Two Kinds of Inflation

High consumer prices are the ultimate reason we're facing a close Trump-Biden rematch; media outlets are too quick to repeat inflated statistics from pressure groups.

Dear readers,

I hope you didn’t watch the very stupid Republican presidential debate this week. It was a big waste of time! Still, I had an interesting conversation about it with two journalists from Reason magazine yesterday, which you can watch here. And I had a chat on Tuesday about the state of the presidential race with Frank Bruni and Sarah Isgur. You can read that conversation at The New York Times.

Today, I have a note for you about how inflation is driving virtually every aspect of our politics — including the fact that we’re headed for a mind-numbing Trump-Biden rematch that will actually be close. And I have a discussion of how so much of the press fell for an obviously wrong claim about child care: that a third of the industry will shut down due to COVID-era subsidies that expire next week.

Everything is about inflation

It’s a rough time for establishment political parties governing rich countries. Canada’s ruling Liberal party badly trails the opposition Conservatives. In the UK, the Conservatives govern, and will surely be routed by Labour at next year’s election. Irish voters can be expected to turf out the country’s two centrist establishment parties that currently govern together, electing a left-wing government led by Sinn Féin for the first time ever. Germany’s ruling Social Democrats would likely place third if an election were held today.

These governments are unpopular whether they’re governing from the left, right or center. Even the governments that win elections are often unpopular: In France, Emmanuel Macron was hideously unpopular before his re-election and remains so afterward, but he managed to win because his opponents were even more unpalatable. This could be a preview of what’s to come here in the US: Joe Biden’s poll numbers are bad, but so are Donald Trump’s, and public polling has the presidential race about tied.¹

Why are these governing officials and parties united in their unpopularity, despite their ideological differences and despite the differences among the countries themselves? It’s inflation: It’s high, and people are really mad about it. One of the themes of my conversion with Andrew Sullivan a few weeks ago was my view that inflation is singular among the drivers of American politics since COVID — excepting abortion, the various social issues that dominate so much political argument are of tiny electoral importance compared to price levels. But it’s even broader than that: All over the rich world, inflation is dominating politics and making incumbents unpopular.

I also think inflation is the ultimate answer to a question a lot of people are asking themselves lately: How can it possibly be the case that we’re heading for a Trump vs. Biden rematch?

Inflation is the reason Biden could not deliver on his core promise to return the country to normal and the main reason his poll numbers are bad. Yes, we also have a border crisis and we still have elevated levels of crime and disorder in many cities, but there are always problems, and most voters’ lives are not affected by those problems on most days. Inflation is the problem that is everywhere, for everyone in the country, every day. A key argument Biden will make against Trump is “do you want to go back to all that mess?” and inflation undermines that. Inflation means voters still find things to be a mess, and inflation is what will make it plausible for Trump to campaign in a general election on nostalgia for his presidency — yes, he was embarrassing and exhausting and alarming at times, but at least everything wasn’t so expensive.

And all of that means it’s harder to talk Republican voters out of renominating Trump. One of the main arguments Trump’s opponents within the Republican Party like to make is that Trump is electoral poison — he lost Republicans the House in 2018, the presidency in 2020, and the Senate in 2021. One reason Republican voters believe Trump can win next time is that a lot of them believe his lie that he won last time. But another reason Republican voters believe Trump can win next time is that the polls show he can win next time. If inflation were low, Biden might be well ahead in the polls, and Trump’s primary opponents might sell Republican voters on the idea that the party must change to win.

Ultimately, this is not a very interesting story — people don’t like it when prices go up, and they especially don’t like it when prices go up faster than their incomes (which was the case until very recently), and they punish the party in power. Opposition parties don’t worry too much about changing if they have reason to believe the government’s misfortune means they can win by staying the course. And for voters, Donald Trump’s lawlessness is just one issue among many.

