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When I updated these numbers with the latest economic metrics under Biden, they didn’t look good:

Andrew Prokop / Vox

The president’s party’s midterm performance and real income growth. Check out Mischiefs of Faction for another look at this data.

Depending on how you slice this data, it may look a bit different. Masket compared, specifically, real income growth from the second quarter of the year before the midterms, to the second quarter of the midterm election year. (He also plotted that against loss of House seats, while I used the national House vote results.)

A study by researchers at the Federal Reserve Bank of Dallas found that real wage growth during the pandemic has been “slightly positive” once changes in composition of the workforce are controlled for. That Dallas study, though, also found that real wage growth turned negative in the second half of 2021 because inflation shot up.

And as Masket points out, there is a complication here. The three midterms here with negative income growth — 1954, 1958, and 1974 — all occurred in the midst of, or right after, recessions. This year, there is continuing disruption due to the Covid-19 pandemic, but the economy is growing strongly and only briefly fell into recession at the beginning of 2020. Other metrics are rosier: GDP growth looks good and the unemployment rate is low. This is a bit of a different situation than prior periods of negative income growth and, Masket tweeted, it “adds to the uncertainty” about this year.

Still, large majorities of poll respondents have been saying they think the economy is in bad shape and that Biden hasn’t been handling it well. Biden’s approval rating started declining more rapidly in the second half of last year, as inflation began really picking up, and it’s currently around 41 percent. According to NBC News, the White House is trying to brainstorm a new economic message — but there may be no substitute for improving workers’ real wages.

Economists like Nobel laureate Joseph Stiglitz see it too; in a recent column, Stiglitz pointed to the oil industry as a particularly acute example.

“What we are seeing today is a naked exercise of oil producers’ market power,” Stiglitz wrote of rising energy prices earlier in February. “Knowing that their days are numbered, oil companies are reaping whatever returns they still can.”

But there’s plenty of pushback, both political and economic, to this perspective. A survey of a number of leading economists by the Initiative on Global Markets at the University of Chicago’s Booth School of Business showed that a majority of those surveyed — 67 percent — disagreed or strongly disagreed with the statement, “A significant factor behind today’s higher US inflation is dominant corporations in uncompetitive markets taking advantage of their market power to raise prices in order to increase their profit margins.” Only 7 percent of those surveyed agreed or strongly agreed with the statement.

“I don’t see the logic: U.S. markets have been concentrating for decades but high inflation is [less than] one year old,” Massachusetts Institute of Technology economist David Autor wrote in response to the survey.

Biden administration economic advisers, too, are disputing that message; as the Washington Post’s Jeff Stein reported on Thursday, messaging about corporate concentration leading to higher prices is currently a live debate within the administration.

President Joe Biden himself, under immense pressure to address inflation, has pointed out market consolidation in a few industries, but hasn’t gone so far as to blame it for the longer-term inflation the US is experiencing. “This isn’t a new issue,” Biden said last month. “It’s not been the reason we’ve had high inflation today. It’s not the only reason. But, over time, it has reduced competition, squeezed out small businesses and farmers, ranchers, and increased the price for consumers.”

But critics of major corporate price increases aren’t arguing that the consolidation is the only force driving inflation; rather, that because these conglomerates hold so much of the market share, they are able to raise prices out of step with the actual price increases they’re incurring and passing on to consumers — essentially, that they’re using the current inflationary environment as an excuse to raise prices more than necessary because they don’t have competitors to drive them to keep prices down, in turn contributing to the problem of inflation.

Corporations have high pricing power, driving higher costs and contributing to inflation

What is clear is that, “we’re in a highly unusual context,” Gregory Daco, the chief economist at EY- Parthenon, a global strategy consulting firm, told Vox. According to Daco, companies are currently being rewarded for price hikes with higher valuations and stronger revenues, so there’s little incentive for them to stop doing so, even if the prices aren’t justified by increasing costs to corporations.

Some price raises are to be expected; there are increasing costs to supplies, transportation, and labor, but consumers don’t have a way of knowing how those increased costs factor into price rises — and that’s something we’ll likely never figure out, Daco said.

