radiofree.asia

Category: inflation

  • Corporate Profits Have Contributed Disproportionately To Inflation. How Should Policymakers Respond?

    The inflation spike of 2021 and 2022 has presented real policy challenges. In order to better understand this policy debate, it is imperative to look at prices and how they are being affected.

    The price of just about everything in the U.S. economy can be broken down into the three main components of cost. These include labor costs, non-labor inputs, and the “mark-up” of profits over the first two components. Good data on these separate cost components exist for the non-financial corporate (NFC) sector—those companies that produce goods and services—of the economy, which makes up roughly 75% of the entire private sector.

    The post Corporate Profits Have Contributed Disproportionately To Inflation. How Should Policymakers Respond? appeared first on PopularResistance.Org.

    This post was originally published on PopularResistance.Org.

  • McConnell Pins Inflation on Biden, But Has Raked In $1.2M From Corporate Donors

    Republicans have been denying corporations’ role in rising prices and instead blaming inflation on Democrats. But a new investigation has found that the same corporations that profited greatly from rising inflation last year have also donated millions to those same Republicans.

    A new report by Accountable.US finds that 18 Republicans who have been the most vocal in shielding corporations from being blamed for rising prices have received over $5.7 million in donations from roughly 30 top companies that reported making $151 million more in 2021 than they did in 2020.

    These Republicans have gone to great lengths to blame the inflation on Democrats in the face of mounting evidence that corporations are at least partially responsible for the current squeeze on consumers.

    Senate Minority Leader Mitch McConnell (R-Kentucky) was the leading fundraiser among these Republicans; McConnell has taken $1.24 million from companies like Walmart, ExxonMobil and Pfizer during his time in office. Earlier this year, he issued a press release saying that the Biden administration is “failing” the working class and that this administration cannot take credit for the current economic recovery.

    In reality, McConnell has gone to great lengths to harm middle- and lower-income workers during the pandemic. He voted against last March’s economic stimulus, which provided a much-needed boost to working Americans’ bank accounts, and decried Democrats’ social safety net bill last year as a “liberal wish list.” Those bills contained provisions like the expanded child tax credit that helped the poor and might have done much more if they had not been slashed.

    Meanwhile, as inflation reaches new highs, corporations have been reaching into the pockets of the working class in order to pad their own profits and pay out shareholders. Recent data has shown that corporate profits reached record highs in 2021, growing by 25 percent year-over-year to $3 trillion. At the same time, price hikes, especially for essential goods, are hitting low-income people the hardest,

    Sen. Roy Blunt (R-Missouri), another loud inflation critic, has taken $946,000 in donations from the top profiting companies. Last month, he specifically criticized Democrats for saying that corporations are responsible for high prices, saying instead that inflation was due to the COVID relief package. Other Republicans, like Sen. Pat Toomey (R-Pennsylvania) and Rep. Cathy McMorris Rodgers (R-Washington), have made similar claims while sitting on hundreds of thousands of dollars in donations from top corporations.

    While economic experts say that the relief package may have added to inflation, they also say that pandemic-driven uncertainty like supply chain issues are a much stronger driver of inflation rates. Meanwhile, corporations claim in public that inflation is what’s causing them to raise prices – when, in shareholder calls, they are bragging about raising prices beyond inflation costs and buying back stocks at record high rates.

    “You don’t see any correlation between inflation and the generosity of fiscal relief. Inflation is up everywhere, regardless of whether countries were stingy or generous,” Economic Policy Institute director Josh Bivens told Salon. “You also have to think, ‘What did we get for a couple of percentage points of inflation?’ We got 6.5 million jobs created over a 13-month span – that is an incredibly fast rate of growth that just absolutely dwarfs any other recovery we’ve had before.”

    Republicans are also opposed to policies suggested by Democrats that could stop the price gouging and ease the burden on working class Americans. Last month, Sen. Bernie Sanders (I-Vermont) introduced a bill that would levy a 95 percent tax on all excess profits for large corporations in order to ensure that companies aren’t taking advantage of crises like the pandemic and conflict abroad to price gouge.

    GOP lawmakers roundly opposed the idea. Sen. Lindsey Graham (R-South Carolina) called the idea a “disaster,” while Sen. Chuck Grassley (R-Iowa) said – without evidence – that Democrats were “misdiagnosing the cause of inflation.”

    This post was originally published on Latest – Truthout.

  • Corporate Profiteers Are Driving Inflation. It Hurts Poorer Countries Most.

    The U.S. Labor Department said Tuesday inflation in the United States rose to 8.5% in March — the highest in four decades. Meanwhile, Oxfam is warning over 260 million people around the world could be pushed into extreme poverty by the end of year due to the pandemic and rising energy and food costs. For more on the growing inflation crisis, we speak with economist Jayati Ghosh, who says prices of essentials are soaring much higher than can be explained by oil prices and supply shortages alone, because of what she calls “feverish speculation” in financial markets and corporate profiteering. She also speaks about how the Global South sees the West’s response to the Russian invasion of Ukraine as deeply hypocritical when compared to the growing humanitarian crises in places like Yemen and Afghanistan, and calls on the International Monetary Fund to reverse practices of pushing austerity in less wealthy countries and instead focus on massive public spending to combat existential crises like inflation and climate change. Her recent article is titled “Putin’s War Is Damaging the Developing World.”

    TRANSCRIPT

    This is a rush transcript. Copy may not be in its final form.

    AMY GOODMAN: This is Democracy Now!, democracynow.org, The War and Peace Report. I’m Amy Goodman, with Juan González.

    We look now at the soaring price of energy and food around the world. The U.S. Labor Department said Tuesday inflation in the United States rose by 8.5% in March — the highest it’s been in 40 years. Meanwhile, Oxfam is warning over 260 million people could be pushed into extreme poverty by the end of the year due to the pandemic and rising energy and food costs. Oxfam International said, quote, “Without immediate radical action, we could be witnessing the most profound collapse of humanity into extreme poverty and suffering in memory.”

    For more, we’re joined by Jayati Ghosh, economics professor at the University of Massachusetts Amherst, previously an economics professor at Jawaharlal Nehru University in New Delhi, India, where she taught for 35 years, just appointed to the U.N. Advisory Board on Effective Multilateralism. Her recent article on the increase in commodity prices following the Russian invasion of Ukraine is headlined “Putin’s War Is Damaging the Developing World.”

    We welcome you to Democracy Now! There is a lot of news in the United States, Professor Ghosh, about inflation, with the numbers just out yesterday, worst in 40 years. If you can talk about that and then put it in the context of the world?

    JAYATI GHOSH: Yes, absolutely. There’s no doubt that it is high inflation, and it’s much higher inflation, I think, than many people, including in the administration, expected. It’s driven really by the fuel prices. And food prices matter, but to a much much lesser extent in the U.S. It’s dominantly the price of oil that is driving this. There are supply chain issues in a number of other smaller areas, like automobiles and so on. But this is a cost-push inflation, as economists call it. It’s the rise in costs of fuel, which is something that is used in everything else. It’s used in the production of many, many other goods and services. It’s used in transport. And so it doesn’t just affect the prices at the pump, it actually affects all the other prices in the economy.

    The problem is that then governments say, “Oh, well, what we have to do is to get the central bank to tighten monetary policy, to raise the interest rates.” That’s not the problem, because that’s not the solution. That doesn’t affect the cause of the inflation. So you really have to think of different measures in this situation.

    JUAN GONZÁLEZ: And what parts of the rising inflation, or what percentage, roughly, do you attribute to the invasion and the subsequent sanctions against Russia, and what part to structural problems within the world economy, in general?

    JAYATI GHOSH: This is a very interesting question, because we know that both these prices — food and fuel — were rising even before the Ukraine war. What happened thereafter is a dramatic and very sharp increase, even beyond the increase that we were already getting. At that time, before the Ukraine war, the fuel prices accounted for about 30% of the increase in U.S. inflation. Now it’s more like half of the proportion of inflation that it’s determining. But the prices themselves have gone higher than you would expect given the actual impact on supply.

    It’s absolutely true that, you know, Russia is a major exporter of oil and natural gas. But, hey, its volumes of exports haven’t fallen that much. They’ve just been diverted to other countries. It’s also true that both Ukraine and Russia are major suppliers of food grain. Ukraine does wheat and oil seeds. They also supply fertilizer. So all of those are impacting food production globally. But the prices have actually shot up well beyond what you would expect through just that supply decline.

    And that’s because there’s been very feverish speculative activity in what are called the commodity futures markets. These are markets anticipating the price one month from now, three months from now. And those prices have just gone haywire over the last six months, with massive involvement of speculative activity and then declines in them as they rush out of one commodity into another. So, a lot of the destabilizing impact of speculation on what are called these futures markets is impacting the current price, the spot market, as well.

    JUAN GONZÁLEZ: And there has been an economic impact on the Global South, obviously, from inflation, and fueled, as you say, also by the aftereffects of the war. But there’s also been — and this hasn’t been noted too much in the media coverage in the West — a sharp divergence in public opinion in the Global South about this war versus the public opinion in the West. In countries like Indonesia, some of the largest countries in the world, Pakistan, Brazil, China, public opinion is much more sympathetic to the Russians than it is to Ukraine, and certainly much more so than in the West. I’m wondering why you think that is happening?

    JAYATI GHOSH: Well, let me take your second question first. I think what is really striking — and I don’t people in the West realize it — is the extent to which the hypocrisy in the sort of moral double standards are evident in this Ukraine war. I mean, yes, it is terrible, what is happening. It is a brutal and completely unjustified invasion, and people are dying, and people are suffering. But more people have died in Yemen in the last three months, with arms provided by the U.S. and very, very brutal attacks. Children are starving in Yemen and in Afghanistan because of U.S. policy. And so, you know, everyone else in the world is saying, “How come it’s only when there are white Europeans who are affected that you care at all?” I think the — you know, really, I don’t think people in the West realize the extent to which they have absolutely lost moral legitimacy in terms of the very, very different reaction they have exposed in this war to white European lives and all other lives in the rest of the world. This is not lost to anyone in the developing world. There is a very, very strong reaction.

    And this is going to affect all kinds of things. It’s going to affect the possibilities for multilateralism. It’s going to affect whether G7 has any standing at all to ask countries to do anything. And it’s going to affect whether people go along with the U.S. and Europe in doing sanctions when the U.S. and Europe wants to do it, but not for other equally terrible acts that they themselves are party to. So, I really do believe that people in the West need to wake up and realize how much damage has been done to their own very limited conception of what is moral and ethical, when the rest of the world is very, very evident of what is going on.

    AMY GOODMAN: I’m wondering, Professor Ghosh, if you can talk about the actual corporations, if you could name names of the large corporations that are making a killing off of what’s happening right now, that are making huge profits. I mean, we know when it comes to, for example, gas, and many in the United States have asked — they would say, “Well, people are paying $5 or $6 because of the war, Russia’s war in Ukraine.” But it turns out that ExxonMobil and BP — all these oil companies are making more money right now than ever in their history. If you can talk about the same when it comes, overall, to inflation and food prices, as well?

    JAYATI GHOSH: So, this is the whole issue, that, you know, once you get some increase in prices, companies see this as a terrific way of quickly making additional profits by raising their prices even more than is justified. So, yes, there is, as I have mentioned, this cost-push element, but what you’re also getting is profiteering, plain and simple. So, companies, as you mentioned, in the oil sector, companies in the food sector, companies in a range of other sectors are raising their prices much more than is justified by the increase in their own costs. And they can do this because there’s a whole atmosphere of inflation expectation. And this enables them to — there are no limits.

    I mean, this is a time when, really, you have to have public policy which is regulating companies like this. And it’s possible that governments can do it. You have to regulate the companies that are openly profiteering. You have to set some controls on the prices of essentials, that enter into all other prices. And fuel is one of them. You really have to make sure that those prices are regulated and determined. So, the notion of this free market is completely false, because these are big fat companies — oligopolies — that can control the market. And so you really have to make sure that governments regulate those prices.

    The same thing is true internationally. We are getting the big players in agribusiness raising prices of basic grains and foods well beyond what is justified by the increase in costs. And this is affecting people in the developing world who are already much worse off than those in the U.S. and Europe, who already experienced the pandemic much worse, because they had decline in employment, falling livelihood, falling money wages. They haven’t had a recovery. Their governments haven’t had the money to spend, that has been spent in the U.S. and Europe. They are still well below levels of employment that were there before the pandemic. And now they’re facing these huge increases in food prices and fuel prices that really are just going to make massive increases in poverty and hunger globally.

    So we have to address the problem at the root, which is in terms of the ways in which prices are structured, the companies that are allowed to get away with straightforward profiteering in times of crisis, and bring in regulations and controls that will prevent that.

    JUAN GONZÁLEZ: And speaking of these protests that have begun to develop, especially in the developing world, in Sri Lanka, there was a mass protest over the cost of essential goods. And on Tuesday, the country stopped its international debt payments, effectively defaulting on its debts. Do you foresee a potential debt crisis across the developing world as a result of these inflationary forces?

    JAYATI GHOSH: Yes, absolutely. And this is something we had predicted a year ago, actually, even before the Ukraine war. The Ukraine war has, if you like, accentuated and intensified the problem. But it’s not just economists like me. The IMF has predicted this, that if you don’t do something about, first of all, the huge overhang of debt that already a lot of countries had, then the knee-jerk response of countries in the North, U.S. and Europe, to raise interest rates, so capital — all the capital comes back to these countries, and then you get massive volatility and capital flight from all the developing countries, you’re going to get massive debt crises. This is just the beginning. This is, if you like, the first step towards the abyss.

