The Real Inflation Problem Is Corporate Profiteering
Category: News & Politics
Via: john-russell • 3 years ago • 38 commentsBy: fshakir (The New Republic)
S E E D E D C O N T E N T
The prices of everyday goods are going up, and everyone from members of Congress to talking heads on cable news have their own diagnoses as to why it's happening. But they're all missing the biggest piece of the puzzle about what is to blame—namely, corporate profiteering.
You've heard a dizzying array of explanations about inflation. Biden administration officials have said the Covid pandemic resulted in supply chain disruptions, which are now being ironed out. Republicans are blaming Biden's policies for putting too much money into the hands of working families. Corporate leaders are blaming it on an inability to hire workers and a workforce that wants better pay and working conditions. Economists say that while inflation is indeed occurring, the expectation of inflation is truly what's altering consumer attitudes and behavior.
What all these arguments miss is that, despite whatever rising costs exist for raw materials or transportation or other underlying factors, the incontestable truth is profits are way up for the largest corporations in America.
And what that means is pretty simple: Corporate America has seized on the fears of inflation to jack up prices on you and make a ton more money. According to The Wall Street Journal, nearly two out of three of the biggest U.S. publicly traded companies had larger profit margins this year than they did in 2019, prior to the pandemic. Not just profits. Larger profits. Nearly 100 of these massive corporations report profits in 2021 that are 50 percent above profit margins from 2019.
CEOs are quick to suggest to media that they have been forced to raise prices because of one difficulty or another. However, my organization More Perfect Union reviewed recent corporate earnings calls featuring CEOs of some of the largest companies in the world, like Tyson Foods, Kellogg's, Pepsi, Mondelez (a huge snack food and beverage company that used to be known as Kraft), and others. And we found jubilant executives revealing that price hikes are great for business.
In these calls, business leaders employ fancy financial lingo to tell large shareholders how they are engaging in "pricing improvements" and "successful pricing strategies." They tell you they are experiencing customer "elasticities" to price increases at historically low levels. When you decode what they're saying, it's nothing less than a euphoric articulation that they're able to pass off price increases to consumers, who, in the words of legendary investor Warren Buffett, are "just accepting it." The stocks have in turn moved higher and higher. (And interestingly, when a corporation like Target announces it hasn't raised prices despite strong earnings, investors are punishingit by pushing the stock downward.)
In an interview with Fox Business, John Catsimatidis, a conservative pundit and billionaire CEO, revealed very simply what his C-suite colleagues are doing. "Why give something away if you don't have to, and you can have a bigger margin?" he said. Right. It's corporate price gouging at work.
Beef prices are up this holiday season. Why are they up? Because a consolidated market has allowed monopolists like Tyson's, Cargill, and National Beef to rake in more profits while ensuring that very little of that goes to ranchers and farmers who are raising the cattle.
Home Depot and Lowe's recently posted incredible earnings, pleasing giddy investors. CNBC's voluble Jim Cramer observed that these two companies "can do no wrong because they're passing on rising costs to the public, and the public has no choice…because these two chains have single-handedly wiped out the competition already."
The power is entirely in the hands of large corporations, and they're going for the gold. This story of corporate greed is being missed in the national inflation conversation.
But there's more! Think about the devious design of what corporations have been up to. For months, they have, with one hand, fueled talk of inflation as a way to make obscene profits off the backs of consumers. That's bad enough. But with the other hand, they have been manipulating the talk of inflation to engage in a full-frontal assault on President Biden's efforts to pass a Build Back Better bill for working families.
The U.S. Chamber of Commerce has called Biden's proposal an "existential threat," and it—along with many corporate P.R. groups—has led a multimillion-dollar barrage of corporate ad spending to try to dissuade voters about it.
Corporate America is also feeding its talking points into the hands of Republican lawmakers and media outlets that pin the blame for inflation on Biden and falsely warn that enacting a working families bill is only going to feed it further. Because the Build Back Better act will have increased taxes on corporations, these big businesses are eager to kill it. They are not about to give up any of their record profits to invest in the safety net of America.
