Can politicians afford an affordability problem?

Weekly Updates

“Affordability” has suddenly become a political focus. People are angry about the loss of affordability, and are inclined to blame incumbent governments for this. It is tempting to think of affordability as another version of the “cost of living crisis”—but affordability is subtly different, and may linger.
Affordability captures price increases. “I cannot afford that” is central to people’s anger. While inflation is a general increase in prices, affordability is normally directed at specific, large expenses such as home ownership. Consumer price inflation is a plutocratic statistic, biased toward high income groups’ spending patterns. Affordability, being political, is democratic; inflation inequality can make this a problem even when the aggregate inflation level is well behaved.
Affordability also has to capture income growth—because spending power is the focus. As with inflation, rising income inequality can create an affordability crisis even when the average income growth seems benign.
Affordability also includes some kind of aspiration. People want things (generally “better” things than they currently have) and are upset that they cannot afford those things. This may make affordability a more enduring problem than in the past. Social media presents carefully curated, idealized lifestyles to anyone with a smartphone. That fuels resentment about a lifestyle that cannot be afforded.