    AMY GOODMAN: I wanted to ask you about the inquiry that you’re taking part in today with Progressive International, which was founded by, among others, the independent Vermont Senator Bernie Sanders, as well as Yanis Varoufakis of Greece. Can you talk about the inquiry into the IMF and how that relates to what we’re talking about?

    JAYATI GHOSH: Well, you know, I think many people in this inquiry are going to be arguing that the IMF had been guilty of many sins of commission and omission. I think the sins of commission are very important, but they’re well known. Let me quickly highlight. The IMF goes into countries that are in deep crisis, and says, “Cut public spending.” And it’s part of the way they are supposed to somehow bring these countries back into balance, by saying, “You reduce government spending, you impose austerity, and investors will feel more confident. Private investors will then come flocking in.” That rarely happens. All that happens is that the problem gets much, much worse.

    There are many ways in which the IMF has had a very double standard, again, in terms of the rich countries and the not-rich countries, the middle-income and low-income countries, because in the rich countries they say, “Yes, spend more. You have to be countercyclical. You have to revive the economy.” In the middle- and low-income countries, they say, “Oh, you have to cut down on your spending, because you have to reduce your deficit. You have a very large debt. You have to make sure you can somehow reduce that debt” — in the period of crisis. So, in turn, they then demand extra fees and commissions. They impose surcharges on the countries that are worst off, that have had to take IMF loans for a longer period or take larger IMF loans, which is absolutely ridiculous. It’s the IMF making profits out of a catastrophe in all of these countries. So these are the sins of commission, which are very great and have had devastating consequences across the world, really.

    But the sin of omission, I would argue, is actually even greater. The IMF is the only multilateral agency we have today that handles global finance and can think of international financial arrangements to do with crises, to deal with the challenges that humanity faces. We don’t have any other structure. Now, humanity, we know. First there was a pandemic. We know that there could be well more pandemics and so on. But there is climate change, which is, again, already upon us, which is affecting agricultural supply, which is affecting coastal sea rises, which is affecting livelihoods, which is causing already significant increases in environmental destruction, in hunger, in employment loss, in people having to move, displacement, all kinds of things.

    You have to bring in massive public spending. And the IMF is the agency that can do it. Where is the ambition that can actually provide this minimal funding for the huge climate challenges that we face globally? And which, really, again, you can’t be nationalist about this. Climate doesn’t respect passports and visas. It’s not stopping to wait at the border. It’s going to affect everybody, if we don’t do something now. And the IMF has been remarkably unambitious, sluggish, I would say, really not doing the minimum that it’s supposed to do. It was created just after the Second World War in a very, very different world, with this power structure that is completely ridiculous now, with the U.S. being able to block everything, U.S. and Europe controlling 60% of the voting rights and all that. But as a result, it really hasn’t moved to do the basic things that a multilateral organization that is in charge of global finance has to do — prevent private finance from —

    JUAN GONZÁLEZ: And you were —

    JAYATI GHOSH: — doing crazy — yes.

    JUAN GONZÁLEZ: — talking about climate change. You mentioned climate change. How has the eruption of this war affected efforts in various countries? Even in the United States, we’re seeing President Biden backtracking on some of his proposals in terms of reducing our carbon footprint. Could you talk about the impact of the war on climate change?

    JAYATI GHOSH: It’s very unfortunate that the Ukraine war has shown that whenever there is any immediate crisis, governments across the world are going to not just backtrack, they’re going to reverse on all of the commitments in terms of carbon emissions, in terms of moving to greener energy, in terms of everything. So, even a war like this, which is, let’s face it, a limited war in one part of Europe, is causing everyone in the world to completely forget about all of their major promises and strategies, some countries going back to coal, some countries emphasizing the dirtier kinds of fuel, forgetting about all of the attempts — instead of saying, “Well, look, now let’s actually push for greener energy; because oil prices are high, let’s push for greener energy,” they’re saying, “No, no, quickly, grab all the possibilities for the dirtiest energy possible.” It’s the United States. It’s Europe. It’s India. It’s China. It’s everyone in the world. No country has actually — or, very few countries have actually said, “Let’s use this as an opportunity to move much more directly into green energy sources with public funding,” which is really what should be the response. This is terrifying, because it means today it’s the world, tomorrow it can be anything else. Governments are not committed. They’re not seeing the writing on the wall. They’re not recognizing the clear and present danger of a climate catastrophe.

    AMY GOODMAN: Jayati Ghosh, we want to thank you for being with us, economics professor at the University of Massachusetts Amherst. Her recent article, we’ll link to, following the Russian invasion of Ukraine, headlined “Putin’s War Is Damaging the Developing World.”

    Next up, speaking of economics, we get an update from the growing Starbucks union drive that’s spread to 200 stores in 30 states. Back in 30 seconds.

    This post was originally published on Latest – Truthout.

  • Child care and elder care investments are a tool for reducing inflationary expectations without pain

    Policymakers should look for any tool that can help restrain inflationary pressures without causing significant collateral damage. One such tool could be investments in child care and elder care. By subsidizing families’ use of child care and elder care and providing direct investments to providers, such investments could boost future labor supply by allowing working-age parents and children who want to look for paid employment to do so while remaining confident their family members are receiving care. Further, these investments can help dampen inflationary pressures—that rising wages could in theory contribute to—even well before they fully take effect.

    The post Child care and elder care investments are a tool for reducing inflationary expectations without pain appeared first on PopularResistance.Org.

    This post was originally published on PopularResistance.Org.

  • Here’s what consumers plan to cut back on if prices continue to surge

    By: Carmen Reinicke

    See original post here.

    As inflation continues to weigh on American households, people are plotting what they’ll cut from their budgets in the coming months to keep spending in check.

    More than 50% of adults say they’ve already cut back on dining out and will consider reducing that further if inflation continues to surge, according to the CNBC + Acorns Invest in You survey, conducted by Momentive. The online survey of nearly 4,000 adults was conducted March 23-24.  

    Which of the following, if any, will you consider doing if higher prices persist? (Select all that apply)? Dining out: 52%

    People are also cutting back on driving and subscriptions and are even canceling vacations to keep up with inflation, the survey found.

    “It’s been astounding,” said Tania Brown, an Atlanta-based certified financial planner and founder of FinanciallyConfidentMom.com.

    Which have you cut back on in the last 6 months: 53% say dining out; 39% say driving.

    People are thinking about rising prices all the time

    Inflation is at its highest level in 40 years and has pushed up the prices of most consumer goods and services, including housing, food and energy.

    That means many Americans are suddenly spending more on essentials, making their budgets tighter without any change in habits. People are noticing these hikes and paying closer attention. Nearly half of all adults said they think about rising prices all the time, while 55% of those with annual household income of $50,000 or less are constantly checking costs, the survey found.

    To watch video, please visit: https://www.cnbc.com/2022/04/05/consumers-squeezed-by-inflation-plan-to-cut-back-if-prices-keep-surging.html#Echobox=1649153204

    “Having your eyes focused on your spending is always a good strategy,” said Susan Greenhalgh, an accredited financial counselor who runs Mind Your Money LLC in Rhode Island. “You really can’t understand what’s happening with your money unless you’re really looking at it and measuring it.”

    Keeping track of what you spend can also help you tailor where you can cut back, she said, as inflation hits everyone differently. If you’re someone who doesn’t eat out much but is getting pummeled by gas prices at the pump, reducing driving will probably help your budget more than skipping a few dinners at a restaurant.

    It’s also important to be watching and comparing your spending month to month because prices are rising so quickly. You may have to adjust more frequently than you’ve had to in the past.

    “The No. 1 goal is, no matter what, to protect the necessities, and that is food, shelter, basic transportation and basic medical,” said Brown.

    What to do about inflation

    Inflation is poised to continue to run hot, squeezing budgets even further. More than 75% of adults said they’re worried higher prices will force them to rethink their financial choices, the survey found.

    The impact will be the harshest on those with the lowest incomes who may be pushed into survival mode, said Brown. For those struggling to cut spending even more, she also said to reach out to creditors and lenders to see if you can put off payments.

    Some people may also qualify for programs to help with utility bills, which could help with monthly costs she said. It may also be time to dip into emergency savings to cover your essential costs, if you need to, she added.

    Those with higher incomes will also have to adjust, especially if they want to keep saving at the same rate as they were before inflation ticked up, said Greenhalgh.

    Of course, if your budget is stretched too thin, cutting back on savings may have to happen to avoid debt. If that’s the case, both Brown and Greenhalgh suggest putting away smaller amounts consistently to keep yourself in the habit of saving.

    “As long as you’re taking things in the right direction, that’s great,” said Brown.

    The post Here’s what consumers plan to cut back on if prices continue to surge appeared first on Basic Income Today.

    This post was originally published on Basic Income Today.

  • Government not protecting poorest from rising cost of living, says charity

    The government is not protecting the poorest people amid the cost-of-living crisis, with out-of-work benefits at historically low levels, a UK poverty charity has said.

    The 3.1% benefits increase coming into effect on Monday 11 April does not match inflation, which is expected to hit 7.7% this month. This will cause the greatest fall in the value of the basic unemployment benefit rate in 50 years, according to analysis by the Joseph Rowntree Foundation.

    ‘Desperate situations’

    Associate director Helen Barnard told Sky News on Sunday 10 April:

    For a decade we’ve had cuts and freezes to benefits, and actually for eight of the last 10 years benefits have been losing value, so we’re already at a historic low.

    Although benefits go up tomorrow, they go up by so much less than the cost of living is rising.

    It means that in terms of their values, how much bread and milk you can buy in the shops, it is the biggest fall in value since 1972.

    Many people were already in “desperate situations”, struggling to afford food, heating and basic hygiene products, she said. And she recounted how some pensioners are riding the bus all day to keep warm. Moreover, long-time foodbank volunteers are now themselves relying on donations.

    It’s “humiliating for people”

    Barnard called on the government to take urgent action to prevent the situation from deteriorating further. And she criticised Rishi Sunak for failing to support the poorest people in society. She said:

    If you look at the spring statement, the Chancellor spent about £18 billion.

    Of that money, about two thirds went to benefit people in the richest half of the country.

    So he actually had the money, the issue is that the Government is not prioritising using the money they have to protect the poorest people who are facing the greatest hardship.

    ‘Too many jobs’ are low paid and insecure

    The benefits squeeze will also hit low-income workers hard. These are people who rely on benefits to top up low earnings and are now facing “incredibly difficult situations”, Barnard said.

    She said the raising of the national insurance threshold, a measure designed to help lower earners, actually harms some of them. Because their benefits are pulled away to make up for the fact that they are keeping more of their income.

    Barnard said:

    We know the majority of people in poverty now are in working households.

    One of the problems is that too many jobs are not just low paid, but they’re insecure…

    And so it is people who are really vulnerable in that situation when they’re working, who are also now struggling to afford the basic essentials and having to rely on charities for toothpaste and toilet rolls.

    It’s humiliating for a lot of people.

    By The Canary

    This post was originally published on The Canary.

  • Sanders Announces Budget Committee Hearing on Corporate Greed and Profiteering

    Senate Budget Committee Chair Bernie Sanders (I-Vermont) announced on Friday that the committee will soon hold a hearing on how corporate greed is contributing to rising prices and inflation.

    The hearing scheduled for Tuesday will highlight a “level of corporate greed [that] has only widened the gap between the top one percent and the working class,” according to the press release. It will feature testimony from former Labor Secretary Robert Reich and Lindsay Owens, director of Groundwork Collaborative, a progressive economic advocacy group.

    “The American people are sick and tired of corporate greed,” Sanders said. “They are sick and tired of being ripped-off by corporations making record-breaking profits. They are sick and tired of being forced to pay outrageously high prices for gas, rent and food while large corporations make out like bandits.”

    The hearing comes as high prices are squeezing working-class Americans, while corporate profits rise. As inflation rose by 7 percent in 2021, corporate profits increased by 25 percent to reach nearly $3 trillion – a record high. CEOs and shareholders are benefiting heavily from these profits; last year, S&P 500 firms spent more than $900 billion.

    Meanwhile, prices for basic needs have also skyrocketed. Gas prices are up 38 percent, used car prices have increased by 41 percent and Tyson has increased its prices on meat products, the press release points out. Analysis from Bloomberg last week found that the average family will have to shell out an extra $5,200 this year for the same level of consumption as previous years.

    As corporations were raising prices, executives bragged about it. As Owens wrote in March, CEOs in many industries have told investors on earnings calls that raising prices on products has been a successful tactic for raising revenues and stock prices.

    The Vermont lawmaker has been urging Congress to address corporate profiteering. During a speech on the Senate floor in February, Sanders said that billionaire wealth hoarding has led to an oligarchic society in the U.S.

    “The time is long, long, long overdue for Congress to start addressing the needs of the American people,” the independent senator said. “Maybe, just maybe, we should do what the American people want, and not what wealthy campaign contributors want.”

    In late March, Sanders introduced a bill that would capture nearly all excess profits through 2024. The Ending Corporate Greed Act would levy a tax on corporate windfall profits, capturing 95 percent of corporate profits exceeding average pre-pandemic levels through 2024.

    This would not be the first time that the country implemented similar taxes in order to prevent corporate price gouging. During the first and second World Wars and the Korean War, the U.S. taxed profits to ensure that companies weren’t taking advantage of wartime to pad their pockets.

    Other lawmakers have introduced similar bills; in February, lawmakers debated whether or not to give federal regulators more power to crack down on and potentially ban corporate price gouging. Republicans claimed that high prices are caused by labor shortages and inflation, though industries have been lobbying against corporate price gouging regulation in order to keep their profits high.

    This post was originally published on Latest – Truthout.

