These numbers explain the anger among Trump voters around the world

An economist is calling for economic disaster protections to better protect wages.

Niklaus von Tobel/ch media

A notorious exaggerator, Donald Trump is likely to glorify his re-election as a sign of unparalleled historical uniqueness and other superlatives. But a look at the global super election year of 2024 reveals something different. His re-election is just an election year rule, unique in the world.

In ten major democracies, incumbents are punished. This is shown by the Parlgov database, which traces election results in these countries back 120 years. The ruling party lost vote share everywhere, according to the Financial Times. This is the case, for example, in the United States, India, Japan, France and the United Kingdom. Germany could be the next country to follow this model when Olaf Scholz and his Social Democrats face voters again.

The reason for voters' anger may be found in their wallets. Because as the huge job prospects in the OECD association show, things are looking bad there. In 16 out of 35 countries, the purchasing power of people’s wages is still lower than before the COVID-19 outbreak. So your purchasing power at the beginning of 2024 is still lower than in 2019. It was a bad five years.

Money: Voter anger is likely to come from empty wallets.Image: trapezoid

Purchasing power in France is still growing slightly, but only by 0.8% since the end of 2019. However, purchasing power in Germany fell by 2%. Italy was hit hard, losing nearly 7%. The Nordic countries also performed poorly, with Norway down 1.5%, Denmark down 3.5%, Finland down 5.9% and Sweden down 7.5%. Real wages fell by about 0.8% in the United States and 2.5% in Canada.

Switzerland has not escaped this tragic trend. It does a very good job of avoiding inflation. Compared with the highest annual inflation rate, only Japan among nearly 40 countries has a similarly low inflation rate. According to data from the OECD, overall consumer prices in Switzerland increased by 3.5% compared with the previous year, making Switzerland the country with the highest inflation rate. The average across all industrialized countries is over 10%. So almost three times.

Wage woes in a booming job market

But this success does not prevent Swiss purchasing power from disappearing entirely, but at least declining. That is 2.1%. As a result, average real wages have not increased as much as they would have if the economy had grown. Even the preservation of purchasing power has not been achieved. Things took a turn for the worse.

This wage dilemma may seem puzzling at first glance. At the same time, if you look at the unemployment rate, things are going well in the labor market. In most countries, they are only slightly above or significantly below the historical lows of the past two decades. This holds true for the United States, the Eurozone, or an average across all industrial countries. For some time, this has been the case. The average unemployment rate across all industrialized countries has been below 5% for 30 consecutive months. In short: The labor market has boomed and is still doing well, but wages are disappointing.

This contrast was also discovered by KOF, the economic research center at ETH Zurich. One feature of the past few years has been a decline in real wages despite an apparent historical shortage of workers.

After all, the period of declining real wages may end this year. KOF predicts that wage growth after inflation will eventually reach 0.8% in 2024. In 2025, real growth will reach 1%. However, this also includes salary increases that employees receive after a job change.

Need to buffer inflation reserves

The reason for the miserable wages is most likely inflation. Unions and employees failed to push for compensation for price increases. Wages have grown too slowly and purchasing power has been lost. The fact that this inflation compensation does not exist despite a booming labor market may be related to the unique nature of the inflation shock. Switzerland has not had such high inflation for about 30 years, the United States for about 40 years, and Germany for about 70 years. The workers were surprised.

Wage developments may still reflect too mildly the extent of voter dissatisfaction. As a Harvard study shows, their main concern is price or price increases. They don't even notice that this is not fully but at least partially compensated by wage increases. To them, rising wages are their own fault and inflation the fault of the ruling party. You've accomplished something; the incumbent kind of screwed it up.

Donald Trump: Politicians with extreme positions benefit from anger about inflation.Image: trapezoid

Anger over inflation has been directed at the ruling party and has brought in power substitutes, including politicians with extreme positions. German economics professor Isabella Weber therefore warned on social media that Trump’s election showed: “Inflation is a threat to democracy.”

Weber therefore called for better protection of people from “cost shocks”. Today, the responsibility for fighting inflation falls disproportionately on central banks, which have raised key interest rates after shocks such as the coronavirus pandemic. But this will only put more people out of work, the loss of purchasing power will only be corrected slowly, and the economic difficulties will eventually be ignored.

Weber said in an article in Time that “economic disaster protections” are needed. For example, ports must be forced to build reserves to prevent shortages and increased costs. Or buffer stocks of basic foodstuffs such as cereals must be built or expanded, as is the case in the United States, which has a strategic petroleum reserve.

The former prime minister recounted her memories. Merkel was at peace, but she also admitted her mistakes. Attempting review.

First a confession: I've only read excerpts from the book I wrote about here. This may certainly apply to many critics, because when the publisher emailed the 700-page proofs of Angela Merkel's autobiography “Freedom” on Tuesday morning, the work was already in bookstores.