“I think it’s nearly impossible to disentangle what is considered a natural, if we can put that word here, a natural outcome from the Covid crisis, from the massive injection of fiscal stimulus that led to very strong demand, or very strong demand and recovery, and the fact that supply was slower to come back,” Daco told Vox, “versus an environment where market concentration is exacerbating these price pressures, because a few dominating firms have the ability to do so.”

The inability to dismantle those two phenomena, though, is integral to the ability of certain businesses to continue increasing prices, according to Lindsay Owens, the executive director of progressive economic policy organization the Groundwork Collaborative and a former senior economic policy adviser to Warren.

“The preconditions for the price hikes we’re seeing today long predate the pandemic,” Owens told Vox via email. “Companies are able to take advantage of a crisis like the pandemic precisely because these foundations were set in place long before the crisis itself. And in corporate earnings call after corporate earnings call, executives are using inflation as a cover for egregious price hikes to boost their own profits.”

As you read today’s inflation report, pay close attention to what the CEOs who set prices are saying. We got our hands on the latest batch of earnings reports, and it’s a doozy. They’re literally bragging about hiking prices while hiding behind “inflation.” The receipts…(1/7)

— Lindsay Owens, PhD (@owenslindsay1) February 10, 2022

Daco echoed that sentiment, saying, “We are, I think, in a situation where market concentration is exacerbating inflationary dynamics.”

Warren has highlighted the meat industry as an egregious culprit, calling for a Justice Department investigation into the industry’s practices. “Tyson is abusing their corporate market power and raking in record profits by jacking up meat prices,” she tweeted earlier this month. “I’ve long argued that we need to enforce our antitrust laws to break up monopolies and promote competition, and now it’s more vital than ever as a tool to fight inflation.”

Tyson is abusing their corporate market power and raking in record profits by jacking up meat prices.

I’ve long argued that we need to enforce our antitrust laws to break up monopolies and promote competition, and now it’s more vital than ever as a tool to fight inflation. https://t.co/KIbMUbM6B4

— Elizabeth Warren (@SenWarren) February 7, 2022

The Biden administration has also planned to inject $1 billion into smaller, independent meat processors to drive “meaningful competition” in the meat market, after a White House Economic Council analysis found gross profits of the top four meat processors soared 120 percent over the course of the pandemic.

“Capitalism without competition isn’t capitalism. It’s exploitation,” Biden said during the January unveiling of the plan. “That’s what we’re seeing in meat and poultry industries now.”

The only thing that will stop corporate price increases in the short term is if people buy less — one way or another

In the short term, corporate price hikes aren’t going anywhere so long as people are still willing to pay higher prices, Daco told Vox. “It’ll last and be sustainable as long as there is no pushback from consumers,” he said. “Essentially, if the price increases that are being passed on to consumers don’t weigh on demand, then businesses will continue to push up on prices.”

For the time being, that likely means the Federal Reserve will have to act to address inflation. Over the past year, the Fed has repeatedly signaled that the stimulus measures it put into place to aid in the recovery from the pandemic — buying up government bonds and keeping interest rates low — would have to be reversed to counter inflation and get it back to the central bank’s target rate, 2 percent.

Now, starting in March, the Fed is widely expected to start raising interest rates, with two more potential hikes coming later in the year, and even more by March of next year. That move tamps down on inflation by making credit — everything from mortgage payments to gigantic corporate loans — more expensive, thus decreasing purchasing power and demand. Slackening demand caused by a tightened monetary supply would send a fairly immediate signal to corporations that it’s time to arrest ongoing price hikes.

Other central banks, such as the UK’s Bank of England, have already begun to raise interest rates; Daco says the Fed is lagging because it was caught a bit off guard by just how much the Covid-19 pandemic affected the economy.

“I think the Fed was working under the impression that the pre-Covid world would return very rapidly — that we would very rapidly return to a world where the inflation dynamics would be fairly soft, therefore inflation would come back down toward 2 percent, where you would have ongoing labor market gains, where those would not stoke major inflationary pressures,” he told Vox. It’s clear now, he said, that the Fed needs to act — but very carefully.