  • Corporate Profits Reached Record High of Nearly $3 Trillion in 2021

    As working-class Americans struggled with high inflation, corporate profits soared to a record high in 2021, reaching nearly $3 trillion.

    Data from the Department of Commerce’s Bureau of Economic Analysis shows that pre-tax profits over the whole year increased by a whopping 25 percent, reaching $2.8 trillion. The annualized rate of profit from the fourth quarter was even higher, at $2.94 trillion.

    The boost in profits exceeds the 7 percent inflation for consumer prices, bolstering arguments that companies are raising prices beyond inflation rates in order to pad their profits. Meanwhile, hourly wages for U.S. workers increased by about 4.7 percent last year, which is equivalent to a pay cut of about 2.4 percent.

    Experts say that the record profits are evidence that inflation isn’t a concern for corporations.

    “Clearly, mega-corporations could easily absorb the higher costs of goods and services right now,” wrote Robert Reich, former labor secretary and economics professor at University of California, Berkeley. “They’re not raising prices because they have to. They’re doing it because – with so few competitors – they can. The problem, at its core, is corporate greed.”

    Indeed, corporate executives have admitted on earnings calls with shareholders that they’re not afraid to exploit inflation and current crises like the pandemic and the Russian invasion of Ukraine in order to increase their profits.

    “Our business operates the best when inflation is about 3 percent to 4 percent,” Kroger CEO Rodney McMullen told investors last June. “A little bit of inflation is always good in our business.”

    Other corporate executives have lied about their reasons for raising prices. As CBS reported, Tyson’s CEO told shareholders that the company it’s only raising prices on meat products in order to cover inflation costs for the company. However, it posted profits of $1 billion in the first quarter of 2022, a 48 percent raise over the same period last year.

    Lawmakers have proposed legislation to reign in runaway profits. Last year, Sen. Elizabeth Warren (D-Massachusetts) introduced a bill that would have created a minimum tax rate of 15 percent in order to prevent companies from paying $0 in taxes or a negative tax rate, thanks to corporate subsidies.

    Other recent proposals have been aimed directly at current profits. Last week, Sen. Bernie Sanders (I-Vermont) unveiled his corporate windfall profits tax, which would levy a 95 percent tax on corporate profits that exceed pre-pandemic levels for companies that make more than $500 million in profits yearly. The tax resembles policies that the U.S. put in place during World Wars I and II and the Korean War to discourage companies from profiteering from the conflicts.

    “We cannot allow big oil companies and other large, profitable corporations to continue to use the war in Ukraine, the COVID-19 pandemic, and the specter of inflation to make obscene profits by price gouging Americans at the gas pump, the grocery store, or any other sector of our economy,” Sanders said in a press release on the bill. “During these troubling times, the working class cannot bear the brunt of this economic crisis, while corporate CEOs, wealthy shareholders, and the billionaire class make out like bandits.”

    This post was originally published on Latest – Truthout.

  • ‘Crush Inflation’?: Workers, Living Standards, And The Politics Of Inflation

    Politicians, the media, central bankers and the average worker have all been talking up the recent acceleration in the cost of living. Just a short time ago price rises of just 2% might have been considered ‘inflationary’. In the current phase of the Covid pandemic, inflation in core capitalist states, including Canada, is now running at the 5-7%, far ahead of wage settlements and bumps in income supports for welfare.

    The post ‘Crush Inflation’?: Workers, Living Standards, And The Politics Of Inflation appeared first on PopularResistance.Org.

    This post was originally published on PopularResistance.Org.

  • Ocasio-Cortez Digs Into Private Equity for Buying Houses and Jacking Up Rents

    Rep. Alexandria Ocasio-Cortez asks a question during a hearing in the Rayburn House Office Building on August 24, 2020, on Capitol Hill in Washington, D.C.

    On Tuesday, Rep. Alexandria Ocasio-Cortez (D-New York) called out real estate companies, some backed by huge private equity firms, for “gobbling up” homes across the country, especially in non-white and low-income neighborhoods.

    In a hearing on inflation in the House Financial Services Committee, Ocasio-Cortez named real estate companies like Invitation Homes, which is backed by BlackRock, for buying a huge share of single family homes in the U.S. These corporations are seeking only to make a profit at the expense of families and individuals looking for a place to call home, she said.

    “We have these major, often private equity-backed companies, that are gobbling up homes in our housing market, which is already creating excess scarcity on top of the housing scarcity that already exists,” Ocasio-Cortez said.

    “And then, by constricting that supply, we’re also seeing a lot of these major, huge multi-million dollar companies then either flip those properties and resell them at a higher rate due to that artificially inflated price, or they hold on and hoard this housing stock and rent out at exorbitant prices,” she continued.

    Mark Zandi, chief economist for Moody’s Analytics, said that individual investors and institutional investors made up a quarter of home sales at the end of 2021. Indeed, investors have been buying homes in record numbers.

    According to Redfin, low- and mid-priced homes make up a large portion of investments, with low-priced homes being the most popular purchase. In the fourth quarter of 2021, single-family homes made up three-quarters of investors’ purchases.

    These purchases are rapidly accelerating. In 2021, BlackRock-owned Invitation Homes spent nearly $2 billion buying 4,802 homes, while their revenue increased by 9.5 percent over the last year to nearly $2 billion total.

    Large corporations have a huge advantage in the market, as they have the ability to buy homes before they’re even listed for public view, to use algorithms to determine what homes would be a good investment, and to buy homes with cash. Real estate firms also get lower interest rates than regular homebuyers.

    Meanwhile, regular families and individuals looking to buy a home are left in the lurch as the housing market explodes. In the late 2010s, housing prices were plateauing, but in 2021, the average price of a home shot up; while the average new home cost about $392,000 in 2020, it cost $453,700 in 2021.

    “[Regular people are] competing against the largest private equity firm in the world to purchase a home,” Ocasio-Cortez said. “In fact, companies like Blackstone, Zillow and Bedrock are buying up to 15 percent of available homes – but what I find interesting here is that they’re purchasing them in minority and low-income neighborhoods specifically.”

    Indeed, companies like Invitation Homes are buying up a large share of affordable homes and homes in Black neighborhoods; in 2021, 30 percent of home sales in majority Black neighborhoods went to investors, compared with 12 percent in other areas, according to The Washington Post.

    Meanwhile, people with no choice but to rent are facing landlords who are squeezing tenants for more money. In New York City, for instance, landlords are raising rents by up to 70 percent, forcing tenants to move and seek cheaper housing.

    “This is the market that we have created for housing in America. Right now, 6 million renter households are currently behind on rent,” which is twice the amount of people who were behind rent pre-pandemic, Demond Drummer, managing director at PolicyLink, said in the hearing. The majority of people behind on rent are people of color, Drummer pointed out.

    “In 2021 alone, rents increased by 10 percent in 149 metropolitan areas. What we’re seeing around the country is a failure of policy and law to address the acute shortage of housing,” Drummer said. “My view is that our current housing prices constitute a serious, significant series of market failures that require a robust policy response.”

  • Poll Finds Most Voters Think Companies Are Exploiting Pandemic to Raise Prices

    A volunteer with Lakeview Pantry helps a person load grocery items into a car outside the pantry on January 24, 2022, in Chicago's Lakeview neighborhood.

    As large corporations post record profits, nearly two-thirds of voters agree that corporations are taking advantage of the pandemic in order to raise prices, new polling has found.

    The poll of over 1,500 likely voters, conducted by Data for Progress in collaboration with Groundwork Collaborative this month, found that 63 percent of all respondents think that corporations are using the pandemic to pad profits. Only 29 percent said that the companies have no choice but to raise prices to cover operational costs.

    This belief is widely held regardless of political affiliation, according to the survey. Seventy-six percent of Democratic voters said that companies are taking advantage of the pandemic, along with 62 percent of independents and 51 percent of Republicans.

    A smaller number of voters believe that companies are using inflation in particular to unfairly raise prices, with 50 percent agreeing and 41 percent saying that price increases are due to the government. Still, that is a nine point margin in favor of believing that corporations are profiteering, with 72 percent of Democrats agreeing as such.

    “It’s no secret that corporations are taking advantage of this pandemic and patterns of consumption it has accelerated,” Ethan Winter, senior polling analyst for Data for Progress, told Truthout. “Executives openly admit to doing so on quarterly earnings calls. American consumers are stuck bearing higher prices for goods on shelves and in stores.”

    Evidence shows that corporations are indeed using inflation to jack up prices more than they would need to to cover rising costs of production. Though inflation is at record highs, corporations have raised or are planning to raise prices while simultaneously posting record profits.

    Starbucks recently announced that it’s planning to raise prices, even while its profits increased by 22 percent over a two-year span in the fourth quarter of 2021. Tyson’s first quarter profits for 2022 nearly doubled as meat prices soar, while Exxon marked its highest earnings in seven years in the fourth quarter of 2021 – and the list goes on.

    Corporate executives even admit to exploiting inflation since the start of the pandemic; in earnings calls, executives have outright said that rising inflation is an opportunity to profit. Kroger, Albertsons, Procter & Gamble, Chipotle and Kraft Heinz are just a few companies that have lauded inflation in the past few months.

    Fed Chair Jerome Powell said in a hearing last month that higher prices for goods could be due simply to corporate decisions to price gouge. Prices could be rising because “demand is incredibly strong and [corporations are] raising prices because they can,” he said in a Senate hearing.

    Though voters don’t necessarily know that corporations are doing this, likely voters surveyed by Data for Progress said that corporate pricing is making goods more expensive. Eighty-two percent of surveyed voters said that corporate price gouging is contributing to inflation.

    Although not all voters agreed on the root causes of rising prices, an overwhelming majority said that the government should crack down on corporate profiteering and enforce antitrust laws. A whopping 80 percent of likely voters responded as such, including 88 percent of Democrats.

    The polling demonstrates that cracking down on corporate price hikes could be a popular move for Joe Biden and Democrats to take ahead of crucial midterm elections this fall. Biden recently directed his administration to look into potential antitrust moves that corporations are making.

    However, his administration is stopping short of directly blaming corporations for increased prices, as some economists in the administration hesitate to back this messaging. Language pointing the finger at corporations was taken out of recent remarks from an administration official before Congress, The Washington Post found earlier this month.

    Meanwhile, progressive lawmakers have been sounding the alarm about how prices are hurting consumers. Sen. Elizabeth Warren (D-Massachusetts), for instance, has prodded real estate firms, grocers, the car rental company Hertz, and more, asking that they explain their role in rising rents, grocery prices, and other goods, and pinning the likely cause on corporate greed.

    In a recent tweet about Chipotle’s shares rising, Warren said, “This CEO bragged about their ‘pricing power.’ Let me translate that from economist-speak: they can raise prices and extract profit from consumers without worrying about losing too much business. Big corporations are raising prices because they can.”

    This post was originally published on Latest – Truthout.

  • Inflation Talk Belies Deeper Question: Why Was Everything So Cheap Before?

    A shopper places items in a cart at a home improvement store in Bethesda, Maryland, on February 17, 2022.

    Inflation has reached a 40-year high, propelled by the pandemic’s labor and supply chain disruptions, billions in stimulus money and corporate profiteering. In response, politicians and the Federal Reserve are scrambling to figure out how to staunch the rapid rise in consumer prices. And while many obsess on assigning blame, few, if any, are asking the more trenchant question: “Why was everything so damn cheap in the first place?”

    Why have televisions and smartphones and clothing and meat remained so inexpensive for as long as they have? How did corporations profit so obscenely off these ever-cheaper products? And how was it even possible for consumers to gobble up goods from a virtually bottomless pit of plenty when wealth has systematically accumulated in fewer and fewer hands since the election of Ronald Reagan in 1980?

    The EconomicPolicyInstitute’sStateofWorkingAmericaDataLibraryand the Economic Policy Institute's Working Economics Blog
    The Economic Policy Institute’s State of Working America Data Library and the Economic Policy Institute’s Working Economics Blog

    Devotees of Milton Friedman will argue that the pit of plenty is an organic outgrowth of an increasingly unfettered and, therefore, increasingly “free” market. The truth is far more complicated. Although the neoliberal project since 1980 has ostensibly been about “free trade” and “free markets,” the U.S. taxpayer has, however unwittingly, directly and indirectly subsidized this consumption-driven system of resource extraction and labor exploitation through a vast infrastructure of defense spending, and through generous handouts to the energy and agricultural industries.

    At the same time, presidents and policy makers chummed the world’s waters for corporate executives who fed like sharks in far-flung pools of low-cost labor and resources. They exploited lax and non-existent regulatory environments as they offshored jobs and pollution to build the profitable supply chains consumers now bemoan as broken.

    Predictably, the mainstream media fixated on these broken supply chains when the bottomless pit of plenty suddenly and shockingly dried up. Empty shelves make for click-bait articles, and understandably so. Yet, few, if any, questioned a globe-spanning system that affords U.S. consumers the unprecedented opportunity to live a disposable lifestyle based on cheap oil, cheap labor and cheap food. This, in turn, depends on quantity over quality. Profit margins depend upon driving down costs and avoiding nettlesome labor and environmental standards. And it all depends upon offsetting stagnant wages, growing inequality and massive consumer debt with the unsustainable promise of more and more for less and less at ever-faster speeds.

    As such, the empty shelves say more about the tenuous nature of the U.S.’s voracious “Empire of Consumption” than they do about the market’s verdict on stimulus checks. The pandemic — with its sudden disruptions to overseas suppliers and its brutal impact on low-wage laborers (many of whom were categorized as “essential workers” and forced to expose themselves to a risk of illness) — has, in effect, pulled back the curtain and exposed the imperial wizard pulling on supply chains that allow less than 5 percent of the world’s population to consume 25 percent of its resources.