The more interesting question is why things aren’t even worse politically for the president. Why isn’t Biden headed for ignominious defeat like Justin Trudeau and Rishi Sunak? I see a few reasons:

• The economy is somewhat better here than elsewhere — the US had the fastest economic rebound from COVID of the G7 countries, and since Russia’s invasion of Ukraine, we’ve been generally experiencing lower inflation than Europe.

• Biden has better fortune with his opponents. Republicans’ extreme position on abortion is a major political liability (one the former president has been trying to neutralize). And we saw in the midterms that Trump’s lawlessness and efforts to undermine democracy were a real political liability for Republicans, to the extent they nominated candidates who defended him on those topics. Surely Trump will continue to defend himself on this in 2024.

• American politics is more polarized and the polling floor for either major party is higher here than in other countries.

It is likely that Biden will hold on next year, just like Emmanuel Macron did when he had his own rematch against Marine LePen. Inflation is why the election will be close. A flawed and extreme opposition is why Biden can win it at all. And inflation is one of the reasons that the opposition can be so complacent about its electoral baggage.

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Lies, damned lies and statistics

You may have seen headlines that a COVID-era program to subsidize day care centers is about to expire. You may even have seen this discussed in recent weeks in terms of a “child care cliff” that will sharply reduce the availability of day care across America. That’s because mainstream media outlets like The Wall Street Journal, The New York Times and Axios all cited a report from The Century Foundation, a left-wing think tank, that claimed the program’s end would lead to 70,000 day cares closing, and 3.2 million children — about a third of all the American children in day care — losing their slots.

If those numbers sound implausible to you, that’s because they are. Rachel Cohen, whose writing on policy always makes me smarter, has a piece for Vox today that debunks these shocking claims that a third of American day care is about to vanish. She writes:

That figure was derived from an October 2022 survey of 12,000 early childhood educators that found 34 percent of child care programs reported that they would have closed during the pandemic if not for the emergency grants. The grants covered 220,000 programs and 9.6 million kids, so the Century Foundation multiplied those figures by 0.34 to arrive at its estimate.

Experts in child care policy told Vox, however, that the “cliff” may prove far less of a tumble for providers and families than that popular statistic suggests…

Today, programs are no longer struggling to enroll students nor needing to cover the costs of pandemic safety regulations. “Saying you would have closed during Covid if not for the grants is not the same thing, that you will close after Covid if the grants don’t continue,” said Matt Bruenig, founder of another left-wing think tank, the People’s Policy Project.

One leading child care expert declined to comment on the widely cited Century Foundation estimate (“We didn’t do the number and I don’t want to speak directly to that,” Sarah Rittling, of the First Five Years Fund, told Vox), while another said that they knew no one who expected the loss of programs to reach anywhere near 70,000, but did not want to say so on the record for fear of alienating other leaders in their child care advocacy coalition.

If you looked at my inbox, you would not believe the number of pitches I get that are full of data and estimates and other kinds of numbers that are just complete bullshit.

Dall-E image generation for “inflated statistics”

Often the stakes are low — for example, I got a pitch in July from the International Drivers’ Association that purported to provide a “state-by-state breakdown of the most searched fast-food drive thrus,” based on a quantitative analysis of Google search traffic. Their list says the most-searched drive thru in Vermont is Ben & Jerry’s, which cannot be correct because Ben & Jerry’s doesn’t have any drive-thru locations in Vermont (or in any other state, as far as I can tell).² Still, readers like to read and share lists of things that are “biggest” and “best” and “most popular by state,” and it’s tempting for news outlets to publish these sorts of rankings even when they are kind of made up, because it is so easy to take the list you’re sent from some industry group and turn it into a story.