“An excessively rapid or disorderly tightening of monetary policy could have more negative effects than desired,” Daco said. “In the end, what the Fed wants to do is essentially proceed to the so-called ‘soft landing’ of monetary policy, where it brings inflation back in line with its mandate; it needs to allow the labor market to grow, and the economy to move toward maximum employment — and [do] so without creating recession.”

Some Fed officials have echoed this sentiment recently, saying that a major initial rate increase isn’t warranted. And however interest rate increases proceed, Fed officials will have to weigh making a move that tightens the money supply across the board and decreases demand, without tightening so far and so fast that, for example, businesses decide they can’t afford to hire or keep workers on, leading to a recession.

That doesn’t completely negate concern about what Stiglitz calls the “supply-side” problems contributing to inflation — both in terms of fixing the supply chain and in terms of addressing corporate consolidation.

For example, Robert Reich, a former US Labor secretary, warned in a Guardian opinion piece on Sunday that, absent addressing anticompetitive behavior and other supply-side issues, “responsibility for controlling inflation falls entirely to the Federal Reserve, which has only one weapon at its disposal — higher interest rates,” Reich wrote. “Higher interest rates will slow the economy and likely cause millions of lower-wage workers to lose their jobs and forfeit long-overdue wage increases.”

Such fixes, however, would likely be a long-term project, while the Fed has the power to act now. And absent some action, corporations will likely continue to hike prices, because they have the ability and the desire to do so. As New York University economist Thomas Philippon told the New York Times last month, that’s because the current, unprecedented moment is just a manifestation of an underlying reality: “The firms were always greedy,” he said.

A snowboard slope is next to the towers of a former steel mill. Jean Catuffe/Getty Images

A 2022 Olympics snowboard slope sits next to a former steel mill.

But the progress seen in a city that was once synonymous with the term “airpocalypse” is still far too rare. Thousands of miles away in Delhi, air pollution has remained at pervasively high levels for the past few months. The Indian capital’s winter air pollution spike is coming to an end, but the annual cycle — driven by cooler air, cooking and heating fires, seasonal agricultural burning, and the Diwali festival — will persist without further action.

Winter in Delhi is accompanied by a pervasive smell of toxic smoke, by coughing and nausea indoors and outdoors, and by increased hospitalizations for respiratory and cardiac-related illnesses. This past November, Delhi even instituted a partial lockdown for non-Covid reasons, shutting down schools and construction for several days and imposing a work-from-home order for government employees in an effort to reduce air pollution. Throughout the winter into January, Delhi’s Chief Minister Arvind Kejriwal tweeted the city’s bad air pollution levels every day, raising awareness about the issue.

Air pollution in Delhi comes from nearly every source possible: power plants, vehicle emissions, construction dust, agriculture, and the burning of coal for home cooking and heating. All of these activities create particulate matter — minuscule air pollution particles that contribute to cancer, lung and cardiovascular disease, and even cognitive decline.

PM2.5 — the smallest version of these particles, measuring 2.5 microns or less in diameter — can cause the most damage. While no level of air pollution is considered harmless, the Air Quality Index (AQI), which translates PM2.5 concentration into a 0-300+ EPA scale, classifies 0-50 as healthy. For the month of November, when the partial lockdown took place, the air quality in Delhi ranged from “unhealthy” (starting at 151) to “hazardous” (300+). In 2020, Delhi had more than twice the average annual PM2.5 concentration of Beijing and over 5 times the average PM2.5 concentration of Los Angeles.

But it’s not just winter in India. Air pollution is a pervasive global problem, cutting short billions of lives across India and other developing nations.

Millions of deaths per year are attributed to air pollution, and it reduces average global life expectancy by 2.2 years. Air pollution is one of the most pressing public health problems in the world, and one of the most neglected, as Vox’s Dylan Matthews has written. Before the Covid-19 pandemic, poverty, malaria, pneumonia, and diarrheal disease deaths were on the decline, along with maternal and child mortality rates; air pollution, on the other hand, was getting worse in many places.