    Fistfight at the Golden Corral

    On a recent Friday night in Bensalem, Pennsylvania, diners grazing on the buffet at their local Golden Corral began wielding furniture like weapons, all because of an “alleged steak shortage.” At least, that’s what many news outlets trumpeted with their click-bait headlines. However, a spokesperson for the company assured The Washington Post that the restaurant in question “never ran out of meat,” which is incredibly on-brand. In fact, endless meat is not just the essence of Golden Corral’s brand, but also the essence of the Empire of Consumption. Both are inexorably rooted in the illusion of endless plenty at bargain prices. And those bargain prices, like the growth of fast food over the last 30 years, have been built upon the backs of cheap immigrant labor.

    Not coincidentally, that deep pool of cheap labor was filled by one of the great neoliberal achievements of the last 40 years — the North America Free Trade Agreement (NAFTA). The “agreement formerly known as NAFTA” was nominally altered in 2020, but the damage was done. In 2017, the Department of Agriculture found that Mexico lost 900,000 farm jobs in the decade after then-President Bill Clinton (who essentially completed the Reagan Revolution’s neoliberal project) finally got NAFTA enacted in 1993.

    A main cause of that not-so-great displacement was a flood of heavily subsidized U.S.-grown corn. It decimated small and subsistence corn farmers in Mexico. As Alejandro Portes of the Social Science Research Council wrote back in 2006, “The response of peasants and workers thus displaced has been clear and consistent: [T]hey have headed north in ever greater absolute numbers.”

    Suddenly set adrift in a newly “globalized” market dominated by U.S. agribusiness, which also began gobbling up American family farms throughout the “farm crisis” of the 1980s, Mexican farmers fled north to work for the very “Big Ag” titans who dislodged them in the first place. These repeatedly scapegoated immigrants flocked to the burgeoning “factory farms” that filled American bellies with brutally raised industrialized meat. The factory farming model depends upon concentrated animal feeding operations, or “CAFOs,” which further decimated small U.S. family farms throughout the ‘90s.

    The growth and profitability of this industrialized farming model relied on absorbing family farms at home and pulling in cheap labor from abroad. Disempowered and dependent upon the whims of their employers, undocumented workers in particular have little choice but to be compliant, despite the risk of death, dismemberment and abuse. The looming threat of deportation exploits many migrant workers for a faster and faster food system that eschews anything other than profit. It’s not coincidental that cheap, meat-dependent fast food went from an occasional treat to a daily staple for millions of Americans during the NAFTA-stoked ‘90s. But fast food and buffet-line steaks weren’t the only thing on the menu.

    Over the years, Golden Corral periodically advertised an “Oceans of Shrimp” promotion. And where does all that shrimp come from? Like Atlantic salmon, tilapia and shellfish, it’s drawn from around the world. In fact, as Mashed recently detailed, “Thailand accounts for the majority of shrimp imported to the United States, and its system is rife with human rights abuses,” with “20-hour workdays,” “child labor and physical abuse,” and with “a large portion of farmed Thai shrimp … handled directly or indirectly by trafficked laborers.” Ecuador and Vietnam also fill Americans’ plates with this food item that was once considered a luxury but now can be consumed in abundance.

    Even the “All-American” beef we’re eating might not be as American as we think. The folks at Farm Aid, which arose out of the aforementioned farm crisis of the ‘80s, recently pointed out that meat marked “Product of the USA” may “have been raised and processed in Brazil or New Zealand.” As CBS News explained, “imported beef products can be labeled ‘Product of the USA’ as long as it’s been minimally processed or repackaged in a U.S. Department of Agriculture-inspected facility.” Farm Aid advocates the end of this sleight of hand in favor of more truth in advertising. In the meantime, the Amazon rainforest is being cleared to raise more cows.

    From Fast Food to Faster Fashion

    If you are not familiar with the term “fast fashion,” you’re probably familiar with its purveyors. It often carries designer labels and is sold through major retailers like GAP, Urban Outfitters, H&M and Forever 21. Investopedia defines it as “clothing designs that move quickly from the catwalk to stores to take advantage of trends,” thus allowing “mainstream consumers to purchase the hot new look or the next big thing at an affordable price.” Fast fashion relies on “cheaper, speedier manufacturing and shipping methods,” which is why it is often made in sweatshops in places such as Bangladesh, where a series of deadly fires exposed the problematic disposability of its workers. Bangladesh’s garment workers often toil 12 hours per day, and sometimes 72 hours straight, according to The World Counts, for $92 per month. And it’s all done to feed the fast fashion fancies of U.S. shoppers.

    International customs and brokerage firm AFC International tracks the fashion supply chains that link U.S. consumers, and profit-hungry corporations, to the world. Clothing tops the list of products imported to the U.S., with footwear, furniture, appliances and cars following in that order. Of course, China, thanks in part to its brutalized Uyghur workforce, is the leading source of imported clothing, accounting for “36.49 percent of U.S. apparel imports” and “84.95 percent” of imported footwear. Thanks to Nike, Vietnam is the runner-up in both imported footwear “with 6.46 percent of the U.S. import market,” and apparel with “10.4 percent of total U.S. imports.”

    Not all these countries allow their workers to be as disposable as those in Bangladesh. But the clothing they produce is no less disposable. That disposability is more of a feature than a bug. Rapid turnover translates into more buying and more profits. The race to keep up also means less long-term planning and tons of excess inventory. Sadly, 59,000 tons of the unwanted byproduct is dumped annually in a Chilean desert. And that’s just one of the dumping grounds for excess clothing. Ghana, too, is a final destination for the fashion that comes in and out of the U.S. market with alarming speed.

    It’s a model also reflected by the landfilling churn of “fast furniture.” Design Excellence describes it as “furniture that is made quickly and meant to last for a short period of time [and] is meant to be on trend and break quickly so that you can toss it and purchase the next trendy piece of furniture.” And we are tossing it by the ton. According to Environmental Protection Agency statistics, the annual amount of discarded “furniture and furnishings” has nearly doubled since 1990, when 6.8 million tons went to the landfill. Since 2015, over 12 million tons has been discarded each year.

    Prime Movers

    “There’s more to Prime. A truckload more.” That’s the tagline you’ll see emblazoned on the back of many Amazon trucks. But is “a truckload more” what we actually need? Apparently not, because the pandemic-stoked surge in online purchases has generated a surge in returns.

    CNBC reported that “retail returns jumped to an average of 16.6% in 2021 versus 10.6% a year ago,” with a staggering $761 billion in merchandise sent back to stores and warehouses. As the conversion rate optimization company Invesp notes, “at least 30% of all packages ordered online are returned as compared to 8.89% in brick and mortar stores.” That matches the data reported by The Atlantic in a piece detailing the terminus of many of those returns, which is yet again the landfill. If you add the massive amount of oil and gas it takes to ship these items, which are often petroleum-based plastic products, the environmental and climate impacts of this back-and-forth is staggering.

    The one thing all of these supply chains have in common is oil. It’s omnipresent, from the oil it takes to extract and ship more oil and other resources, to the oil it takes to make the plastics and petrochemicals that become a plethora of plastic products, to the oil it takes to run the factory farms and the manufacturing plants that pump out the goods that, thanks to oil-based shipping, eventually make it to our homes and businesses. It’s even making it into our bodies through petroleum-based microplastics.

    Oil is the cornerstone of post-WWII foreign and defense policy, and U.S. taxpayers essentially subsidize the unabated flow of oil by funding a globe-spanning empire. Much like the old adage about “all roads leading to Rome,” the U.S.-built Empire of Consumption depends on all supply chains leading to home. With the rise of online shopping, that’s now quite literally true for most Americans. With the click of a button, a vast, oil-slicked supply chain delivers products directly to our doorsteps.

    That is, before a shocking amount of those “easy as one-click” orders end up in landfills, right next to the 108 billion pounds of food the U.S. discards every year. This ever-faster churn is how the Empire of Consumption fills the bottomless pit of plenty. It’s also how neoliberal economics relies upon cheap labor and plasticized disposability to perpetuate the illusion of never-ending growth.

    That illusion, which depends upon a cocktail of cheaper and cheaper products and more and more debt to give Americans the false sense of an increasing standard of living, was broken by the pandemic’s disruption.

    That disruption is a Don’t Look Up-style warning about the unsustainability of a global system that acts like a conveyor belt feeding a heretofore bottomless pit of consumer desires… desires that are, in turn, crucial to justifying the continuation of an insatiable empire that denudes the planet, alters the climate and exploits labor around the world.

    This post was originally published on Latest – Truthout.

  • Nationalizing Fossil Fuel Industry Is a Practical Solution to Rising Inflation

    The sun sets over container ships and oil platforms off the coast of Huntington Beach, California, on January 12, 2021.

    Since mid-2020, inflation has been rising, with the level of average prices going up at a faster rate than it has since the early 1980s. In January 2022, prices had increased by 7.5 percent compared to prices in January 2021, and it now looks like the U.S. may be stuck with higher inflation in 2022 and even beyond.

    Why are prices rising so dramatically? Are we heading toward double-digit inflation? Can anything be done to curb inflation? How does inflation impact growth and unemployment? Renowned progressive economist Robert Pollin provides comprehensive responses to these questions in the exclusive interview for Truthout that follows. Pollin is distinguished professor of economics and co-director of the Political Economy Research Institute at the University of Massachusetts at Amherst.

    C.J. Polychroniou: Back in the 1970s, inflation was the word that was on everybody’s lips. It was the longest stretch of inflation that the United States had experienced and seems to have been caused by a surge in oil prices. Since then, we’ve had a couple of other brief inflationary episodes, one in the late 1980s and another one in mid-2008, both of which were also caused by skyrocketing gas prices. Inflation returned with a vengeance in 2021, causing a lot of anxiety, and it’s quite possible that we could be stuck with it throughout 2022. What’s causing this inflation surge, and how likely is it that we could see a return to 1970s levels of inflation?

    Robert Pollin: For the 12-month period ending this past January, inflation in the U.S economy was at 7.5 percent. This is the highest U.S. rate since 1981, when inflation was at 10.3 percent. Over the 30-year period from 1991 to 2020, U.S. inflation averaged 2.2 percent. The inflation rate for 2020 itself was 1.2 percent. Obviously, some new forces have come into play over the past year as the U.S. economy has been emerging out of the COVID-induced recession.

    To understand these new forces, let’s first be clear on what exactly we mean by the term “inflation.” The 7.5 percent increase in inflation is measuring the average rise in prices for a broad basket of goods and services that a typical household will purchase over the course of a year. At least in principle, this includes everything — food, rent, medical expenses, child care, auto purchases and upkeep, gasoline, home heating fuel, phone services, internet connections and Netflix subscriptions.

    In fact, prices for the individual items within this overall basket of goods and services have not all been rising at this average 7.5 percent rate. Rather, the 7.5 percent average figure includes big differences in price movements among individual components in the overall basket.

    The biggest single factor driving up overall inflation rate is energy prices. Energy prices rose by 27 percent over the past year, and within the overall energy category, gasoline rose by 40 percent and heating oil by 46 percent. This spike in gasoline and heating oil prices, in turn, has fed into the total operating costs faced by nearly all businesses, since these businesses need gasoline and heating oil to function. Businesses therefore try to cover their increased gasoline and heating oil costs by raising their prices.

    The second big factor is automobile prices, used cars in particular. The average price of used cars rose by 41 percent over the past year. High auto prices do also feed into the costs of other businesses, though not to as large an extent as energy costs.

    The third big factor has been wage increases. Average wages rose by 4.0 percent over the past year. Here again, businesses will try to cover these increased wage costs through passing the costs onto consumers through higher prices. That said, we need to be clear on some details about the wage increases. First of all, for the average workers, their 4.0 percent wage increase is 3.5 percent below the 7.5 percent increase in prices for the average consumer basket. This tells us that, due to the 7.5 percent inflation rate, the workers’ 4.0 percent wage increase ends up amounting to a 3.5 percent pay cut after we take account of what the workers can buy with their wages.

    Second, not all workers have gotten this average 4.0 percent wage increase. Some have gotten more and others got less. In fact, some of the largest wage increases went to workers employed in hotels and restaurants (8.4 percent raises) and in nursing home facilities (6 percent raises). These workers were hard-hit by the COVID pandemic and recession, through the dangerous conditions in nursing homes and the full-scale lockdowns of restaurants and hotels. Finance industry employees also got big raises, at 8.1 percent, though in this case, hardly to compensate for hardships over the previous year. These raises rather reflect the dizzying rise of the U.S. stock market during COVID and after, all fueled by the Federal Reserve’s $4 trillion bailout of Wall Street over the crisis.

    What then are the key specifics underlying the overall inflation rise?

    Let’s consider car prices, energy prices and wages in turn:

    Cars: What is pushing up these prices is the widely discussed breakdown in global supply chains, and in particular, the sharp fall in the supply of computer chips that are needed for manufacturing new cars. The supply chain breakdown is far more widespread than just the computer chip industry. But auto manufacturing is where the impact on overall inflation has been most acute to date. This is because the demand for used car purchases spiked when the supply of new cars coming off of global assembly lines contracted.

    Car prices will start falling when the computer chip supply becomes replenished. But this may not happen for several more months. In any case, both for the short term and over the longer term as well, the demand for car ownership can and should be reduced, through increasing the availability and quality of public transportation, along with people carpooling to work, and biking or walking when that is a realistic option. All of these ways to reduce our dependency on private cars will also, of course, mean lowering the demand for gasoline. And let’s not forget that when we burn less gasoline, we will then also reduce carbon dioxide emissions that are the primary cause of climate change.

