Why the Democrats lost -- economic reality

During the 2024 campaign, Democratic candidates and activists often expressed frustration that voters believed economic conditions were bad, even though official statistics showed that things were booming.  How could those foolish voters be so mistaken?  (Well, actually, no one asked that except rhetorically.  They just dismissed it as people being swayed by "Republican talking points", which has become the go-to thought-canceling phrase used when squeezing one's eyes shut against inconvenient facts.)  Now comes this article by Eugene Ludwig, an economist and former US comptroller of the currency, explaining why in fact the voters were right, and the official statistics were -- well, not always wrong, though some of them were, but calculated in a way that missed the realities of how most people actually live.

To begin with, there was the evidence of deteriorating conditions that was visible to anyone.  Ludwig observes:

But when traveling the country, I’ve encountered something very different. Cities that appeared increasingly seedy. Regions that seemed derelict. Driving into the office each day in Washington, I noted a homeless encampment fixed outside the Federal Reserve itself.

Note that the same is true of the bogus "crime is down" narrative that Democrats endlessly regurgitated, while determinedly ignoring or rebuking ordinary voters' insistence on believing what they could see happening in their downtowns right in front of their eyes instead of accepting the crime statistics being spouted by the talking heads (I've explained here multiple times why those statistics were wrong).

Ludwig assembled a team of researchers to investigate why the physical reality on the ground wasn't reflecting the rosy official numbers.  The post linked above reveals his findings.  Unemployment, for example, is calculated in a way ludicrously divorced from reality.  Anyone who is earning any money at all -- even homeless people scrounging a little work here and there -- is counted as "employed".  People who have given up and are no longer looking for work are not counted among the "unemployed".  The post itself gives more details and actual numbers.  The final conclusion is a shocker:

I don't believe those who went into this past election taking pride in the unemployment numbers understood that the near-record low unemployment figures -- the figure was a mere 4.2 percent in November -- counted homeless people doing occasional work as "employed."  But the implications are powerful.  If you filter the statistic to include as unemployed people who can’t find anything but part-time work or who make a poverty wage (roughly $25,000), the percentage is actually 23.7 percent.

In other words, the true employment picture behind the rosy figures was disastrous.

The biggest economic issue in the election was inflation.  Officially, inflation had largely abated, even though prices had not yet begun to return to normal levels.  But again, the problem lies in the way the statistics are calculated.  The Consumer Price Index tracks the price changes on eighty thousand different goods and services, but most of the costs encountered by most Americans involve only a small fraction of these -- groceries, rent, insurance premiums, and the like.  And prices on things people actually buy were going up much faster than the CPI's average of those mostly-irrelevant eighty thousand items.

My own experience reflects this.  By far my biggest expense is rent.  Every year the increase in my rent, whether in percentage terms or absolute dollars, is considerably larger than the increase in my Social Security.  My car insurance and health insurance (even with the ACA subsidy) go up by double-digit percentage increases each year.  The official inflation rate bears no resemblance at all to the reality I actually experience.  And the great majority of voters were in a similar position.  Most people's incomes were not keeping up.  Not even close.

Finally, there is the issue of the distribution of economic growth, which Ludwig downplays, but which I think is critical:

There is, to be sure, real value in tracking the sheer volume of domestic production, though GDP is an imperfect measure even of that.  But as useful as the figure may be in the sense that it purports to track generalized national wealth, it is hampered by a profound flaw: It reveals almost nothing about how the attendant prosperity is shared.  That is, if a small slice of the population is awarded the great bulk of the bounty from economic growth while everyone else remains unenriched, GDP would rise nevertheless.  And that, to a crucial degree, is exactly what has happened.  Here, the aggregate measure of GDP has hidden the reality that a more modest societal split has grown into an economic chasm.

He follows with some discussion of education levels and geography, but in fact the real issue is at the top-income extreme.  Over the last few years, the wealth of billionaires has increased by staggering amounts, with the very richest few heaping up individual piles in the hundreds of billions.  They did not produce that wealth.  The workers did.  But the parasite class has perfected the art of gaming the system to skim off most of the growth in national wealth for themselves, leaving the actual creators of wealth struggling.

I was basically aware of most of this throughout the campaign.  I still voted for Democrats pretty much across the board -- the Republicans, obsessed with ever more tax cuts for the already wealthy, would have exacerbated these problems even more, not alleviated them.  Yet it remained infuriating that most Democrats showed no real awareness of how dire the situation has become.  And by reciting official numbers that bore no relation to the reality that most people were living in, they sounded hopelessly out of touch.  I can understand why many who would otherwise have voted Democratic simply did not feel motivated to turn out.  And many voters don't vote based on which party they think will best solve the problems they see -- instead, when things are bad, they vote against the party in power to punish them, regardless of who the alternative is.  You can call people all the names you like for voting that way.  It remains a fact, one which candidates need to accept and accommodate.

I write critical posts like this because I want Democrats to win in the future.  To do so, they will need to accurately understand the reality the country is going through.  As a general rule, any time you find yourself thinking "why are the voters so wrong?", it's you who are on the wrong track.

What the country needs is a radical populist agenda -- a full restoration of reasonable tax rates on the ultra-wealthy plus whatever additional measures are needed to re-distribute those obscene piles of wealth back to those who actually created them.  Ideas like basic income, national rent control, tough federal support for unionization, and other radical measures to address inequality need to be on the table.  This is what the Democrats must embrace in order to win.  Penny-ante fiddling around with tax credits for this and that is not going to cut it any more.  The extreme concentration of wealth in the hands of a few is a national emergency.  It needs to be treated like one.

[Please, no comments along the lines of "we're becoming a dictatorship and there won't be any more elections".  I'm trying to stay reality-based here.]