“boarded up,” its citizens cowering in fear of riots and crime. People have to
know that their own neighborhoods aren’t like that but may imagine that it’s
happening somewhere else.
Whatever
the explanation, post-truth politics has expanded its domain to the point that
it overrides everyday experience. On the right, at any rate, the economy that
voters perceive no longer bears much relationship to reality.
What does
this say about the politics of economic policy?
A large
body of research in political science says that the economy drives elections.
Specifically, what seems to have mattered in the past was the rate of income
growth in the six months or so before the election.
This was
always a troubling result, partly because presidents usually don’t have much
influence over short-run economic developments, partly because it suggests that
there are no political rewards for good long-term performance. In fact, if you
believe standard election models, the optimal political strategy for a
president seeking two terms would be to start with a deep recession, so as to
make room for rapid growth in the run-up to the next election. (This is more or
less what actually happened during Ronald Reagan’s first term, although it wasn’t
deliberate.)
Still,
things could be worse — and they seem to have gotten worse. We appear to have
become a country in which a large chunk of the electorate won’t even judge a
president by short-run performance, because those voters’ perceptions of the
economy are driven by partisanship unrelated to reality.
OK, maybe
I’m being too pessimistic here. Elections are decided at the margins, so good
policy may still be rewarded even if, say, a third of America’s voters refuse
to believe good news if a Democrat sits in the White House. But I still miss
the days when truth mattered.
Paul
Krugman has been an Opinion columnist since 2000 and is also a Distinguished
Professor at the City University of New York Graduate Center. He won the 2008
Nobel Memorial Prize in Economic Sciences for his work on international trade
and economic geography. @PaulKrugman
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