    Energy: Precisely because burning gasoline, heating oil, and other fossil fuel energy sources is the primary cause of climate change, what we most need to accomplish is to dramatically lower demand for fossil fuels. In other words, pushing fossil fuel prices back down is not helpful in terms of addressing the climate crisis since it would encourage greater fossil fuel consumption.

    As such, government policy now needs to commit to both keeping fossil fuel energy prices high, but then to protect energy consumers from the impact of these high fossil fuel prices. This will require large-scale investments in energy efficiency, in all areas of buildings, transportation and industrial activity. Greatly expanding public transportation offerings is one place to start. Providing large subsidizes to retrofit residences with low-cost LED lights, improved insulation and high-efficiency electric heat pumps to replace inefficient boilers is another critical area. Government policy then needs to massively accelerate the production of clean renewable energy sources to supplant our existing fossil fuel energy infrastructure. It is already the case that the costs of generating electricity with solar and wind power are at parity or lower than with fossil fuels. Of course, not all of these investments in energy efficiency and renewable energy will have an immediate impact. Therefore, for the immediate term, the government should provide people with energy tax rebates to compensate them for the impacts of any temporary spikes in energy prices.

    The more basic solution here would be for the government to take over the U.S. fossil fuel industry. Under a nationalized fossil fuel industry, the necessary phase-out of fossil fuels as an energy source can proceed in an orderly fashion. The government could then set fossil fuel energy prices to reflect the needs of both consumers and the imperatives of the clean energy transition. At present, the U.S. government could purchase controlling interest in the three dominant U.S. oil and gas companies — ExxonMobil, Chevron and Conoco — for about $350 billion. This would be less than 10 percent of the $4 trillion that the Federal Reserve pumped into Wall Street during the COVID crisis. More generally, these costs should be understood as trivial because nationalization would end these corporations’ relentless campaign of sabotaging the clean energy transition.

    Wages: It is crucial to frame these current wage increases within the broader historical context. Over the past 50 years, the average wage for U.S. workers has stagnated (after accounting for inflation). Thus, as of January 2021, the average wage for nonsupervisory workers was at $25.18 an hour, while this figure for 1972, adjusted for inflation, was $25.28 per hour. This is while average labor productivity — the average amount each worker produces over the course of a day — has increased nearly 2.5-fold between 1972 and 2021. Thus, if average wages had risen in step with productivity gains, and no more, between 1972 and today, the average worker’s wage last year would have been $61.94, not $25.18.

    Indeed, a major factor keeping inflation low for the previous 30 years was the fact that workers didn’t have the clout to bargain up their wages. Alan Greenspan, the chair of the Federal Reserve from 1987 to 2006, explicitly acknowledged this fact. He observed in 1995 that, even at low unemployment rates, U.S. workers had become “traumatized” by the loss of bargaining strength, resulting primarily from global outsourcing that pitted U.S. workers against those in relatively low-wage economies, such as China and Mexico. Greenspan was effectively describing what Karl Marx termed the “reserve army of labor,” in Volume 1 of Capital, except that the reserve army now operates on a global scale.

    Within this perspective, we certainly do not want to keep inflation down through preventing workers from receiving the wage increases they more than deserve. But this is exactly the core idea undergirding the approach advocated by a large chorus of orthodox economists such as Lawrence Summers. Their proposals entail the Federal Reserve increasing interest rates significantly, with the aim of reducing spending in the economy since it will then become more expensive to borrow money. The spending cutbacks will then raise the unemployment rate. Higher unemployment, in turn, will inculcate workers with a necessary fresh dose of trauma. Wage demands will correspondingly fall.

    In short, this is a program to accomplish exactly the opposite of what the Biden administration has promised in terms of delivering increased well-being to U.S. workers post-COVID.

    Are there any feasible alternatives to the Fed raising interest rates as a means of controlling inflation?

    The Federal Reserve has held the short-term interest rate that it controls at near-zero since the onset of the COVID pandemic in March 2020. The Fed also held this interest rate at near zero for six years in the aftermath of the 2007-2009 Wall Street collapse and Great Recession. Generally speaking, it should be possible for interest rates to be higher than zero without causing the economy to collapse. Interest rates could therefore rise modestly and incrementally. But this is different than the Fed imposing large interest rate increases for the purpose of raising the unemployment rate and, thereby, decimating workers’ bargaining strength.

    An alternative program for addressing the current inflationary pressures should include:

    1. Responding to the full set of immediate supply-chain issues, starting with computer chip shortages. For example, expand public transportation and subsidize ride-sharing to dampen the demand for used cars while the computer chip bottlenecks are brought under control.
    2. Protect consumers from high energy prices through energy tax rebates and accelerating large-scale energy efficiency investments.
    3. Supporting ongoing wage increases. Businesses will have to absorb these increased labor costs to some extent, and thus, on average, see their profit margins decline modestly. U.S. businesses cannot expect that wage stagnation will remain a feature of U.S. capitalism for another 50 years, even while labor productivity continues to increase steadily. To the extent that big corporations, in particular, try to push their increased labor costs onto consumers through raising prices, the Biden administration should aggressively enforce existing antitrust (i.e., anti-monopoly) policies to control these price mark-ups over labor costs. They have already begun to do so.

    Considering these measures as a whole, they are not likely to bring the inflation rate down into the 2 percent range that the U.S. experienced between 1990 and 2020. Keeping inflation that low will almost certainly require exactly more decades of traumatized workers and wage stagnation. But by itself, an average inflation rate in the range of 3-4 percent, as opposed to 1-2 percent, is not a serious problem, as long as that somewhat higher inflation rate results from increased wages and a more equal distribution of the economy’s overall income pie.

    What is the impact of persistent inflation on economic growth and unemployment?

    In fact, there is no consistent relationship between inflation, economic growth and unemployment. Rather, focusing now just on the high-income economies (i.e., those that make up the Organisation for Economic Co-operation and Development) since the 1960s, relatively high inflation, even in the range of 10 percent or higher, has been associated with periods of both high growth and low growth, depending on the specific circumstances.

    In the 1960s, higher inflation rates emerged because economic growth was strong, as supply bottlenecks, such as we are experiencing now, became more common. Workers were also generally more able to bargain up wages and gain an increased share of the economy’s overall income pie. But facing such problems is certainly preferable to an economy operating at zero inflation that is also stuck in recession. As President Lyndon Johnson himself noted after U.S. inflation had arisen from 1.5 percent in 1965 to 3 percent in 1966, “If rising prices are a problem, they’re a lot better than a stagnant economy and high unemployment.” On the other hand, when high inflation resulted from the oil-producing countries (OPEC members) and the private oil corporations such as Exxon exercising monopoly power to quadruple oil prices in 1973, and then to double prices in 1979, the resulting overall inflation was associated with recession and high unemployment.

    The 1970s inflation was also the precursor to the rise of neoliberalism at the end of the decade, with the election of Margaret Thatcher in the U.K. and then the 1980 election of Ronald Reagan in the U.S. As for the present, we absolutely cannot allow neoliberalism to bask in a new wave of legitimacy in the name of fighting inflation.

    This post was originally published on Latest – Truthout.

  • Sanders Rips Into Billionaires for Creating “Oligarchic” Society in US

    Sen. Bernie Sanders speaks during a press conference at the U.S. Capitol on January 30, 2019, in Washington, D.C.

    On Wednesday, Sen. Bernie Sanders (I-Vermont) gave a powerful speech on the Senate floor, excoriating billionaires and CEOs for accumulating unfathomable amounts of wealth while millions of Americans struggle to get by.

    Since the start of the pandemic, millions of Americans have struggled economically, gotten ill or died – but for billionaires, “this moment has never been better,” Sanders said. Because of their rapid accumulation of wealth, the country is moving toward becoming an oligarchy.

    “In the 1950s, when I was growing up, CEOs did very, very well. They made 20 times more than their average worker. Well, if you are a CEO, the good news is those days are long gone, when you only made 20 times more than your average workers,” Sanders said. “Today, as I am sure the CEOs of this country know, they are now making 350 times more than what the average worker in America makes. Three hundred and fifty times more. Talk about greed.”

    While grocers like Kroger and oil and gas companies like Shell, BP and Exxon Mobil have jacked up prices for consumers, they’re also making record profits and spending billions on stock buybacks, Sanders pointed out. And as the U.S. pays the highest prices in the world for prescription drugs, the CEOs of the top eight pharmaceutical companies were paid over $350 million in compensation in 2020, he went on.

    Meanwhile, Wall Street has a huge influence over the economy of the country. Finance giants BlackRock, Vanguard and State Street manage over $21 trillion in assets – which is larger than the GDP of the U.S., the largest economy in the world.

    CEOs and billionaires currently own a larger portion of the wealth in the U.S. than at any other point in history, Sanders pointed out.

    “We hear a lot of talk about transfer of wealth – ‘oh my god, we can’t tax the rich and transfer wealth. Terrible, terrible,’” he said, mocking lawmakers who refuse to increase taxes on corporations and the wealthy. “But there has been, over the last many decades, a huge transfer of wealth. The only problem is, it’s gone in the wrong direction – from working families to the top 1 percent.”

    The concentration of wealth in the United States is extreme. The top 1 percent of wealthiest Americans own more wealth than the bottom 92 percent of earners, Sanders said, while the two richest people in the U.S. – Jeff Bezos and Elon Musk – own more wealth than the bottom 42 percent of the population. Indeed, a report in January found that while millions of people have died due to COVID, the 20 richest men in the world have doubled their wealth during the pandemic.

    The Vermont senator sarcastically suggested that the Senate should recognize billionaires in the same way that it recognizes football players like Tom Brady or Olympic athletes for their achievements. “Maybe the time is approaching when we should offer a unanimous resolution congratulating the billionaire class for their enormous success in moving this country into the oligarchic form of society that they have long desired,” he said.

    The lawmaker concluded by saying that Congress should start voting on individual issues that are popular among the American people, like lower prescription drug prices, expanding Medicare to include dental, vision and hearing, or putting taxes on corporations and the wealthy so they pay their “fair share.”

    “The time is long, long, long overdue for Congress to start addressing the needs of the American people,” he said. “Maybe, just maybe, we should do what the American people want, and not what wealthy campaign contributors want.”

    This post was originally published on Latest – Truthout.

  • Big Food Producers Are Profiteering Off Inflation — and Bragging About It

    A woman shops in the chicken and meat section at a grocery store on April 28, 2020, in Washington, D.C.

    Sen. Elizabeth Warren, D-Mass., on Tuesday accused corporate executives of using inflation as a cover to jack up the cost of meat, vegetables and cleaning products and rake in record profits.

    “Giant corporations are making record profits by increasing prices, and CEOs are saying the quiet part out loud: they’re happy to help drive inflation,” Warren tweeted on Monday.

    “American families pay higher prices and corporate executives get fatter bonuses,” the Democrat added.

    Last year, the consumer price index saw a 7% increase, the largest 12-month gain since 1982. Inflationary pressures have had a particular impact on the prices of meat, poultry, fish and eggs, which increased by 12.5% in 2021, according to the Bureau of Labor Statistics.

    This is clearly hitting ordinary consumers hard, and is disproportionately impacting poor and low-income people. But executives of major grocery chains, meat producers and household products manufacturers openly crowing about the phenomenon, largely because it has created higher profit margins.

    On an earnings call with analysts Thursday, Rodney McMullen, CEO of the supermarket retail company Kroger, said the company “operates the best when inflation is about 3% to 4%,” adding that “a little bit of inflation is always good in our business,” according to CNN.

    The CEO also noted that the increasing cost of goods, fundamentally driven by soaring demand and a supply chain backlog, can be passed off to consumers because they “don’t overly react to that.”

    “Businesses like ours have done well when in periods where the inflation was 3% to 4%,” Albertsons CEO Vivek Sankaran echoed during an investor conference Tuesday.

    Last week, the CEO of Tyson, the nation’s second largest processor of chicken, beef and pork products, attributed price increases to rising manufacturing costs and materials shortages, saying in an earnings call: “We’re not asking customers or the consumer ultimately to pay for our inefficiencies. We’re asking them to pay for inflation.”

    During the final quarter of 2021, Tyson’s average price of beef rose by roughly 31%. The company’s share price shot up by 11% on Monday after it reported profits that doubled in the first quarter of 2022, according to Reuters.

    Consumers also face similar difficulties in the household products market.

    Last month, Procter & Gamble — which manufactures or distributes a wide range of cleaning and hygiene items as well as food, snacks and beverages — said on Wednesday that the company expects profits to increase into 2022, even as the cost of labor, freight and raw materials continues to rise, according The Wall Street Journal.

    “The consumer is very resilient and very focused on these categories of clean home and health and hygiene,” P&G finance chief Andre Schulten told the Journal.

    On CNBC’s “Squawk Box,” P&G CEO Jon Moeller called pricing “a positive contributor to our top line for 17 out of the last 18 years.”

    “When you have a business model that’s founded on innovation that provides higher levels of delight, solves problems better upon the consumers, you are able to charge a little bit more,” he added.

    Last quarter, P&G outperformed Wall Street’s expectations, leading to a 3.8% jump in share price. The company has also projected a strong financial outlook for 2022.

    Lindsay Owens, executive director at Groundwork, a progressive economic think tank, wrote on Twitter last week that “if you want to understand the role of corporate greed in price hikes & inflation in America today, you don’t have to take the word of watchdogs or critics of corporations,”

    “CEO’s are admitting it themselves in plain daylight,” she said. “And they’re betting they can get away with it.”

    This apparent profiteering is finally receiving scrutiny from the Biden administration. In a blog post from December, the White House said that meat processors’ profits were too high to justify their claim that price increases are the result of supply chain issues, noting that gross profit margins are up 50%.