As we head into Thanksgiving and Christmas, and we all look forward to large enjoyable feasts with friends and family, we should rightly harbor anger about inflation. Not just that they made us pay more for turkey, cranberries, and pie crusts. We're having to pay more because corporate America made a choice to raise prices on us, and then on top of that, it tried to manipulate your fear about those prices to keep you from getting paid leave, home care, childcare, and climate change action. Corporate America made you pay more while trying to make sure it didn't have to.
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Most Americans are brainwashed into believing that corporate profiteering is the American way and = "freedom".
So what's Biden's fix for this "temporary" problem?
releasing three days worth of gasoline from the strategery reserves ........
Most Americans understand supply and demand. When the demand is very high and the supply is very low the costs go up. It is that way the world over; and is not just a problem in the US.
Biden can't do much to increase the supply; but he can do a ton to lower it.
Love this part.
Really, Biden is ironing out the supply chain disruptions? How? Increasing the ours of operation at LA and Oakland ports aren't going to cut it. Unless Biden can shit out more chassis for the containers to go on; more drivers to pull the containers from the ports; more warehouse space in and around LA and Oakland to transload the material to; more rail flatcars, ramp workers, and engine crews to move the material by rail; more long haul drivers and rail drayman; and more workers at the local level warehouse supply for stores and the stores themselves- the supply chain disruption will be around for a very long time. If he somehow manages to do all that he can start on the world supply chain issue- because it isn't just the US- the whole world is having the same issue.
Funny how inflation wasn't a thing until Biden took over. Just like the illegal immigrant surge and border problem. And US citizens, Green Card Holders, and Special VISA holders being abandoned in Afghanistan really on charities and private individual operations to get them out; because Joe has "Turned the page". But hey, the massive stimulus from the infrastructure bill is due to hit; so expect inflation to spike further; and maybe Democrats multi trillion dollar BBB bill to follow. Just to add kerosene to the dumpster fire Biden and the Democrats have created.
Unfortunately not everyone is entitled to take part in the left's domestic terrorist smash and grab shopping spree. Guess what that is going to do the cost of merchandise as stores will have rising insurance costs, security costs, and the cost of replacing product and repairing damages. Suppose that will be big business and corporations fault as well?
This article is from 2018. The idea that scattered "smash and grab" attacks in 2021 on a relative handful of mainly high end retailers will add significantly to what was already a costly factor in retail (retail theft) is simply shabby reasoning.
Scattered smash and [ grabs?deleted ]
Suppose you are going to claim the far left domestic terrorists riots, arson, vandalism, and looting of 2020 and 2021 didn't raise the costs either?
Real damn scattered John. Why do the left love criminals so damn much?
The smash and grab , in the stories you link, are related to incidents in California and Illinois.
Something happening in two states would be kind of the definition of "scattered" on a national basis.
All of these organized retail robberies combined are a drop in the bucket to overall shoplifting that exists every single year and most certainly existed under Trump , Bush, Reagan , etc. as well as under Democratic presidents.
The smash and grabs are only happening in places that have enabled them.
Ergo, most in liberally run cities that have reduced the penalties for such.
Thugs are making bank in those big cities.
Big time!
Nobody is buying this.
Record corporate earnings wouldnt exacerbate inflation? lol.
It's pretty amazing really.
Anything bad is not Joe's fault. Anything good is all Joe's doing.
He's like ...... super POTUS ...... TA DA!
His poll numbers are really flattering. Have you seen them lately?
Yeah but those polls are wrong .... just ask team Joe.
As Anthony Fauci once said: "I Am the Science"
Ta Da!
Certainly not those who suffer from the relatively new variant named BDS.
All he had to do was govern like the moderate he told us he was.
I believe deep down Joe is more moderate.
Problem Joe isn't the one who is governing right now.
That would be his puppet masters for the most part
lol. Y'all were attacking him in just this way before he ever took office.