According to the Energy Policy Institute at the University of Chicago (EPIC), global air pollution has decreased since 2011, but that drop is mostly concentrated in China. Most countries across South Asia, Southeast Asia, and sub-Saharan Africa have experienced steady or increased air pollution in recent decades. The situation is especially bad throughout much of India: As of 2020, nine of the world’s 10 most polluted cities were in India, and people throughout the Indo-Gangetic plain could expect to live as much as nine years longer if pollution was reduced to the WHO guideline numbers.

View from inside a vehicle siting in traffic in New Delhi. Getty Images/iStockphoto

Traffic in New Delhi, India.

To some degree, the increase in air pollution is a byproduct of economic development: more cars, more energy, more growth. But severe air pollution isn’t an immutable law of nature. From 2013 to 2019, China reduced its particulate pollution by 29 percent by using a suite of policies, including implementing new and better-enforced emissions standards for coal plants, limiting the building of new coal plants, restricting vehicles on roads in large cities, and increasing renewable energy. “If these reductions are sustained,” states an EPIC report from 2021, “China’s people can expect to live 1.5 years longer.”

Policies enacted in China, the US, Europe, Japan, and elsewhere have effectively reduced air pollution, demonstrating that progress can be made in the regions hardest hit — that is, if governments can effectively enact and enforce policies that may have trade-offs for different groups of people.

Air pollution reduction is expensive; by some estimates, China’s war on pollution cost almost $400 billion. But countries looking to make progress against air pollution must balance these upfront costs with the long-term human and economic toll of air pollution. In 2019, India lost an estimated $36.8 billion due to premature deaths and morbidity as a result of air pollution; globally, air pollution costs an estimated $8.1 trillion a year, or 6.1 percent of global GDP. The right medium- and long-term policies on air quality can balance economic growth, health, and cost — and save lives.

How bad air quality reduces life expectancy

For decades, public health officials have known that bad air quality can increase the risk of conditions like heart disease, stroke, lower respiratory infections, lung cancer, diabetes, chronic obstructive pulmonary disease (COPD), dementia, mental illness, premature births, and more. But the true extent of the problem — such as the fact that air pollution can be worse for health than heavy smoking, for example — is only now becoming clear, as is the full extent of the threat.

A study published in the February 2022 edition of The Lancet found that 86 percent of the world’s urban population — some 2.5 billion people — are being exposed to air pollution levels roughly seven times greater than WHO guidelines. Based on data from 13,000 cities over two decades, the researchers conservatively attributed 1.8 million deaths in 2019 to urban air pollution, roughly the same number as estimated excess deaths from Covid-19 in 2020.

“Most of what we know about the impacts of air pollution on health are from short-term exposure studies, so these are studies that take advantage of daily or weekly or sometimes quarterly differences in air pollution concentrations,” says Michael Greenstone, director of EPIC, whose AQLI (Air Quality Life Index) tracks reduced life expectancy from air pollution. Yet, he adds, “the reason we regulate it is to change people’s long-run exposure to air pollution.”

The AQLI estimates are based on a 2013 paper that used a home heating program in China to approximate years of life lost by air pollution. From the 1950s to the 1980s, the Chinese government provided free coal for winter heating for households north of the Huai River, but not south of it. That policy created a natural experiment: Villages north and south of the river were mostly the same, save for increased indoor air pollution in the north because residents could afford to burn more coal there.

Life expectancies in those households north of the Huai River fell by an estimated 5.5 years. The researchers used this data to isolate the effect of air pollution from other potential causes of reduced life expectancy, and created the AQLI index to calculate the impact that different levels of particulate concentration can have on lifespan. Policymakers and the general public can use the AQLI to track how air quality has been affecting life expectancy in different countries and regions over the last 20 years. They’ve discovered that while air pollution shortens lives around the world, its main effects are concentrated in South Asia, Southeast Asia, and sub-Saharan Africa.

While air pollution in Delhi has been bad for decades, the last 20 years have seen air pollution worsen in other areas of India and South and Southeast Asia, as economic growth has translated into increased vehicle and fossil fuel use. In the Central Indian states of Maharashtra and Madhya Pradesh, according to EPIC’s 2021 annual report, “the average person … is now losing an additional 2.5 to 2.9 years of life expectancy” relative to the early 2000s due to air pollution. “Eighty- three percent of the country, by one estimate,” says Santosh Harish, South Asian Air Quality program officer at Open Philanthropy, “breathes air that is worse than the national standards,” which are themselves more lenient than the WHO recommendations.