    “If rising input costs were driving rising meat prices, those profit margins would be roughly flat, because higher prices would be offset by the higher costs,” the National Economic Council wrote. “Instead, we’re seeing the dominant meat processors use their market power to extract bigger and bigger profit margins for themselves.”

    In September, the U.S. Department of Agriculture announced a plan to crack down on “pandemic profiteering” by enforcing antitrust laws, improving transparency in labeling, creating a fund of $1.4 billion to help independent meat processing companies and related businesses get through the pandemic, and continuing a joint investigation with the Justice Department into the chicken processing industry.

    Just this month, beef giant JBS was forced to pay $52.5 million to settle a price-fixing lawsuit, according to CBS News. The plaintiffs’ attorney, Dan Gustafson, said the settlement could be an “icebreaker” that might prompt similar cases against other big meat producers, including Tyson, Cargill and National Beef.

    This post was originally published on Latest – Truthout.

  • Inflation Crisis Is Being Resolved on Backs of Workers. It Doesn’t Have to Be.

    Workers at Jon Donaire desserts factory in Santa Fe Springs, California, picket in front of the company on January 10, 2022.

    On Thursday, the Bureau of Labor Statistics (BLS) released its latest report on inflation, and the news is not good for working people. According to the Consumer Price Index (CPI) — which measures the cost of consumer products — inflation for all goods, including food and energy, rose again in January, this time by 0.6 percent. This latest increase brings the yearly rate of inflation up to a whopping 7.5 percent, a figure not seen since the early 1980s when out-of-control inflation and a stagnant economy amounted to an all out economic war on U.S. workers. While wages for this same period have also gone up somewhat, rising between 4 and 4.4 percent, this is still far less than the current rate of inflation, and makes up for only a fraction of the value that workers’ wages have lost over the last several decades of neoliberal austerity.

    Though unsurprising to anyone who has been paying attention, these latest figures exceeded the expectations of most bourgeois analysts who have been claiming for months that the current rate of inflation is a transitory phenomenon caused in large part by the pandemic, increased oil prices, increased demand, and weakened and overstressed global supply chains. While these factors have certainly contributed to rising costs, they are by no means the end of the story. In fact, large corporations have unsurprisingly used the inflation crisis to jack up the prices of many basic goods, even those unaffected by supply chain disruptions, far beyond what is needed to cover increased production costs, making record profits off the backs of workers and consumers in the process.

    As economist Matt Stoller explained in December, increased profit seeking of major firms in the meatpacking, auto, and retail industries, among many others, is leading to a generalized increase in prices across the economy and could account for as much as 3 percent of the current yearly inflation rate. And indeed, corporate profit margins, despite inflation and the ups and downs of the pandemic, have soared over the last year, to levels not seen since 1950, far exceeding what they were earning before the pandemic. From Exxon Mobil, to Tyson, AstraZeneca, Amazon, and Starbucks, corporations are making a killing even as working people across the world struggle to maintain the value of their already low wages. While bourgeois economists like Stoller believe this problem can be controlled through anti-monopoly legislation or taxes on excess profits, such rapacious profit seeking and increasing exploitation of working people is endemic to capitalist production and can’t be legislated away.

    Despite this corporate windfall, however, the Dow Jones Industrial Average fell almost 1.5 percent, and other indexes declined sharply on news of the report, largely over fears of a quicker and more virulent response by the Federal Reserve to the crisis. It appears that a full point increase in interest rates could come as early as this March, and many analysts are predicting that the Fed may raise interest rates by as much as 1.75 percent by the end of the year. Interest rates are currently near zero. While on the surface, interest rate hikes may seem to be of little concern for most working people who have few, if any, investments, they are designed to “cool the economy” by simultaneously discouraging spending and encouraging savings, and this can have serious consequences for working people. As we [Left Voice] explained last month:

    Higher interest rates have a real effect on workers. They make it more expensive to spend money, and reduce disposable income. For the most marginalized people in society, they can render basic needs less accessible. And historically, higher interest rates have also kept U.S. companies from expanding employment.

    And of course, interest rate hikes have historically been used as a cudgel to punish working people and undercut the power of unions. In the 1980s, for instance, the Reagan administration and Federal Reserve chair Paul Volker oversaw a policy of increasing interest rates that led to the loss of millions of manufacturing jobs and an unemployment rate above 10 percent.

    Furthermore, increasing interest rates will almost certainly lead to further austerity, as cities and states face increasing borrowing costs to maintain or fund new investments in education, infrastructure, public housing, and services for the poor or homeless, many of whom are still suffering from the negative economic and health effects of the pandemic.

    The ongoing inflation crisis, the cost of which is being passed entirely onto the working class, is just another example of the failure of a system that prioritizes chaotic production in the service of profit over a planned economy built around human need. For the ruling class, there is no solution to the crisis that does not involve further pain for working people, but this does not mean there is nothing to fight for. Using the methods of class struggle, strikes, and mass demonstrations, we can unite the working class to demand a bigger share of the value we produce, to resist austerity, to fight for automatic wage and benefit increases, and to demand a freeze on the price of vital goods and necessities paid for by the profits of the corporations that oversee their production. It is only in such struggles that we can discover and build our true strength as a class, one capable of directly vying for power and control over the productive forces of society.

    This post was originally published on Latest – Truthout.

  • Inflation Policies Must Deal With Impact of Rising Food Prices on the Poor

    People shop for groceries in a Manhattan store on January 12, 2022, in New York City.

    Consumer prices in 2021 rose 7 percent over the past year, making this the largest rise in consumer prices over a 12-month period since 1982. Why are prices rising, especially global food prices? Is the current inflationary episode related to the pandemic? Is aggressive monetary policy the main inflation culprit? And how does inflation affect the world, and the poor in particular? Can it be controlled?

    Alastair Smith, an international expert on issues of global sustainable development, seeks to offer answers to these questions in this exclusive interview for Truthout. Smith is a senior teaching fellow at the University of Warwick in England and a research associate of the Global Drugs Policy Observatory at Swansea University, Wales.

    C.J. Polychroniou: Inflation has increased to surprising levels in 2021, with the U.S. experiencing one of the biggest increases, and looks like it will continue to climb in 2022. Why is inflation happening now, and to what extent is it affected by the pandemic?

    Alastair Smith: Inflation seems to have been driven through trade openness and a growing trade deficit in recent decades; with a specific increase from 2020, despite a limited contraction of imports during the COVID pandemic. Primary drivers of this deficit include an increase in industrial supplies and materials, mainly petroleum, products and metals. An underlying cause of growing expense has been the increased cost of international shipping and domestic transport: the Baltic Dry Index (a measure of shipping costs) has increased significantly, while higher gasoline prices and truck driver shortages in some regions are pushing up the cost of road transport services. Therefore, the legacy of the pandemic — currently elongated by sluggish vaccination in countries without a critical mass of immunity — has and is predicted to continue driving inflation into 2022.

    Global food prices have risen significantly over the last year or so. What is driving the increase in overall food prices in particular?

    It’s important to select our dataset for analysis critically and I don’t believe we currently have the right balance.

    The dominant narrative from the UN Food and Agricultural Organization (FAO) and Governments, and therefore the media and wider public understanding, is that nominal prices have increased significantly recently. Headlines highlight that “Global food prices rose ‘sharply’ during 2021,” on the basis that the FAO’s “Food Price Index, which tracks monthly changes in international prices, averaged 125.7 points — a 28.1 percent increase over 2020.”

    However, the FAO also maintain a separate price index, where “nominal” prices are converted into “real” prices. This index shows the relative cost of food over time, and in the context of wider inflationary pressures. In contrast to the nominal price index, the real price index shows that international food prices declined between the 1960s and the turn of the millennium, but then started to rise again from the year 2000. They have been increasing, more or less, ever since. This means that in real terms, food has not just gotten more expensive over the last year or so, but that food is less accessible in 2022 than it has been for most of modern history.

    Focusing on the drivers of international real price increase, we need to look at inflationary pressures of the food sector but also the wider costs of life. We know that despite all our socio-technical development, food production is still victim to unpredicted and unpredictable weather. This is exacerbated by the recent La Niña episode driving dryer weather in most food exporting countries. There has also been a steady pressure on land use created by demand for biofuels — an indirect consequence of the climate emergency. Another pre-COVID shock was the African Swine Fever outbreak, which created price rises in various protein markets. A further significant, more recent pressure has been rising costs of international shipping — something that has increased the costs of all imports.

    How do rising prices impact the world and the poor in particular?

    We know that poorer individuals and households generally spend a greater proportion of their income on food than more financially wealthy households. This illustrates the evident truth that food is a staple consumable understandably prioritized even by those with less economic capacity. However, in the context of generalized inflation, in the costs of food and other essentials, more of the poor in countries such as the U.S. are increasingly required to choose between even the basic level of nutrient and other essentials, such as heating (context depending). For this reason, we have seen greater reliance on emergency food provision in countries, such as the U.S. and the U.K.

    In other geographies, we might accept that malnutrition has been growing since 2014 as this is largely driven by conflict, climate extremes, economic downturns and reductions in purchasing power for the poorest. The current famine in Madagascar has drawn speculation that it will be the first globally recognized example of a climate-driven emergency. Other analysis has critiqued this. However, given the low level of economic capacity in the country, rising prices, particularly in rice markets, only reduces the option to mitigate local pressures through imports.

    Is there any evidence to suggest that government spending has an effect on inflation?

    The impact of government spending on inflation would be highly contextually dependent. We’d need to consider both the magnitude and specifics of such spending, the degree of openness for any specific economy, as well as other economic variables. Government expense will contribute to inflation when other forces create such potential. In other situations, where spending is depressed due to wider factors, well calibrated increases in government expenditure can be used to create a more desirable situation. The COVID pandemic has been a very clear example of this, where even highly politically conservative governments have used public funds to support the economy through restriction essential to saving valued human life years disrupted. As ever with these things, the devil is in the details.

    What specific policies can be used to contain inflation? Is there any room for strategic price controls in today’s economy?

    Again, containing inflation is complex, and the appropriate measures will be highly contextually dependent. Interest rates are a widely used strategic price control intimately related to suppressing inflation and it’s widely anticipated these will soon begin to rise.

    More broadly, it has been interesting in the U.K. We have a Tory government ideologically committed to minimizing income support for the poorest. Ironic that such elitist government has been responsible for bankrolling the largest public borrow-and-spend initiative in decades. Sadly, an immediate action after the pandemic has been to cut income support and add further conditions for continued eligibility — that create further structural barriers to self-sufficiency for many of the poorest.

    A more logical response for those apparently concerned with “leveling up” would have been to recognize the possibility to set a strategic price control for society to pay its constituent citizens — through the possibilities of Universal Basic Income (UBI). This would facilitate a more flexible labor market and allow individuals to invest in personal development for new and emerging opportunities. Flexibility would genuinely underpin and support economic restructuring and offer a long-term dampening mechanism on inflation driven by external costs. Such investments wouldn’t need to be funded through further debt: what we need in post pandemic 2022 is 100 percent smooth, progressive taxation, not administratively burdensome staged tax bands. (Under a true progressive taxation, the percentage rate increases as income increases, possibly as high as 60 or even 80 percent tax for incomes over, say, 1 million dollars.) In this scenario, contemporary data processing power could set a continually adjusting strategic control on the price of citizenship for each member of our society. Only this sort of qualitative visioning for the future can deliver transformation of national and global economies to the more stable, steady state economics essential to the sustainability of human development on this planet.

    This post was originally published on Latest – Truthout.

  • Op-Ed: The Conservative Argument for Reviving the Child Tax Credit as COVID Lockdowns Ravage Families

    By Ja’Ron Smith

    Original post can be found at: https://www.westernjournal.com/op-ed-conservative-argument-reviving-child-tax-credit-covid-lockdowns-ravage-families/

    One of the most significant impacts of the spread of the omicron variant of the coronavirus is upon us, as a wave of Democrat-controlled school systems has begun announcing a return to indefinite remote learning.

    Meanwhile, Democrats are proving incapable of responding to the pandemic in real time, and the child tax credit — the only thing keeping some families afloat — has expired. This one-two punch poses a serious financial challenge for working parents in a time of rising inflation.

    With the child tax credit, Republicans have the opportunity to step in and save the day for parents in a year that could decide the legislative majority on Capitol Hill.

    So far, the omicron variant has caused the most classroom interruptions in school systems across the country since August, when school reopenings were complicated by the emergence of the delta variant. Given the dramatically higher rate of transmission of the omicron variant, it’s unlikely the classroom disruptions will subside any time soon.

    With the final monthly child tax credit payment sent to parents last month, many families will have limited options for managing a return to remote learning.

    Since Democrats have failed to pass their partisan version of the benefit as part of a reckless spending bill, Republicans have an opportunity to take up the mantle and provide meaningful changes to the policy in a singular CTC renewal that will benefit the economic well-being of working-class families across the country.

    According to a study conducted by Humanity Forward and the Social Policy Institute at Washington University in St. Louis, nearly 30 percent of parents spend some of their monthly checks on child care. The coverage for this expense is likely why one in four parents is actually working more hours thanks to the CTC, according to a recent survey.

    According to the Humanity Forward study, less than 6 percent of respondents planned to work less, the majority of whom are parents with infants who will be able to seek longer-term, more gainful employment.

    The benefits of the monthly, fully refundable child tax credit are abundantly clear. In six months, it has lifted 3.8 million children from poverty, enabled many parents to return to work, fostered entrepreneurship and cut food insecurity by nearly a quarter.

    If the moral imperative of reducing child poverty alone is not a compelling enough reason to continue this policy, the economics surrounding it do the rest of the talking — all while empowering parents, not government.

    Despite the demonstrated success of the child tax credit, working mothers are still lagging in terms of workforce participation after the initial job losses of the pandemic.