YOU, meaning "conservatives" want to blame Biden for "critical race theory" , which is ridiculous, for "Afghanistan" which is semi-ridiculous, for illegal immigration, which has been taking place for 60 or 70 years, and for inflation, which is a global occurrence related to the recovery from the pandemic. And also blame Biden for "wokeness" , a right wing invention related to social justice (Biden has very little connection to any social justice initiatives).
The idea that Biden is going "progressive" is a creation of conservative media and has unfortunately been amplified somewhat by the corporate mainstream media. The progressives in the Democratic Party are the ones who have compromised , not the moderates.
Biden campaigned on "Build Back Better" , because he wants to do something for the middle and working classes. There is nothing "radical" about it.
I think the thing that's always driven Joe Biden is what's good for Joe Biden. He's a moderate when it serves him politically (90s) and now that the far left controls his party, he's far left. He sees what happens to moderates like Sinema and Manchin and knows where the power lays
No, not quite. We were attacking him then for not campaigning. He simply ran as "I'm not Trump." Was that a fair criticism?
And now we criticize him for his performance as president. Fair?
YOU, meaning "conservatives" want to blame Biden for "critical race theory" , which is ridiculous, for "Afghanistan" which is semi-ridiculous, for illegal immigration, which has been taking place for 60 or 70 years, and for inflation, which is a global occurrence related to the recovery from the pandemic. And also blame Biden for "wokeness" , a right wing invention related to social justice (Biden has very little connection to any social justice initiatives).
I meaning "me" condemn him for caving in to the left and advancing CRT, running out of Afghanistan and leaving 13 Marines dead & 26 critically maimed, leaving American citizens behind along with $Billions in military equipment. He also OPENED THE BORDERS to the entire third world! The inflation was created by him and the legislation he sponsored and the energy crisis he created.
The idea that Biden is going "progressive" is a creation of conservative media and has unfortunately been amplified somewhat by the corporate mainstream media. The progressives in the Democratic Party are the ones who have compromised , not the moderates.
You'll find out in 2022.
Agreed. He's being told what to say and do.
That's just nonsense. Biden has nothing to do with "critical race theory" whatsoever. The controversy was created out of thin air by a right wing activist named Christopher Rufo.
Trump wanted all US troops to leave in January 2021. Is it your opinion that the Afghan forces would have had a stronger backbone because Trump was in charge during the surrender of their country ? rofl. Maybe more or less than 13 Americans would have been killed during a Trump withdrawal but we will never know. As far as the Americans left behind, most of them were orginally Afghans who went back and just how many of them actually want to leave is unknown.
Only comprehensive immigration reform legislation can solve the problem which has existed for many decades. All the rest of this is politics.
That is the opinion of right wing pundits. Others have totally different opinions.
Bullshit. reform legislation is only going to be justification for an overrun worse than we are seeing now. It's justifying illegal activity. We have immigration laws already that have worked just fine for millions of people.
Goebbels has nothing on you. Not one damn piece of truth in the entire damn post.
But Trruuummmmppppp!!!!! Pathetic, and getting more so every time it is used. There is no excusing what Biden did; it was/is criminal.
Until you close down the border there can be no comprehensive immigration reform! Think the future waves of illegals will obey the new laws any more than they did the old ones? Think that there won't be a future amnesty call, after amnesty call, after amnesty call? Wash, rinse, and repeat the stupidity.
Thankfully the majority doesn't agree with the "others". Less are siding with the "others" every day. Midterms can't come quick enough.
Trump 'signed memo to withdraw troops from …
Sep 15, 2021 · Former President Donald Trump signed a secret memo calling for the withdrawal of all US troops from Afghanistan by January 15, 2021 , according to the new Bob Woodward book. Home U.K.
Trump says wants US troops out of Afghanistan by …
Oct 08, 2020 · President Donald Trump has said he wants all US troops to leave Afghanistan by Christmas, speeding up the timeline for ending America's longest war. "We should have the small remaining number of...
