The impact of the 2024 U.S. presidential election on democracy and the economy

As the U.S. prepares for the 2024 election, democracy itself is at a turning point, not just within America but across the globe. This year marks a critical moment for democratic systems, with elections taking place around the world—from Europe to Latin America and beyond. The choices made by voters, both in the U.S. and internationally, will reverberate for years to come, shaping political and economic futures alike. More than ever, democracy is not just a political issue but an economic one, influencing everything from inequality to markets to the stability of public institutions. Against this backdrop, the U.S. presidential election becomes part of a larger narrative about the future of democracy as a system of governance—one with profound economic implications.

Democracy is a system built on compromise and competition, but it is far from perfect. As the late Nobel Laureate Daniel Kahneman succinctly put it, “Democracy is very complicated.” Much of the political debate hinges on undecided or emotionally driven voters, who may not always base decisions on policy but on the appeal of a particular leader, according to Kahneman. In the context of the 2024 U.S. election, this dynamic is amplified by the deep ideological divides that permeate the political landscape. However, the adaptability of democracy—its ability to reflect and accommodate the will of diverse groups—is precisely what allows it to navigate such complexities.

Nobel Laureate Bengt Holmström highlights the erosion of trust in democratic representatives in recent years. “Democracies are supposed to function so that you elect somebody to represent your views, partly because you don’t have the time to collect all the information needed to make informed decisions about matters,” he says. “But at the same time, be that in Washington or in Finland, there’s this sense that [political leaders] have become worse representatives and there’s polarization.”

While dissatisfaction with political leaders is real, and amplified in the age of social media, it can serve as a driving force for reform and a shift toward more responsive governance. Democracies, even in times of strain, have the tools to self-correct provided there is active civic engagement.

One of the greatest challenges facing democracies today is the growing divide between the rich and the poor. According to Nobel Laureate Joseph Stiglitz, if you go back in American history, the attempt to break up monopolies and antitrust laws were more about politics than economics, whereas today they are perceived as being economic laws. “The worry was that the agglomeration of political power would distort our democracy,” says Stiglitz. “And that’s what’s been concerning me, that we’ve moved too close to a system of one dollar/one vote rather than one person/one vote. And that totally destroys the nature of our democracy.”

The gap between the wealthy and the rest of society has certainly widened, in the U.S. and across economies globally, and democracy itself stands out as a solution uniquely positioned to address these challenges. By enabling open debate and the contestation of ideas, democratic systems offer the possibility of policies that address inequality and create more equitable economic outcomes. The 2024 election presents an opportunity for voters to advocate for policies that tackle economic disparities and strengthen democratic values.

As voters prepare to go to the polls, issues such as wealth redistribution, corporate taxation, and the affordability of healthcare and education are likely to dominate the conversation. These policy debates are not only about economic fairness but also about the sustainability of democratic governance in the face of growing disparities. The 2024 election will serve as a referendum on how democracy can respond to the rising tide of inequality, a question that also has global resonance as other nations grapple with similar issues.

Democracy isn’t perfect, no system is. At a time when many citizens feel disconnected from their national political institutions, local governance can reinvigorate a passion for national democracy. While the U.S. is amidst a presidential election cycle, it remains important to support local initiatives, where citizen can back new leadership and create new pathways for more effective national governance at the same time.

“Local democracy can give us better national democracy because it creates an opportunity for people who have one local office to prove their abilities, to challenge, to govern,” says Nobel Laureate Roger Myerson. “That then makes them stronger competitors on the national level.” 

The power of civic engagement extends to everyone, yet Nobel Laureate Daniel McFadden highlights the importance of the role that young people can play in shaping the future within democratic systems. “Young people have the power to take control if they recognize what their interests are and they speak up and they participate,” says McFadden. “One would hope that in the future, young people will not sit on the sidelines but rather think seriously about what kind of future they want for themselves and try to achieve it.”

The voices of younger generations have played a huge role online in the lead up to the 2024 election and will be critical in determining its outcome at the polls as well. By participating in elections, advocating for policy change, and demanding accountability from their leaders, young citizens can help address the economic and political challenges. Whether through local activism, voting, or broader political movements, civic engagement at all ages is the key to ensuring that democracy remains a viable and vibrant system.

The 2024 election is more than just a contest between candidates or parties—it is a moment of reckoning for democracy itself. While the system faces challenges from economic inequality, political polarization, and disillusionment, it also holds the potential for renewal and reinvention. Nobel Laureates like Stiglitz, Myerson, and Kahneman remind us that, despite its imperfections, democracy remains the best tool we have for balancing competing interests and supporting the wellbeing of a country’s citizens. Regardless of who the next president of the United States will be, voters in the U.S. will have a chance to elect not just a leader but the values they want to country to uphold.