    The Department of Labor estimates that 1.8 million mothers dropped out of the workforce as a result of the coronavirus. If working mothers must navigate a patchwork of inconsistent local and government obstructions amid a new COVID-19 surge without the financial support of the child tax credit, many of the gains they’ve made in the past six months will be lost.

    I understand the trepidation from Republicans who are hesitant to step into an intraparty fight amongst Democrats that seemingly can only help them. But we’d be forgoing a long-term opportunity for our party for ill-gotten short-term gains. We’d be ignoring parents’ pleas today for their votes in November.

    We’ve got to act now.

    More players in Washington appear to be involved now in the future of the child tax credit, as Republican Sens. Mitt Romney of Utah and Susan Collins of Maine have both expressed a willingness to reach across the aisle and come to an agreement with their Democratic colleagues. More may soon follow.

    This is good news, as it represents another pathway for parents to continue receiving help from one of the few successful government initiatives since the start of the pandemic.

    To kill off this policy without considering the omicron variant and the immediate effects it will have on American families in the coming months would be a mistake and would undermine ongoing gains Republicans are making with the working class and suburban women.

    For Republicans in Congress, this represents yet another chance to prove they are the party of solutions.

    The post Op-Ed: The Conservative Argument for Reviving the Child Tax Credit as COVID Lockdowns Ravage Families appeared first on Basic Income Today.

    This post was originally published on Basic Income Today.

  • The National Debt and Other Red Herrings

    Discussions of inflation are often laden with an air of superstition and moral panic. Like all such things they can only persist in the face of misunderstanding and rumor. One of the most common and most important pieces of economic misinformation is the old “quantity theory” of money: The notion that if you create more of the stuff it is worth …

    The National Debt and Other Red Herrings Read More »

    This post was originally published on Real Progressives.

  • Fed Chair Jerome Powell Says Corporations “Are Raising Prices Because They Can”

    Federal Reserve Board Chairman Jerome Powell speaks during his re-nominations hearing on Capitol Hill on January 11, 2022, in Washington, D.C.

    In a hearing before the Senate Banking Committee on Tuesday, Federal Reserve Chair Jerome Powell said that corporations may be raising prices arbitrarily to pad their profits while the public suffers under high inflation rates.

    Powell said that higher prices for commodities like groceries could be chalked up to corporate greed, at least partially. This statement echoes recent research that shows that businesses are seeing some of their highest profit increases since 1950, using inflation as an excuse to reach further into consumers’ pockets.

    The statement came as the result of prodding from Sen. Elizabeth Warren (D-Massachusetts). During a confirmation hearing for Powell’s renomination to lead the most powerful financial institution in the country, Warren questioned whether or not the Fed chair believed that corporations were fleecing customers as corporate concentration is on the rise.

    “Does that increase in profit margins combined with greater market concentration in industry after industry suggest to you that some corporations may be passing along increased costs and, at the same time, charging more on top of that to fatten their profit margins?” Warren asked.

    “That could be right. It could also just be, though, that demand is incredibly strong and that they’re raising prices because they can,” Powell said.

    “Well, that’s the point. They’re raising prices because they can and not being competed down,” Warren responded. Consumers aren’t just offsetting inflation for raw materials for corporations, she pointed out – they’re also paying more out of pocket.

    This isn’t the first time Warren has brought attention to the issue. In December, the Massachusetts lawmaker sent a letter to large grocers that have been raising prices, expressing similar concerns regarding inflation. Kroger, Publix and Albertsons have been reporting high profits as grocery bills have increased by over 6 percent on average over the past year, Warren wrote.

    Reporters have pointed out that fears about inflation may be overstated, however. As Hadas Thier wrote for Truthout, wages are currently rising at a similar rate to inflation – meaning that worries about inflation, as sensationalized by conservative lawmakers and the media, could be a tool for corporations to create conditions for price gouging.

    During the hearing, Powell sounded the alarm on inflation, saying that it could throw a wrench into the country’s economic recovery from the pandemic and potentially hamper jobs recovery. This hearing comes ahead of January’s inflation report, which the Financial Times reports is expected to show the consumer price index rising annually by 7 percent.

    Powell also claimed during the hearing that the country no longer needs policies that were put into place as protection against the financial impact of the pandemic. During his tenure, Powell rolled back measures that were intended to protect the economy after the Great Recession, which has led economists to question whether he intends to protect consumers or whether he would rather throw favor to Wall Street through deregulation.

    Lawmakers, including Warren, have repeatedly criticized decisions that the Donald Trump nominee made during his tenure. But President Joe Biden renominated the Fed chair despite warnings that Powell hasn’t been doing enough to address the climate crisis and that he has a poor record on financial regulation.

    This post was originally published on Latest – Truthout.

  • A New Era?

    The work of the left at this moment is to understand what new spaces have opened up and how to build upon them.

    Introducing our Winter 2022 special section, “Beyond Bidenomics.”

    This post was originally published on Dissent MagazineDissent Magazine.

  • Is There an Alternative? The Macroeconomics of the Biden Administration

    The response to COVID-19 proved that the federal government is far more capable of managing the economy than many people thought. What happens now that Bidenomics faces rising headwinds?

    This post was originally published on Dissent MagazineDissent Magazine.

  • What’s Really Causing Inflation & How We Should Deal With It

    While times have been getting harder for workers, it is clear that capitalists (or “big business”) have been doing very well. It would seem as though everyone is against inflation. But the real problem is not that prices have been increasing but that wages have not kept up with this. It is important to look not only at why inflation has increased but at the very different question of why wages have not kept up with it.

    The post What’s Really Causing Inflation & How We Should Deal With It appeared first on PopularResistance.Org.

    This post was originally published on PopularResistance.Org.

  • Businesses Have Manufactured Inflation Fear to Protect Profits Amid Rising Wages

    People line up to check out at a grocery store in New York City, on November 14, 2021.

    For weeks, a high-pitched panic about inflation has infused the mainstream media, most absurdly in CNN’s clip of a family struggling to keep up with the price of buying 12 gallons of milk per week (yes, 12).

    Up until recently, Federal Reserve Chair Jerome Powell pushed back against this kind of narrative, arguing that rising prices were a short-term and transitory problem due to supply chain shocks from the pandemic that will eventually return to normal. But now the Fed has shifted course and is preparing to institute policies to “cool off the economy” — a euphemism for shrinking the money supply in order to drive down business investment and thus scale back job growth.

    The definition of inflation is simple enough: an increase in the prices of goods and services. If prices rise quickly, and outpace wage growth, this can cause problems for working families — even those who don’t drink 12 gallons of milk per week. But the media narrative about rising inflation has conveniently left out several important points.

    First, the prices of some of our biggest expenses — health care, housing, higher education to name a few — have been rising (often explosively so) for decades with little discussion or concern from the punditry. Health care costs are in fact the leading cause of bankruptcy in the country. Global food prices, too, have been rising because of the impact of climate change on crop yields. Easing these kinds of costs — through a nationalized health care system, investment in affordable housing, student debt relief and decarbonization — would go a much longer way toward improving working people’s finances than monetary policies to tighten economic growth.

    Second, although it’s true that there has been a noticeable uptick in prices (measured by the annual change on the consumer price index) by 6.8 percent over the last year, this is still not very high by historical standards. The last time the United States experienced a serious inflationary crisis in the 1970s, the rate of inflation regularly hit between 11-13 percent. It’s also the case that measures of current price increases are skewed by a few sectors of the economy, most notably the energy sector.

    A more useful measure to look at is a comparison of the rise of prices to the state of wages. If prices are going up faster than wages, then our relative purchasing power declines. But if wages keep pace with inflation, or even outpace inflation, then our purchasing power stays the same, or is strengthened. The reverse is also true. Thus, even though inflation rates have remained relatively low for much of the last few decades, wages have grown even less, meaning that purchasing power for working people declined despite low inflation rates.

    Today, wages are finally rising. The New York Times recently reported that about 13 percent of workers have not seen pay increases this year and many retirees receive pensions that are constant. But it has been “middle- and high-income earners whose pay gains were least likely to have kept up with inflation. Over the 12 months that ended in September, those in the top quarter of earners experienced 2.7 percent gains in hourly earnings, compared with 4.8 percent for the lowest quarter of earners.” The combination of wage increases and COVID-19 relief checks have put more money in the pockets of the bottom half of earners than they had at the start of the pandemic.

    Most importantly, the media spin has left out the elephant in the room. It is business owners who are the ones raising prices. They are currently setting record profits, so do they have to raise prices? The answer to this question ultimately reveals that inflation is a question of class politics — which class gains at whose expense — rather than technical monetary policies.

    What Exactly Is Inflation, and Where Does It Come From?

    Inflation is an increase in prices, generalized across the economy, i.e., not just the rise of one particular good but goods across wide swaths of the economy.

    How does this happen? The classic explanation is that inflation occurs when too many dollars chase too few goods. That is, if demand for goods and services exceeds the world’s capacity to supply those goods and services, this creates an upward pressure on prices. Business owners can get away with charging more from consumers, who essentially bid against each other for limited supply.

    Today, the rapid reopening of economies following lockdowns has created heightened demand for goods and services, far outpacing the rate at which supply chains have come online. The free market allows producers of items in short supply to “pick their price,” as anyone looking to buy a used car right now knows.

    This can also lead to good old-fashioned price gouging. The oil industry, for instance, curtailed production at the height of the pandemic due to cratering demand for fuel. Now that demand is back up, Bloomberg News reports, “oil companies are keeping production flat while using profits to reward shareholders.” And although wholesale prices of oil have fallen somewhat, retail gas stations are still selling gas at high prices. “When wholesale prices decline rapidly, it provides a window for retail operators to sell at high prices for a few weeks before lowering prices,” oil storage broker Tank Tiger CEO Ernie Barsamian told Bloomberg. He noted that eventually gas prices will come down, but for now, many refiners and gas stations are enjoying the higher profits.

    The other half of the inflationary equation is the role of increased workers’ wages. In a situation like today, where wages have begun to rise, this will feed an increased demand for goods, as working people have more money to spend. At the same time, higher wages also raise the cost of production for employers. If businesses pay higher wages to workers, the argument goes, this cuts into profit margins, leading capitalists to pass on their added costs to consumers.

    Most mainstream economists assume that even if an external factor (a spike in oil prices due to geopolitical shifts, or supply chain chokeholds due to pandemic lockdowns) triggers the rise in prices, ultimately higher wages are the primary culprit of any sustained inflationary trends. Finally, mainstream economics draws a line between higher wages and low unemployment rates. A tight labor market, where workers are not easily replaced, gives workers more bargaining power to demand higher wages.

    This line of argument was first championed by economist Milton Friedman, who stated that a ”natural rate of unemployment” exists below which inflation begins to take off. Friedman’s “monetarist” ideas took hold after the inflationary crisis of the 1970s, and ever since have been used as a battering ram against policies in which governments actively promote full employment or better jobs for workers.

    In one sense, conservatives have a point. Karl Marx himself similarly argued that capitalism depends on unemployment — a “reserve army of labor” — to keep workers desperate enough to agree to whatever terms of work they can get. Unemployment, in other words, is a means to prevent wages from growing so far that they threaten profitability.

    Class Conflict

    The question that economic pundits conspicuously avoid is: What if instead of raising prices, businesses just made do with smaller profit margins? After all, U.S. corporations are currently making record profits, posting their fattest margins since 1950. Even at John Deere, the site of the highest-profile strike this year, Bloomberg News reports, “workers held out to get a 10% raise, yet the company is still expected to earn even more next year than the record profit it posted [in November].”

    Workers don’t set prices, the bosses do. And they do so on the basis of maintaining the greatest possible profit margins. If workers’ wages go up but prices stay the same, this would simply mean that a greater share of profits went to workers rather than capitalists. System-wide, workers’ share of the economic pie (i.e., the “national income”) would increase. Falling unemployment, rising wages and increased social spending does not have to automatically translate into inflation of prices if we allow bosses’ profit margins and their share of the national income to decrease.

    Even the dire rates of inflation in the 1970s, in the context of a strong labor movement “hurt capital more than it did workers, while neoliberal repression of workers’ power has kept inflation low from the 1980s onward,” sociologists Ho-fung Hung and Daniel Thompson have argued. The question of inflation is therefore a matter of class conflict over who gains at whose expense.

    This is not to say that inflationary pulls aren’t a problem; if prices of common goods rise much faster than wages, or if the spikes in inflation are so high that businesses aren’t able to operate smoothly and fall into bankruptcy, laying off workers, this could have dire consequences. But the cures that are typically on hand are worse than the disease. Thus, in response to the crisis in the 1970s, the U.S. ruling class, led by President Ronald Reagan and Fed Chair Paul Volcker (though begun by President Jimmy Carter), was willing to induce a severe recession in order to stop inflation. The ensuing decades of neoliberalism created astronomical levels of class inequality.

    But there are other tools to stop inflation, which do so in favor of workers. Price controls have been used in wartime throughout U.S. history, most significantly by President Franklin Delano Roosevelt’s administration. As political scientist Todd Tucker recently pointed out, FDR employed 160,000 federal employees in the Office of Price Administration to control prices “on goods from scrap steel to shoes to milk.” Even President Richard Nixon briefly implemented price controls.

    Immediate reforms in the form of rent control, expanding Medicare, and allowing the government to negotiate lower drug prices are a good start to such policies, along with capping CEO pay and taxing the rich. Other reforms like investment into public housing and public education also indirectly cap prices.

    Ultimately, a left economic agenda must push back against the inflation panic to maintain demands for higher wages and increased social spending, while guarding against real inflation through price controls and policies that protect working people’s pockets.