In neighboring Bangladesh, the average person is losing 5.4 years of life expectancy due to air pollution, much more than 20 years ago. Urbanized regions of Indonesia, such as Jakarta, face similar burdens on life expectancy due to vehicle-related pollution and coal- fired power plants. Forest and peatland fires for agricultural clearance related to palm oil production in Kalimantan and Sumatra affect air quality across Indonesia and throughout Southeast Asia.

Air pollution is a severe health threat in Nigeria, Ghana, and the Democratic Republic of the Congo. In Nigeria, home to over 200 million people, air pollution has reduced life expectancy by 1.5 additional years compared to the early 2000s, caused by vehicles, industrial emissions, waste burning, port pollution, and the operation of diesel generators that are used because of the country’s unreliable electricity supply. As energy consumption in sub- Saharan Africa has grown, air quality has decreased throughout the region, according to the AQLI.

The image shows two maps of Africa with pollution spread marked in orange and red, one from 1999 and one from 2019. The Air Quality Life Index
AQLI change in Africa, 1999-2019.

And that’s the crux of the problem. Since the fuel sources that produce air pollution also provide necessities such as electricity, vehicles, factory-made goods, and heating, policymakers face tough decisions on how to deal with air pollution-related health concerns while not eroding well-being in other ways. The good news is that many countries that have undergone the same economic transition in the past have eventually succeeded in curbing the worst of their air pollution. And so could the affected countries today — with the right set of policies.

Clearing the air

According to Wei Peng, an air pollution researcher at Penn State’s School of International Affairs, the best way to think about which air quality policies are likely to work is in terms of incentives. That means identifying what different people and organizations want — whether that’s a company’s drive to cut costs, farmers’ need to clear their fields, or the public’s desire for the health benefits of clean air — and how to fulfill them in a way that works for everyone.

So while a country may decide to put strict policies in place, enforcement can be difficult if people or companies have strong reasons not to comply. For example, penalizing crop stubble burning — which heavily contributes to winter outdoor air pollution in Delhi and surrounding states — is nearly impossible to enforce unless farmers have better alternatives for clearing their fields. Measures that focus on reducing pollution at the source of power generation — like flue gas desulfurization, which removes the pollutant sulfur dioxide (SO2) from power plant exhaust — can run into resistance from coal plant companies concerned about their bottom line.

Transitioning to renewable energy can help reduce air pollution and fight climate change, but it won’t happen if people have to pay significantly more for cleaner electricity. It’s not enough to put restrictions in place if they can’t be reinforced, and they can’t be reinforced without buy-in. That makes it important to identify which policies at a given moment in a given place are not only effective but are also politically feasible, and at the same time work to bolster public demand for clean air.

Peng found that in India the most immediately viable and effective clean-air policy could focus on an undercovered air-quality issue: indoor air pollution. The largest source of indoor and estimated outdoor air pollution in India comes from households burning firewood and cow dung for cooking, heating, and water heating, which is particularly salient in rural areas.

One proven way to reduce it is to provide alternative sources of fuel for cookstoves. In India, the government has implemented a program to increase access to liquified petroleum gas (LPG) cylinders, which reduce indoor air pollution from cooking — which disproportionately affects women — because households no longer need to use cow dung biomass or wood to cook. The government has provided small amounts of LPG subsidies, but that can be difficult to sustain — the allocation for subsidies was more than halved for the 2021-2022 budget estimate, and prices of LPG cylinders rose sharply between May 2020 and March 2021. Harish noted that while developing subsidies for alternative fuel sources is important, over time fuel substitution programs can become an ongoing cost for the government as people get used to receiving them.

