Robert Reich: The Real Cause of Current Inflation Is Corporate Power

[kpete]

The underlying structural problem isn’t that government is over-stimulating the economy. It’s that big corporations are under competitive.

Corporations are using the excuse of inflation to raise prices and make fatter profits. The result is a transfer of wealth from consumers to corporate executives and major investors.

This has nothing to do with inflation, folks. It has everything to do with the concentration of market power in a relatively few hands.

from a couple of days ago:
https://robertreich.org/post/667491205931745280

[bucolic_frolic]

1. Yes, but it is partly about paying for higher wages, you knew consumers would pay eventually

"Wage-price spiral" was one of the terms economists bandied about as a cause for inflation in the 1970s. It was not a widely accepted view among economists or the press or historians, but it did have some merit. Surely few thought corporations would accept higher costs to reduce profits without compensating by raising prices. Business owners and shareholder-owners would never tolerate it.

[Martin Eden]

13. True, but ...

... the problem is what consumers and voters WILL tolerate.

The imbalance of power needs to be corrected.

[Probatim]

20. Wages increasing at 1/10s of a percent does not correlate with 6%-8% inflation.

Mishandling of the pandemic, trade wars, and pent up demand are creating this spiraling effect.

All of the mergers and acquisitions that were done to "remain competitive" have helped get us here.

[bucolic_frolic]

21. Well yes it does

To pay higher wages retailers raise prices. Retail wages now pushing $13-17 in some regions. Last year they were not .1% lower. They were a $2-3-4 lower. Plus benefits have generally been broadened. To call it 1/10% increase is simply untrue.

[Probatim]

24. Does that also mean those making $30-$60/hour also saw 25%-35% wage increases?

https://www.cnbc.com/2021/11/05/jobs-report-november-2021.html

In this link, wages rose 4.9% YOY and 0.4% for the month.

Supply chain disruptions are inflating the cost of most goods. Food costs are up significantly in the last few months, there are very few new cars being made due to a chip shortage - this has disrupted the used car market as well, fuel and shipping costs are up - due to demand, and there are many other areas where demand has outstripped supply.

We're all paying a lot more than we did a year ago and it's not all from higher wages.

[bucolic_frolic]

32. I didn't say it did, that was your extrapolation or assumption

[JohnSJ]

2. Boy, do I disagree with Reich on this. The inflation that we are experiencing is a direct result

of the mishandling of the pandemic by the previous administration, along with his trade wars which directly contributed to shortages and inflation


All those issues can be resolved

[KS Toronado]

3. Believe "supply & demand" capitalism had a hand in there also.

ie: supply chain

[JohnSJ]

5. Yes, It is about supply and demand, and the pandemic is directly related to that and the

shortages. Now that things are opening up, the demand is greater than the supply

[asiliveandbreathe]

4. Pay employees a living wage, bring down prices through the

reduction in corporate greed...there is absolutely NO reason for those at the top hauling in 300-400% or more than their hourly or salaried employees..

It is time to stop the madness..

[dalton99a]

6. Consumers are being gouged across all sectors, from food to transportation to housing

[malaise]

7. In reality it is the oligarchs' market not the so called free market

Last edited Fri Nov 12, 2021, 12:06 PM - Edit history (1)

That's the truth

[bucolic_frolic]

8. Oh! I like that ... Oligarch's Market

Maybe capitalism is Oligarchism? The lefty economists used to rant about 'mature stage capitalism' ... I think we might be there. And just to put in a plug for dimwit economists, they were more focused on class warfare than on the system of financial flows that passed the money UP the income stream, ladder. But of course this was before the collapse by Reagan of progressive tax rates.

[malaise]

9. Precisely

Turns out they were right

[wnylib]

12. Maybe I'm just paranoid because of

corporate press attempts to smear Biden, especially after the Afghanistan withdrawal, but I've wondered if some of the shortages and higher prices are intentionally created as an economic "war" against Biden and Democratic policies.

[Mr. Evil]

19. Paranoid? Not so much.

They don't want higher taxation so they're taking a 'we'll show you' attitude. They control the media which means they control the narrative.

[malaise]

28. You mean like they did here

Don't rule it out

[wnylib]

39. It's like the corporate media and

other corporations are sending a message to discrrdit Biden and Democratic economic policies. "See what leftist Dem policies do to you? They create inflation and shortages. We can solve this for you. Just vote Republican and the prices will come down while the supply problem clears up "

[pandr32]

25. You hit the nail on the head!

[malaise]

26. Should have written Oligarchs' Market

since there are a few of them

[ancianita]

11. He's right. Every step of the monopolists' marketnot, it's pricing, keeping it high as possible

no matter the necessities of life -- food, clothing, energy, shelter, health care, education -- from producer to assembly to distribution to consumer.

Government doesn't set prices, but exerts price controls for this and other reasons.

When government starts to exert controls monopolists punish everyone along the production/consumption chain and blame it on a) inflation caused by b) evil socialist/communist government meddling.
Their political tools yell INFLATION! day and night, no matter the national situation, and we fall for it.

[wnylib]

14. Yup.

[cstanleytech]

16. Nvidia and AMD are good examples of what happens when your options are limited because

those two are essentially the only players when it comes to video card graphics.
That then causes consumers to have to pay higher prices than they should because competition is virtually nonexistent.

[ancianita]

18. Doesn't Intel make video graphics cards?

I recall they were the first, then my son investing in AMD, their competitor.

