The economy is complicated and deserves honest policy discussion

Simplistic, false promises often earn votes but sow cynicism that is bad for the country and the economy

History tells us that economic conditions are one of the most important factors in national elections. That’s unfortunate.

Before you dash to the comment section to criticize that statement, let me explain. Voters should take their economic well-being into consideration when deciding who to support. Better yet, vote for economic policies that to the extent possible benefit everyone. The problem is that winning campaigns are built on sound bites and simple, easily understandable concepts. The economy is neither simple nor easily understandable. Contradictions and unintended consequences abound.

Here's a look at the trade-offs and complications inherent in three economic issues that likely will be at the forefront of 2024 elections:

Inflation

Candidates from both major political parties can point to causes of inflation and place the blame on their opponents. The reason: There always are multiple causes of inflation, and that’s truer in this post-pandemic economic cycle than in most. Pandemic stimulus, broken-down supply chains, worker shortages, structural economic changes, inequality, climate change. They all have contributed to rising prices. So has the war in Ukraine, which shouldn’t be blamed on anyone other than Valdimir Putin.

Worse, under any circumstance measuring inflation is a complex task. Economists use various models that measure prices of different products and services. So-called “core inflation,” a popular indicator for economists, excludes volatile food and energy prices. Statistically that makes sense because food and energy prices are subject to factors outside the control of economists – or anyone else. The Ukraine war has affected both. Weather, which is increasingly volatile, is perhaps the biggest single determinant of food prices. However, no matter how much sense it makes to economists to exclude volatile sectors from core inflation, consumers can’t exclude those items from their spending. In fact, along with shelter they comprise two of the three most important components of a family budget.

So, what should voters want candidates to do or say about inflation? First, drop the discussion of technical economics. Leave that for staffers and policymakers, not candidates. Focus on what matters the most to voters, which usually is food and energy. Most of all, be honest. Don’t promise what you can’t deliver. That breeds cynicism and is one of the reasons there’s so much voter dissatisfaction. The truth is there are complex tradeoffs. For example, high interest rates help reduce core inflation, but they make buying a home or car, or anything else that requires a loan, even more expensive.

Wages/Labor

President Biden and former President Trump both visited autoworkers last week to show support, in different ways, as the United Auto Workers union strikes select plants. Given the differences in their approaches toward labor and the economy, the fact that both candidates have appeal to at least some autoworkers speaks volumes about both the complexities of current economic conditions and the divisions in the electorate. Biden’s comments, made on a picket line, cast management and Wall Street as the bad guys in the dispute. Trump, who visited a nonunion plant, places the blame on trade, specifically with China, and policies that favor clean energy over fossil fuels (and vehicles that use fossil fuels). Both messages resonate with workers, though union leaders have sided with Biden.

But the economic challenge facing the auto industry is much more complex than Trump’s or Biden’s comments portray. If wages were the only issue, workers and management likely would compromise quickly. The more contentious issue is job security in a changing industry. And protections that workers seek in the transition to electric vehicles run the danger producing short-term gains that harm both workers and the company in the long term. Tesla, which has overwhelming market share in the electric vehicle market, is not unionized and has a lower cost structure than the Big 3 traditional automakers’ union shops. The Big 3 also have the added expense of converting plants to manufacture electric vehicles as well as a disadvantage in marketing and technology – at least in the short term.

So, what should voters want candidates to do or say about labor negotiations? Nothing. As usually has happened in the past, the best thing for presidents (and ex-president) to do is to stay on the sidelines and let the two parties negotiate. The proper role for president is to champion the policies that they believe will create the best, most productive workforce and ensure employers treat workers fairly.

Trade

This is a core topic for demagogues. Cheap foreign products are an easy target that few people or institutions other than large corporations, which have little credibility with the voters that populist candidates target, will defend. But the economics of trade is anything but simple, as is the history. If you want to blame trade with China for the plight of blue-collar workers, as many Trump supporters do, you can find villains in both parties. President Nixon opened the door to renewed relations with China. The U.S. officially normalized relations with China during the Carter administration. China was included in the General Agreement on Tariffs and Trade (GATT) during the Clinton administration. For most of the past 50 years, both Democratic and Republican administrations have been supportive of China trade. Recently, leaders in both parties have reversed course and stoked a trade war with China.

While U.S. manufacturing has declined as imports from China (and elsewhere) have increased, two indisputable facts receive too little attention during campaigns. Many U.S. companies have grown because of access to Chinese markets. And some of the decline in manufacturing had much more to do with technology and decreased demand for certain manufactured goods than with competition from China. Also, important to note: For reasons that include both geography and industry mix, Oregon is one of most trade-dependent states in the nation.

So, what should voters want candidates to do or say about trade? Candidates should acknowledge the necessity of trade. Are there ways to make trade fairer? Yes. Can you do that without tradeoffs? No. As with inflation, candidates should advocate for the policies they favor with an honest, thorough discussion of the issue.

I chose not to discuss immigration, which unquestionably affects the economy, because there are moral, safety and foreign policy dimensions that make it inappropriate to analyze the issue based on economics alone. But the same principle applies to immigration as to these other issues: It is a complex topic that easily can be distorted for political reasons.

The promises that comprise campaign sound bites will not solve any of these issues. As voters, we must demand detailed, constructive discussion of the economic challenges we face and cast our votes accordingly.

Mark Hester is a retired journalist who worked 20 years at The Oregonian in positions including business editor, sports editor and editorial writer.