A complementary approach might be market-based policies. “A great way to soften those trade-offs,” Greenstone told me, “is to use market-based regulations, which really minimize the regulatory costs and minimize the impacts on economic growth, and while doing that allow for robust improvements in environmental quality and ultimately people’s health.” The state of Gujarat in India, for example, started an emissions trading program for air pollution in 2019 in which the government sets an emissions cap and companies could buy and sell permits to discharge pollutants, creating an incentive for them to reduce pollutants. This has cut air pollution by roughly 15-20 percent, according to Greenstone; with this success, the government is expanding the plan throughout Gujarat, and a similar program is being implemented by the Indian state of Punjab.

End-of-pipe control measures — which mandate pollution reductions at the source — face some of the same challenges around incentives. These upgrades, which cut conventional pollutants like SO2, are effective at cleaning up the air — though they don’t reduce carbon pollution — without requiring an immediate transition away from coal. That’s important for countries like India where the energy supply is still dominated by coal, and will likely be so for years.

Such policies have been highly effective at cleaning up the air in China and Europe, as well as the US, but Peng notes that regulators pushing for cleaner air need to grapple with “the organized interests from the power generation companies that don’t want to do additional things to increase their costs.” That means governments have to spend time and money on the process of negotiation, along with monitoring and enforcement.

Cultivating public demand for clean air by warning people about its health risks can also drive action by governments and individuals across countries. Greenstone noted how large policy changes in other countries, like China’s “war on pollution,” were influenced by public demand. In a best-case scenario, this can create a virtuous cycle of policymakers, researchers, and other actors — such as what Kejriwal was trying to achieve with his daily tweets on Delhi’s air pollution levels this winter.

Such warnings can pay off. Recent research from South Korea demonstrates that pollution alerts encouraging people to stay indoors, wear masks, and avoid strenuous activities reduced health expenditures in 2016-2017 by $28.6 million as Koreans took measures to minimize their exposure to bad air.

Over the border

It would be challenging enough if states and nations only had to control their own air pollution, but smog, soot, and other pollutants don’t recognize borders. Delhi’s annual air pollution crisis is heavily affected by neighboring states and vice-versa. Almost half of air pollution in India overall crosses over the country’s 28 state boundaries.

The United States, Mexico, and Canada all experience shared air pollution. In Europe, coal burning from nearby countries causes 1,200 premature deaths in France per year, while in East Asia, increased pollution levels in Beijing lead to fetal mortality increases in South Korea. 

    <img alt="Fire and smoke in a forest in Indonesia." src="https://cdn.vox-
cdn.com/thumbor/Q8dpIwB4PR5LxaVeP4g2WdKlLtg=/800x0/filters:no_upscale()/cdn.vox- cdn.com/uploads/chorus_asset/file/23250182/GettyImages_1234357352.jpg" /> Afrianto Silalahi/NurPhoto via Getty Images
Firefighters try to extinguish peatland forest fires in South Sumatra, Indonesia.

Solving international air pollution requires international cooperation, treaties, and enforcement — none of which is easy, as the case of Indonesia shows.

Indonesia’s economy is heavily reliant on palm oil production; to expand the area under palm oil cultivation, carbon-heavy peatland forests are burned every summer. This causes severe air quality problems in Indonesia and neighboring countries like Malaysia and Singapore. While an ASEAN agreement was ratified in 2003 and ratified by Indonesia in 2014, it’s unlikely to be enforced. Cross-border pollution and tensions have only continued — Indonesia needs to expand palm oil production for people’s livelihoods while neighboring countries only experience its negative effects.

Asit K. Biswas and Cecilia Tortajada, researchers at the National University of Singapore, note that there are ways for Indonesia to expand palm oil production and reduce smoke generation, such as ensuring expansions are limited in peatland and forest areas. But for Indonesia to want to implement these policies, which will be more costly than the current methods of peatland burning, the researchers write that “it is imperative that the Indonesian public and policymakers be convinced beyond doubt that haze is bad for them,” including both health and economic impacts.

Clean air doesn’t have to be a pipe dream. At the Beijing Olympics, aerial skiers competed at the Big Air Shougang venue against the backdrop of shuttered steel mills, an unmissable symbol of the work the Chinese capital has put in to leave its polluted past behind. Countries like India, Indonesia, and others could take on a similar trajectory, and in doing so, save billions of dollars and millions of lives.

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