Between price gouging and stock buybacks, it’s time to talk about what’s really driving inflation.
S E E D E D C O N T E N T
Politics With Charles P. Pierce
Democrats Need to Remember What It Means to Be a Workers’ Party
Between price gouging and stock buybacks, it’s time to talk about what’s really driving inflation.
By Charles P. PiercePUBLISHED: OCT 27, 2022
Justin Sullivan//Getty Images
The next time you see a Republican ad that blames the Biden administration for inflation in general, and gas prices in particular, remember this story, point, and laugh. And the next time you see a timid corporate Democrat start meeping about inflation in general, and “sacrifice” in particular, remember this story, point, and spit. From CNN:
Shell will buy back $4 billion worth of shares and increase its dividend by 15% after posting another gigantic quarterly profit thanks to strong oil and gas prices. The UK company posted net income of $9.45 billion in the third quarter, more than double the $4.1 billion it recorded a year ago. The result was driven by a strong performance in its oil exploration and production business, Shell said. The company’s stock at one point rallied more than 4% in London on Thursday as investors cheered the news. The additional buybacks will increase total share purchases for the year to $18.5 billion, some 10% of the company’s share capital.
It may come as some surprise to you all to learn that stock buybacks of this kind used to be illegal. The Security and Exchange Commission frowned on them. So did most economists. From the Harvard Business Review:
Why have U.S. companies done these massive buybacks? With the majority of their compensation coming from stock options and stock awards, senior corporate executives have used open-market repurchases to manipulate their companies’ stock prices to their own benefit and that of others who are in the business of timing the buying and selling of publicly listed shares. Buybacks enrich these opportunistic share sellers — investment bankers and hedge-fund managers as well as senior corporate executives — at the expense of employees, as well as continuing shareholders.
It will come as no surprise, however, to the regulars here at the shebeen to learn that it was under the Reagan Administration that the SEC adopted a new rule that immunized corporate CEOs from charges of stock manipulation that might arise from such buybacks. This made a lot of people very wealthy, and it also disfigured the economy the same way that all those old SEC fuddy-duddies said it would. In fact, a 1% tax on buybacks was central to the funding mechanism for the Biden administration’s Inflation Reduction Act last August.
More to the point, Shell’s announcement makes anyone running on inflation and/or gas prices look like a fool. There’s been price gouging all over the lot since the pandemic broke out. Rep. Katie Porter already got an anti-gouging bill through the House.
But somewhere between Reagan’s election and now, Democratic candidates have lost whatever it was that allowed Franklin Roosevelt to welcome the hatred of the “malefactors of great wealth.” It ought to be easy to argue as ferociously against price gouging as the Republicans are arguing against inflation—easier, actually, because there’s substance behind an anti-gouging campaign and actual legislation aimed at correcting it; whereas the Republican railing about “inflation” uses the term as a mere conjuring word, and the people invoking it have no substantive plan to deal with it. But sometime over the last 40 years, as a national party the Democrats lost the ability to discuss class with the appropriate vigor and fire. This Shell story should be a live grenade to toss into every Republican congressional campaign. But I’m not sure the Democrats could even find the pin.
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"But I’m not sure the Democrats could even find the pin."
And there you have it. Biden and the Dems ineptness will be blamed
Wait I thought it was Putin that was causing inflation. Joe even said so.
There is no one single simple cause for inflation. Putin's war is a contributing factor but certainly is not the dominant contributing factor. I suggest the pandemic is the dominant contributing factor.
Non,no,no,. I heard Joe say himself that Putin was the cause of inflation and high gas price. Are you trying to cover for him again?
Do you ever engage in serious, adult, thoughtful discourse?
I am just giving you what Joe Biden said himself.or have you forgotten this
I take that as a no...
Yes Ido but for the most part I am speaking to liberals and progressives here and they just wouldn't understand.
Where do you see me denying that? Read, rather than invent from thin air.
Here, read what I wrote:
The above disagrees with Biden. Get a clue.
Another factor is that price increases normally are tempered by competition. The pandemic (and the consequent supply chain problems) gave everyone an excuse to raise prices "we have no choice ... the pandemic ...".
People that raised prices for no cause deserve everyone’s scorn but that’s not the majority. Supply chain problems and an even greater issue, labor shortages, were very real causes for many price increases.
Not to mention too much free money chasing too few products.
Much of that "free money" provided food and shelter for the millions that suddenly found themselves with no income as the country went into lock down.
Much of it did, much of it didn’t.
Funny, the left never cut Bush Jr any slack.
Why after two years of Democrats constantly priming the pump with needless government spending and cash give aways should they be cut any slack?
This recession is on them. The high inflation, gas prices, crime, illegal immigration crisis, and wide open borders are all on them.
They deserve the same fate as Bush Jr and the Republicans. A good flushing at midterms; along with the follow up swirly in 2024 when they lose the White House.
Trust them, they know what is best for us. What bullshit.
Although it's taken me a lifetime to realize it, I'm only now really understanding how the American government works. It's not run by politicians, because they are just the pawns of big business. Not only can the huge corporations manipulate the economy to their advantage as they are doing here to exacerbate the inflation in order to discredit the present government and assure a big win for the Republicans in the midterms, but they strongly support (translation: "buy") the Republicans' campaigns in order to assure that the Republicans will support their corporations to guarantee greater profits. What the oil industry, having amassed bigger profits these days while not being concerned about the gasoline prices soaring because doing something about that would assist the Democrats in the midterms, will benefit from the Republicans taking over, because they will most likely (I enjoy using that expression now) allow more drilling and pipelines which will be to the oil industry's benefit.
I think I'm developing a belief that a socialistic meritocracy is actually a more beneficial governmental system for the people of a nation than America's form of government, especially when the people are fooled into voting for politicians that are more concerned about maintaining their personal position than representing the electorate.
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Calling someone a communist is probably still not allowed here, but I guess the moderators will let us know.
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Interesting that you think that calling someone a "capitalist " could be construed as a personal attack. Doesnt say much for capitalists does it?
Interesting that’s what your take is on my comment. Well, not really ......
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