The question of whether people can still afford their lives has long since become one of the most important political and social questions in many Western democracies. We saw in New York City at the beginning of November that this question can also be decisive in elections, when Zohran Mamdani was elected mayor of the US metropolis on this issue.
The topic is prevalent in the USA affordabilityi.e. the affordability of life, the political debate. The rapidly rising cost of living is also dividing our country – economically and politically. The combination of high rents, sharp increases in energy prices and expensive food primarily affects the middle of society and poorer households. It eats away at economic security and social trust. But it’s about much more than prices at the supermarket checkout or heating bills. It’s about the feeling that performance is no longer worthwhile, that one’s own standard of living is threatened and that politicians no longer take the concerns of many people into account.
Inflation hits the most vulnerable hardest
The economic development of the last four years has left deep marks. Although inflation rates have now fallen, prices remain at a high level. The key point is: low-income people have experienced much higher personal inflation rates – sometimes three to four times the official rate. Because they spend a large part of their income on basic needs – food, energy, rent and mobility – and this is exactly where prices have risen particularly.
We know from surveys that up to 40 percent of households have hardly any savings. You cannot cushion rising costs with reserves. For them, every price increase represents an immediate threat to their existence. The result: More and more people have to turn every euro twice, forego culture, leisure time and healthy food – and lose trust in politics and institutions.
Inflation is therefore also a distribution policy problem. It acts like a hidden tax that primarily affects those who already have little. The state, on the other hand, benefits from increasing tax revenue because higher prices also mean higher VAT revenue. Many large corporations were also able to significantly increase their profits during the inflation phase, while small companies and consumers suffered from the price increases.
This development is dangerous. Frustration arises – and this frustration seeks political outlets. In the lower income groups and in the Middle class The feeling of being left behind grows while others benefit. It is precisely this loss of trust that has contributed to a shift to the right in many Western democracies. The loss of trust in the state – coupled with massive increases in the cost of living – was one of the central reasons for the re-election of US President Donald Trump. The election of Trump opponent Mamdani as New York mayor could be a sign of hope that trust in Trump is not limitless.