So your defense of Biden's screw up is an order (for which no proof is given, of course!) which was NEVER implemented, and THAT caused Biden to go all stupid?
That is a ridiculously weak-ass argument and should be rejected out of hand by anyone familiar with the truth.
Make your stupid arguments to someone who might appreciate them. That would not be me.
Trump became distracted by his insane "stop the steal" nonsense. If not for that, or if he had won the election, who knows what he would have done.
The idea that Trump would have made sure no Americans died in a withdrawal from Afghanistan is ludicrous. No president has the power to make sure of something like that.
Many, many times, things are "stupid" to those who can't understand them.
Wow, what a novel defense of Biden's fuck-up THAT crap is! Speculation is the very BEST you got here?
I always enjoy it when people just prattle off ridiculous arguments against what NO ONE else is claiming.
LOL!
You could live to be a thousand and still never say anything I didnt understand.
You called my argument stupid. Only someone not understanding my argument would feel that way. Your words, not mine, JR.
Own it and enjoy them!
So, why is Joe Biden and the American press selling the public 'supply chain' bunkum?
If there is profiteering (and there's little doubt of it) then it's being done by middlemen in the economy. Increasing prices for services, rents, and utilities isn't caused by supply chain bottlenecks. There was also a significant increase in business debt during 2020 and businesses will pass that debt burden on to consumers.
There needs to be some clarity injected into the narrative. The sector of the economy that has actually benefited from the pandemic has been banking and finance. The increased prices are feeding money directly into the financial sector of the economy. And the Federal Reserve has been using political government to pump cash into finance with its quantitative easing policy. The Federal Reserve has been backing creation of new government debt to give the pubic money and the public has spent that money on inflated prices. The financial sector has been reaping the rewards of pandemic induced business debt, private debt, and public debt without producing anything.
Don't you want your retirement accounts, your IRAs and 401k, to grow quickly? How do you think that happens? Where do you think the money comes from? Fat cat investors are driving inflation and it doesn't require a 7 figure holding to be a fat cat investor. People relying on the financial markets for retirement savings are demanding inflation.
Finance has been profiteering off all segments of the economy. Joe Biden and the American press has been selling the public 'supply chain' bunkum. There are lies, damned lies, and then there is neoliberal economics.
One supplier i talked to told me the cost to ship a standard ocean shipping container was around $1900 from Asia pre pandemic. Now the same container averages over $19,000 today. It doesn't take a Nobel Prize winning economist to see the issue there.
That has little to do with the corporations making the products in the containers, or the corporations shipping those products. Maybe the shipping companies are making bank but that's about it from what i'm seeing.
A lot of that $19,000 is in the form of penalties.
Container grounds at port and there are no chassis to put it on. The port charges the steamship line storage by the day on the container; who in turn passes it along to the customer. Same if it grounds at a rail terminal and there are no chassis. Once a container is out on the street the clock starts on dwelling for the container and the chassis.
It also doesn't help that aren't enough drivers to deliver; and some companies don't have room so they use the containers as extra storage- paying escalating costs over for the entire time the container is out. Which also ties down the container for outbound international loads; and the chassis to handle any future moves.
The 19k is to get from the Asian port, unloaded in a US port.
Land shipping from there is above and beyond the 19k. I'm sure that has gone up exponentially as well.
We are just starting the see the inflation burn. We'll be barking on double digit inflation next year. 12 months give or take from when it started to increase significantly.
It's going to get uglier before it gets better and responsible or not, Biden is going to take the blame. Just like Trump did for COVID.
I finally figured out your name. I saw a preview of an old movie with Robert De Nero.
I've heard similar stories from my clients, normally followed by the phrase "if you can get one".
The tech sector was the primary beneficiary of the pandemic. XLF is up roughly 116% since the lows in March 2020. XLT is up 143%.
The banking sector will be the primary beneficiary of the growing inflation.
Yes, the Fed has been using quantitative easing to keep interest rates low and stimulate the economy. But I think you're overlooking the fact that rising interest rates are good for banks.