But sometimes the stakes are higher than the most popular drive thrus in every state. Sometimes an interest group or think tank will release a report announcing The Number, which is supposed to quantify something important. The Number, of course, is juked to promote that group’s agenda. Some reporters are busy, some are not very numerate, and some are ideologically inclined toward the case the interest group is making — for all those reasons, they don’t poke all the holes in The Number that they should. Plus, often The Number is the only number available. While the Century Foundation’s estimate was crap, there was nobody else around with a good estimate of how many day cares will close because of the end of the subsidies — it’s not zero, and doing good estimation under uncertainty in an industry without great data is really hard. And that’s why you get what happened here — reporters run with The Number without thinking hard enough about whether it’s reliable.

When I first saw The Number being reported a few weeks ago, I thought to myself “that doesn’t sound like it can be right.” Partly, I’m skeptical of these numbers because it’s a hobbyhorse of mine after seeing too many lists like that drive thru one. But I was also skeptical of The Number because one of the things we learned during the fight over Build Back Better — the big package of social spending that Democrats tried and failed to pass in 2021 — was that the child care subsidy lobby is surprisingly dishonest. I say “surprisingly” because these are people who have devoted their professional lives to an important matter of social concern — I don’t think their moral compasses are generally broken. Still, one unmistakable thing we’ve learned in recent years is that their operation is not on the level.

As you may recall, the child care component of BBB was just an absolute mess, designed in a way that was sure to fail to produce all the child care promised to subsidy recipients, while massively driving up costs for parents ineligible for subsidies, and then setting the program to expire after just a few years. How did professional progressive policy operatives not notice this issue when the plan was getting drawn up? Well, as Matt Yglesias notes, some of them did, but they kept quiet to be nice:

I heard from someone who used to work at a well-regarded center-left think tank that one of her colleagues noticed this exact problem earlier. But when she raised the issue, she was told to keep quiet because the care groups have always been supportive on other issues.

It seems this omertà still applies. In her reporting, Cohen refers to one of her sources as a child care policy expert who “knew no one who expected the loss of programs to reach anywhere near 70,000, but did not want to say so on the record for fear of alienating other leaders in their child care advocacy coalition.”

I think what advocates thought they were up to with BBB was that if they got a big pile of cash thrown at child care, and the program they built using that cash didn’t really work, they’d be able to get even more cash later because of the importance of fixing the broken thing we’d have already spent so much money on. And I think what the Century Foundation thought it was up to when it published this big, splashy number was that it would draw a lot of attention to what they see as an important policy problem — that the fear of 70,000 shuttered day cares would carry “emotional truth” even if it wasn’t literally true as such.

It didn’t work out in either case. BBB imploded, the COVID support program for day cares isn’t getting extended, and a lot of the journalists who ran with the 70,000 number are going to look askance at the next report they see from the Century Foundation. The lesson for the progressive policy apparatus is to do honest and careful work next time — as Yglesias says, accurately analyzing proposals for their effects and their viability is ultimately helpful for achieving social change. And the lesson for reporters and readers is to be more skeptical — if The Number sounds too interesting to be true, it probably is.

Very seriously,

Josh

1. Of course, in the 2020 election, it wouldn’t have been good enough for Biden to barely win the popular vote; he needed to win it by several points to overcome the bias of the electoral college. But the uneven nature of Biden’s deteriorating support has a silver lining: he’s suffered especially with non-white voters and in non-competitive states, while holding up relatively well in the heavily white Rust Belt states that are likely to be decisive. As such, Democrats are likely to face little or no electoral college bias in 2024.

2. Like lots of “most popular x by state” lists, this one was clearly designed to find items that are relatively more searched in one state than another, because that will produce an interesting list with different winners in different states, instead of a boring answer like that McDonald’s and Starbucks are the biggest drive thru players most everywhere. Then they added the error of including establishments that don’t even have drive thrus, which is how Ben & Jerry’s won Vermont’s top spot. And of course, there’s a dubious underlying idea: that Google search volume is a good proxy for customer traffic volume in a brand’s stores. A lot of people searching for Ben & Jerry’s might plan to buy it at a supermarket; they could even just be daydreaming about ice cream.