"Until recently, the politically explosive nature of inflation had been forgotten in wealthy countries. It was often dismissed as a problem afflicting less mature democracies and developing countries. Yet inflation turned out to be the Achilles’ heel of what was otherwise a strong U.S. economic recovery from the COVID-19 pandemic—and it sank the Democrats’ bid to retain power in 2024. Donald Trump, the U.S. president-elect, triumphed in part because he signaled to voters that he understood their economic distress. For their part, the Democrats failed to acknowledge the depth of the crisis and shied away from fully embracing policies that could have relieved the pressure on ordinary Americans.
Still, the Democrats’ defeat was not inevitable. Other incumbent parties succeeded in winning elections in 2024 because they took steps beyond adjusting interest rates to tackle inflation and because they clearly communicated to their publics what they were doing to keep prices down. Governments in Mexico and Spain embraced bold measures, including price controls, subsidies, and both tax cuts and tax hikes. Not only did these actions help curb inflation, but they also spurred the ruling parties to victory and, in the case of Spain, helped stave off right-wing extremists. These cases show that in the fight against inflation, there are real alternatives to relying on monetary policy alone. Governments can step up and protect citizens against cost shocks in times of disasters, bolstering not only the economy but also the ruling party’s chances at the ballot box."
https://www.foreignaffairs.com/mexico/governments-survived-inflation
#Economy #PublicPolicy #Inflation #USA #DemocraticParty #Mexico #Spain #PriceControls
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