[cstanleytech]

38. They announced that they are sticking their toes into it but

who knows how deep they will wade in is anyones guess.
As of right now though AMD and Nvidia are the only game in town for high end graphics.

[HighFired49]

27. I think that Naomi Klein had it right

and I agree with you. If you haven't, take a look at her book "The Shock Doctrine: The Rise of Disaster Capitalism". She basically
says that capitalists will take advantage of, or go so far as to create disasters or situations to make laws that advantage them, or make windfall profits, basically because the "disaster" distracts people, or increases their tolerance for higher prices based on whatever BS they've fed the public. Good read.

[ancianita]

37. Yes, she did, and yes, they do! Capitalists worsen disasters effects if that will raise profits.

And her map of capitalist disaster behaviors clearly shows that capitalists plead ignorance when their corporations only coexist with humans when there's profit to be made, so the more disaster, the better. Otherwise, if humans are in the way, corporation "security" get rid of them in the stealth way they take over markets or "enter" a region to get land base resources. Then they "ask" for R & D subsidies. That's why there are over 15 corporate militias in the United States. That's who went in and fought off protestors in forests, pipeline areas, etc., with bought off statehouses doing nothing to stop them, just sending in law enforcement "watchers."

The first thing about corporations and pricing is that corps want "equal protection" under the Constitution with human beings -- for whom the Constitution was solely written -- and none of the responsibilities toward fellow human "protectees."
Then when humans protect each other, if corporations can't make a profit off that, they call it communism, then after softening officials up with lobbying, get "subcontract protection" systems with the government. We know that government usually, in tough times, only wants to do the greatest good for the greatest number. So as long as corps say they'll meet the "help target goals," they'll get the contracts. But then, without constant monitoring, corps become "the help that is no help" except to their bottom line.

The second thing about corporations is that when they say "freedom," they mean a) Money, and b) Rule of law and taxes are for humans.

Here's a great article on how corporations right now are disaster capitalizing on this past year's disasters, and how Biden and his administration are just now trying to come to grips with it through OSHA (I hope) while dealing climate disaster prevention at the same time.

It's a dark, hard read, but we need to know this kind of wage theft and human trafficking are going on and stop it, or our nation will be run like a plantation of overseers with the owners claiming they "had no knowledge" of such practices which represent past slave policies.

https://www.newyorker.com/magazine/2021/11/08/the-migrant-workers-who-follow-climate-disasters

This guy, Saket Solin (sp?), is an important figure in developing the holistic and technical training of people to do cleanup and disaster relief when climate hits us again. We'll need so many more than we have right now.

https://media.newyorker.com/photos/617c97472caeb4c463a5ad75/master/w_1705,h_2560,c_limit/211108_r39323.jpg

[cstanleytech]

15. Very true. nt

[hunter]

17. Economics is easy.

Tax the wealthy to control inflation, and create money when people are unemployed, directing the money to basic social services and good jobs paying comfortable living wages.

That's basic Keynes, which is the only market system that works, in spite of the "conservatives" and oligarchs abhorrence of it. (Most of the conservatives and oligarchs know this too, whatever they say.)

Personally, I think the government should compete directly with the crappiest most abusive employers, offering better jobs than, just for example, the factory farm meat industry.

Jobs that can't pay a comfortable living wage, and jobs with abusive employers, simply shouldn't exist.

Everyone should be able to tell an abusive employer to "take this job and shove it..." without adverse consequences such as hunger, homelessness, or lack of medical care.

The oligarchs and fascists want their employees to be afraid, especially those earning the lowest wages.

[Ligyron]

31. They screamed about mere possibility of a public option in healthcare.

Republicans suck.

[SmittyWerben]

22. A perfect example of this lack of competition is the meat packing industry

I found several beef producers talking about the industry and why consumers are getting hammered. It is not the growers who are making the money, it is the meat packers. There are now only 4 major meat packers operating in the US and as a result, they buy the cattle at a low price, that they set, then process the meat in their plants and sell it to the retailers at whatever price the meat packers desire. Here is a link to just one of the growers talking about the problem. He has several very good videos on the subject.

&t=105s

[fescuerescue]

23. Ok. But why did they wait till 2021?

Corporations have been around for a while now.

[moondust]

29. And maybe the "pandemic" excuse.

Corporate monopolizers may also be using the real economic turmoil created by the pandemic as an excuse to jack up prices (and profits) because...(insert specious financial jargon here).

K/R

[live love laugh]

30. Cronyism and collusion at it's worst. nt

[Ligyron]

33. Anybody remember Nixon's "wage and price controls "?

Imagine any pol even suggesting something like this now.

[mathematic]

34. Typical garbage take from RR. The prices for the last 2 decades have been historically stable

If anything, all this market power corporations are alleged to have was used to keep inflation low and stable for decades.

Choosing a few specific big corporations and looking at their profit margins is the very definition of cherry picking. They're alleged to have no competition (wrong, every major store sells store brand) and fail to examine the profit margins of suppliers and distributors of those products.

Reich is terrible. He doesn't care if he's right. Everything has to be blamed on a corporation.

[ShazamIam]

35. Price gouging and they are using it to block an increase in the federal minimum wage.

[IronLionZion]

36. OPEC cartel controls oil supply

Companies with labor shortages could raise wages to increase supply of workers in a free market system or just pocket those sweet profits and stock gains.