First, an admission. I am not an economist. However, two decades as a political scientist has forcefully impressed upon me the importance of the relationship between politics and economics, particularly in the United States.

Americans’ tendency to hold politicians responsible for economic downturns means that political scientists ignore the study of economics at their peril. With Republicans attempting to characterize the current inflationary spiral as ‘Bidenflation,’ the importance of understanding why inflation occurs and what can be done about it cannot be understated.

So what is inflation, and what causes it?

In simple terms, inflation results from the rapid rise in the price of goods, which contributes to the depreciation of currency. The prices of goods normally fluctuate due to class ‘supply and demand’ factors, costs associated with distribution, and outside factors like the weather that make it harder to get goods to market or that generate short-term spikes in demand. During inflationary periods, people’s paychecks do not cover their immediate needs because the cost of everyday items – gas, bread, milk, eggs, etc. – has risen more rapidly than their paychecks. Low-income Americans are usually the hardest hit by inflation.

Economists like Princeton’s Paul Krugman often describe inflation as ‘too much money chasing too few goods.’

Because inflation is widely felt and sorely resented, the temptation to use inflation for political gain is powerful, and politicians rarely resist the temptation to offer narratives framing their opposition as the cause.

Let’s take the steady rise in the price of gasoline as an illustration of how inflation occurs, the role government plays in causing it, and what policy can do to combat it.

Currently, congressional Republicans are blaming the current rise of inflation on President Biden’s policies, arguing that the dramatic rise in the prices of gasoline is a result of Biden’s policies, such as his suspension of federal leasing of drilling rights on federal lands or his suspension of the Keystone Pipeline from Canada to Houston.

The problem with those lines of attack is that the Biden administration outstripped the Trump administration in opening public lands to such leases prior to the ban. Additionally, petroleum companies hold plenty of existing unexploited leases, so for companies to contend that the administration is creating a hostile atmosphere seems overstated. Likewise, whether Keystone had been continued or not, no supply would be reaching the market for several years. Stipulating to the fact that important resources are often influenced by future estimates of resource availability, the Keystone cancelation seems unlikely as a source of higher prices at the pump today.

If politics is not the primary cause of inflation, what is contributing to higher gasoline prices?

Most economists argue that the primary cause of inflation is the coronavirus pandemic. Extracting hydrocarbons is expensive, and the break-even point is anywhere from $30-50 a barrel. When the pandemic hit in 2020, people largely stopped driving, causing demand to precipitously fall. Everyone understood that the shutdown would end and demand for gasoline would rise, but uncertainty about how soon the economy would reopen – and, importantly, how soon people would return to driving and especially traveling – introduced an element of calculated hesitancy.

Spikes in demand inevitably contribute to rapid rises in the price of gasoline, which is a nightmare for consumers but a dream for oil executives.

So, if inflation is not primarily caused by government, what can government do to ameliorate the worst consequences of inflation for consumers?

Conservatives argue that government response to gas spikes is to incentivize greater production with generous leasing rights and the elimination of onerous environmental regulations. Liberals, in contrast, contend that oil companies are exploiting the situation to reap huge profits, effectively engaging in price gouging. As the saying goes, your mileage will vary considerably depending on which side of the ideological spectrum the reader finds themselves.

Both sides have valid points, and both sides advance proposals to bring inflation to heel. In the past, legislators would engage in legislative sausage-making, hopefully picking out the good ideas from both sides and discarding the bad ideas. Today, partisan polarization often produces stalemate, meaning that pain at the pump is likely to last well into next year.

As one analyst commented in describing the rise of Trumpism, the biggest contributing factor is that too many Americans ‘do not know where to direct their grievances.’ Too often, partisanship in the service of the ‘permanent campaign’ takes advantage of voters’ lack of understanding. Rather than lead, our politicians have chosen to manipulate. We should demand more from our leaders.

Dr. Ken Hicks is a political scientist and department head of History and Political Science at Rogers State University. The opinions, beliefs, and viewpoints expressed in this column are those of the author, and do not necessarily reflect the official position of the Claremore Progress editors or Rogers State University.

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