The True Danger for America’s Democracy

Washington is now thoroughly occupied with the attack on the Capitol. However, inflation, crumbling infrastructure and the fear of recession are also threatening society.

In the United States, a commitment to optimism is actually expected among managers and entrepreneurs even if the situation is anything but rosy. The growing warnings from prominent business representatives who fear a recession are all the more alarming.

Jamie Dimon, CEO of JPMorgan Chase, the largest bank in the country, seems to have switched from the capital market to meteorology. As recently as April, he saw a storm gathering and recently warned about a hurricane of as yet unforeseeable strength. Tesla boss Elon Musk expressed it less poetically, and while he has grandiose visions for humanity, he doesn’t expect much of anything positive in the near future. He says he has a “super bad feeling,” and he just relied on a gut feeling to cut approximately 10% of his car manufacturing workforce. For those affected, the economic slump has already begun.

Recently, it seemed as if CEOs, bankers and economists were trying to outdo each other in sounding alarms. Not that there’s a better mood among the wider population. An impressive 83% of Americans surveyed by The Wall Street Journal and the University of Chicago indicated that the economic situation is “not so good” or even “poor.” More than one-third were unhappy with their financial situation. Only one-quarter of respondents saw opportunities to improve their standard of living. The poll has been conducted since 1972, and participants have never before expressed such dissatisfaction.

Gas Prices at Record Highs

Inflation is one reason. Many economists actually predicted — and even more in President Joe Biden’s administration had hoped — that the rate of rising prices had reached its peak in March and would slowly subside. However, the most recent data from the Department of Labor from last Friday show that this is not the case. Prices in the United States increased by 8.6% in May compared to the same time last year. You have to go back to December 1981 to see the last time Americans had to struggle with such price hikes. Rent rose by 5% compared to May 2021, and grocery prices rose by 12%.

Motorists are seeing most clearly how costs are climbing each day. On Sunday, the average price at the gas pump exceeded $5 per gallon for the first time, 16 cents more than the previous Sunday. Compared to the roughly 2 euros (approximately $2.10) at German gas stations, this still seems cheap. Biden and his fellow Democrats point to the war in Ukraine, noting his government is not responsible, but instead the blame lies with Russia.

However, there are more long-term reasons for the fact that gas is eating up a large portion of the American household budget. The price of gas, which has been relatively low for a decade, is a contributing factor, and it has tempted people to buy increasingly bigger cars. SUVs and pickup trucks in particular were so desirable that domestic car manufacturers like General Motors and Ford decided to gradually close down their U.S. factories, which manufactured smaller models. At the same time, workers put up with increasingly longer trips to work. The fastest increase before the pandemic was in the number of commuters who calculated their drive in hours rather than minutes.

Misery in the Transportation Sector

The search for more affordable places to live was one of the major driving factors behind the growing trend of moving to the suburbs. In California, for example, this led to communities that were increasingly built in regions vulnerable to wildfires, with deadly consequences. There is literally no alternative to owning a car for most Americans. This is because there is no established local public transportation, which in rural regions mostly consists of bus lines that operate intermittently, if at all.

The consequences of this missing infrastructure are apparent everywhere. The construction of railroads in the 19th century once united the young nation. Today, existing rail networks are largely used for transporting freight. Then there are the enormous distances. While the rail network is available in Europe for intercity routes, Americans usually rely on flying. However, not only have ticket prices recently risen by almost 40%, but sales have diminished. Airline companies have reduced the number of routes. Many regional airports are already struggling to survive because many airlines no longer fly there.

The airline companies that were bailed out once again in 2020 with billions in government aid point to the shortage of pilots, among other things. In fact, approximately 5,000 pilots decided to switch careers during the pandemic and ultimately left the cockpit. However, it is also true that these airlines belong to one of the industries with the highest corporate concentration. Now, a new round is beginning: JetBlue and Frontier are fighting over who will take over the budget airline Spirit.

Someone Could Abuse the Situation Politically

The misery in the transportation sector is only one factor contributing to America’s gloomy disposition. There is also pressing credit card debt, which reached a peak value of almost $900 billion in May.

Biden’s persistently low poll numbers are therefore not so surprising. He’s not doing himself any favors with statements like last week, when he appeared on Jimmy Kimmel’s late-night show and explained inflation, among other things, as the side effect of a thriving economy. The president claimed the United States is growing faster than every other economy in the world, and he almost sounded like his predecessor, Donald Trump.

Biden’s remarks are not only unlikely to satisfy Americans, they are also plainly false. The 5.7% of real economic growth in the past year was the highest growth rate since 1984, but a far cry from being the highest in the world. According to the International Monetary Fund, China’s economy grew by 8% in 2021 despite lockdowns.

In recent days, Washington has been primarily occupied with the hearing on the attack on the Capitol on Jan. 6, 2021. Again and again, Biden’s fellow Democrats in particular explain how important this process is, that it’s about the country’s democracy after all. Of course, no one should underestimate this danger. However, the more desperate the economic situation becomes for the people in this country, the easier things will become for those who will abuse it for their own political ends.