    This post was originally published on Latest – Truthout.

  • The Real Antidote To Inflation

    The Federal Reserve is caught between a rock and a hard place. Inflation grew by 6.8% in November, the fastest in 40 years, a trend the Fed has now acknowledged is not “transitory.” The conventional theory is that inflation is due to too much money chasing too few goods, so the Fed is under heavy pressure to “tighten” or shrink the money supply. Its conventional tools for this purpose are to reduce asset purchases and raise interest rates. But corporate debt has risen by $1.3 trillion just since early 2020; so if the Fed raises rates, a massive wave of defaults is likely to result. According to financial advisor Graham Summers in an article titled “The Fed Is About to Start Playing with Matches Next to a $30 Trillion Debt Bomb,” the stock market could collapse by as much as 50%. 

    The post The Real Antidote To Inflation appeared first on PopularResistance.Org.

    This post was originally published on PopularResistance.Org.

  • Sanders Takes Aim at Manchin’s Argument Against Build Back Better: “Not True”

    Sen. Bernie Sanders speaks with reporters in the Senate subway on December 13, 2021.

    Sen. Bernie Sanders on Thursday countered fellow Sen. Joe Manchin’s recent Fox News appearance with an op-ed on the right-wing outlet’s website aimed at rebutting the West Virginia Democrat’s falsehood-laden talking points against the Build Back Better Act.

    “Manchin, the Republicans, and corporate America say this bill will add to our national debt and make inflation worse. Not true,” wrote Sanders (I-Vt.), the chair of the Senate Budget Committee. “Unlike the bloated military budget that Manchin recently voted for, which adds $778 billion to the deficit this year alone and costs four times more than the Build Back Better Act over a 10-year period, the White House has said this bill is fully paid for” with tax hikes on the wealthy.

    Manchin has voted for 11 consecutive military budgets, including the latest version of the National Defense Authorization Act, which the West Virginia Democrat approved without complaining about the price tag.

    “And to add insult to injury, this military budget came after we ended the longest war in recent U.S. history and was $25 billion more than what President Biden requested,” the Vermont senator continued.

    “I should also add that, despite Manchin’s ‘deep concerns’ about the national debt, he voted for $53 billion in corporate welfare that would go to a handful of profitable microchip companies — completely unpaid for,” Sanders wrote, a reference to the Senate-passed Endless Frontier Act, which would lavish taxpayer subsidies on U.S. semiconductor firms.

    Sanders’ Fox News op-ed came days after Manchin — flush with corporate cash — appeared on the network’s Sunday program to announce his opposition to the Build Back Better Act, a centerpiece of President Joe Biden’s domestic policy agenda.

    “This is a no on this legislation,” Manchin told Fox’s Bret Baier. “We have inflation that basically could harm—really harm a lot of Americans and especially those who are most needy and having a hard time struggling right now.”

    But economists have disputed Manchin’s narrative that the $1.75 trillion Build Back Better package would fuel rising inflation, which analysts say is driven by a number of factors including pandemic-related supply chain disruptions to corporate profiteering. In fact, experts have warned that not passing the legislation could harm the nation’s fragile economic recovery.

    Mark Zandi, the chief economist at Moody’s Analytics, argued last month that the Build Back Better Act and the bipartisan infrastructure law together would actually “take the edge off of inflation” by helping to “lift long-term economic growth via stronger productivity and labor force growth.”

    Writing for The Conversation earlier this week, economist Michael Klein noted that “the price tag of the Build Back Better plan passed by the House of Representatives is about $2 trillion, to be spent over a 10-year period.”

    “If the spending is spread out evenly, that would amount to about $200 billion a year. That’s only about 3% of how much the government planned to spend in 2021,” Klein observed. “At the same time, what’s in the bill would make a big difference to improving the lives of average Americans by providing more of them with affordable child and healthcare and reducing child poverty — areas where the U.S. seriously lags behind other rich countries. And it would help the U.S. fight the ever-worsening effects of climate change.”

    “While the $2 trillion in spending would be unlikely to worsen inflation if it were to become law,” Klein concluded, “I believe it could do a lot to materially address these challenges America faces.”

    This post was originally published on Latest – Truthout.

  • Warren Slams Grocers for Raising Prices While Raking in Profits

    Sen. Elizabeth Warren speaks during a hearing in the Dirksen Building on December 7, 2021.

    As corporations blame inflation for steadily rising prices as the pandemic continues to rock the economy, Sen. Elizabeth Warren (D-Massachusetts) is calling out big grocers for charging customers more while padding executives’ pockets.

    Warren sent a letter to CEOs of big grocery chains on Monday detailing her concern over rising prices and questioning whether or not the companies are taking steps to protect consumers rather than trying to fleece them to increase their profit margins.

    Though these companies have reported profits that have increased precipitously in recent months, “it appears that rather than defraying costs for consumers or providing hazard pay to essential frontline workers, these profits have gone directly into the pockets of executives and shareholders,” Warren wrote. The letters were sent to CEOs of Kroger, the largest grocery chain in the country, Publix and Albertsons, all of which have reported high profits in comparison to pre-pandemic levels.

    As the lawmaker points out in her letter, these large grocers seem to revel in their current ability to take advantage of consumers. Experts say that stores are purposely raising prices higher than the cost of inflation to increase profit margins. “A little bit of inflation is always good in our business,” Kroger CEO Rodney McMullen said in a call with investors in June.

    “Although the producer price index released earlier this week did show a rise in wholesale prices, this is clearly not the whole picture,” Warren wrote in her letter. “Behind the scenes, grocery chains have reassured investors that only consumers would be hurt.” She lists a series of questions for the corporations to answer by January 7, asking them to detail price changes for each department, profits made during the pandemic and worker pay policies.

    Grocery bills for consumers have increased by over 6 percent over the past year, according to Consumer Price Index data, squeezing families for extra cash as they struggle with economic hardships. According to Census Bureau data, nearly 20 million adults in the U.S. live in households that are struggling to get enough to eat as of October.

    Meanwhile, Kroger made $2.6 billion in 2020, up 5.6 percent from 2019, and their adjusted earnings as of the third quarter of this year are up 9.9 percent over the same period last year. Albertsons tripled its net income from 2019 to $1.89 billion in 2020. And Publix increased its net earnings for the third quarter by 13.9 percent over last year.

    “Large grocers are blaming high food costs on inflation, but it’s time to talk about how they’re using every opportunity to rake in profits, reward executives and big shareholders while driving up prices even more,” Warren said in a statement.

    “These companies made record profits during the pandemic and when faced with the choice to retain lower prices for consumers, and properly protect and compensate their workers, they greedily granted massive payouts to top executives and investors,” she continued. “They need to answer for these actions.”

    The disparity between executive and worker pay has been especially stark at Kroger, where CEO McMullen’s compensation package jumped by over 45 percent to a total of $20.6 million in 2020. But, as McMullen enjoyed his extra $6.4 million, typical worker pay at Kroger dropped by 8.1 percent, with median pay dropping by over $2,000.

    These same workers suffered through dangerous conditions as they worked frontline jobs during the pandemic. As the company hailed its grocery workers as “heroes,” it cut hazard pay early in the pandemic while pursuing over $1 billion in stock buybacks in 2020.

    Some of the large grocers’ price raises have caused potential legal concerns. Consumers have filed a lawsuit in Texas, for instance, against Kroger, Albertsons, and other grocers for allegedly price gouging early in the pandemic, nearly tripling the price of eggs.

    This post was originally published on Latest – Truthout.

  • Warren Slams Hertz for Raising Prices 147 Percent While Pursuing $2B in Buybacks

    Senator Elizabeth Warren (D-Massachusetts) speaks during a Senate Finance Committee meeting Capitol Hill in Washington, D.C. on October 19, 2021.

    On Tuesday, Sen. Elizabeth Warren (D-Massachusetts) sent a letter to Hertz, criticizing the car rental company for proposing a $2 billion stock buyback plan that would line the pockets of executives and the private equity firm Apollo Global Management, directly after the company exited bankruptcy.

    The letter comes at a time of skyrocketing rental car prices, which Hertz has been taking advantage of. An analysis cited by Warren’s office found that while rental car and truck prices increased by 39 percent between 2020 and 2021, Hertz’s prices have risen even higher. In August, the company was charging a median price of about $114 a day — 147 percent higher than their rate before the pandemic.

    Last May, the company filed for bankruptcy after the car rental industry was hit hard by the pandemic. Hertz laid off or furloughed 20,000 employees — just after paying out $16 million in bonuses to executives — as it dealt with debt that it had already accumulated before the pandemic. The company exited bankruptcy in June, just over a year after it filed, and paid out $3 million in bonuses to executives shortly after.

    In November, nearly five months later, the company announced plans for a new program to buy back up to $2 billion worth of stocks, which is nearly 20 percent of the company’s market cap. Hertz’s shares rose by 6.8 percent immediately following the announcement.

    Warren has slammed this decision, saying that the buyback program will pad executives’ and Apollo’s pockets “at the expense of customers and the long-term health of the company,” giving a 70 percent annualized return to the private equity firm that had just invested in the company in order to help pull it out of bankruptcy.

    “This decision, and other actions taken before and after their bankruptcy process, reveals that the company is happy to reward executives, company insiders, and big shareholders while stiffing consumers with record-high rental car costs and ignoring the recent history that nearly wiped out the company,” Warren wrote in the letter.

    “Hertz executives were inexplicably rewarded on both sides of this bankruptcy,” Warren continued. “But consumers are footing the bill… Consumers are struggling to make ends meet as costs rise throughout the economy and Hertz owes the public an explanation for this corporate greed.”

    Warren concluded her letter by demanding answers about how the buyback plan will affect the company’s health and how much executives and board members will benefit. She also asked if the company is considering potential risks posed to the industry due to the Omicron variant of COVID-19, and whether the buyback program is a risk the company can afford to take.

    Likely partially as a result of their sky-high prices, Hertz has been posting record profits, making $2.2 billion in total revenue in the third quarter of 2021 alone. Meanwhile, customers have reported struggling to get rental cars at a reasonable price — or even to get one at all, regardless of whether they’ve made a reservation. Car production has been causing shortages in rental car availability, and rental companies are evidently taking advantage of that in spades.

    The rental vehicle industry isn’t alone in taking advantage of the fragile COVID economy to increase prices. Other corporations have been taking advantage of the economy to pad their profits, disguising rising prices as inflation. But in reality, while production costs for many companies have gone up, data shows that corporations have been absorbing these costs, reaching into consumers’ pockets to pay for the higher costs and then some.

    This post was originally published on Latest – Truthout.

  • Oil and Gas Industry Profits Climbed as Americans Faced High Gas Prices in 2021

    View of an oil refinery at night

    The fossil fuel industry experienced a boom in profits during the first nine months of 2021, raking in tens of billions of dollars as Americans faced a jump in gas prices.

    A new report by Accountable.US shows that 24 top oil and gas companies made $174 billion in profits between January and September, lining shareholders’ and CEOs’ pockets. Sixteen of those companies raised their dividend at least once in 2021, the report found, and most of their CEOs had compensation packages of over $10 million.

    Companies like Exxon and Chevron have posted high profits in the third quarter of 2021; in just four months, the 24 companies made $74 billion in profits. Exxon alone reported making $6.9 billion in the third quarter, a 60 percent increase in revenue from the same time last year and its highest profits for four years.

    Meanwhile, gas prices have hit a seven-year high during the third quarter especially, increasing by 50 percent in just a year — amounting to an average of $3.40 per gallon in the U.S. — even as wholesale prices have gone down. This has helped pad profits for the oil and gas companies as increased demand drives higher gas prices after pandemic restrictions have been lifted.

    Critics of the oil and gas industry say that the high gas prices are by design, as oil and gas companies haven’t been replenishing fuel supplies to meet high demand. Conservative politicians have deceptively tried to blame high gas prices on President Joe Biden’s climate policies, despite the fact that the president’s climate approach has been tepid at best. But sustainable energy groups like the International Energy Agency have said that high prices are thanks to “the deliberate policies of energy producers.”

    From a climate perspective, more oil and gas production is not to be cheered — but the oil and gas industry has little incentive to shrink the fuel supply due to the climate crisis, and wouldn’t raise prices for that reason. Instead, the industry is likely manipulating costs because gas prices typically have little effect on demand and are not likely to drive down usage. This also means that middle- and- lower-income people with few alternatives for transportation will be hurt the most by these prices, as they continue to experience high levels of hardship nearly two years into the pandemic.

    “As Americans make sacrifices to cover high gas prices, oil and gas corporations are raking in billions that they then use to shower mega-rich CEOs and shareholders with more money,” Accountable.US wrote in its report. “Rather than increase production or reinvest to meet the energy demand increase caused by the world reemerging from COVID-19 lockdowns, oil and gas companies are taking advantage of bloated prices, fleecing American families along the way.”

    The Biden administration has taken note of oil and gas companies’ increased profits. “[T]he oil and gas companies are not flipping the switch as quickly as the demand requires,” Energy Secretary Jennifer Granholm said.

    Last month, Biden asked the Federal Trade Commission to examine potential “anti-consumer behavior” by the industry, pointing out the discrepancy between high prices and low wholesale costs. “This unexplained large gap between the price of unfinished gasoline and the average price at the pump is well above the pre-pandemic average,” he wrote.

    The industry’s actions regarding natural gas prices also lend credence to the idea that the companies are acting deliberately to pad their pockets. Recent reporting found that energy companies were exporting record amounts of natural gas while limiting supply domestically ahead of the winter, as utilities are stocking up. Gas bills are projected to rise to 30 percent higher than last year, according to the U.S. Energy Information Administration.

    Sen. Elizabeth Warren (D-Massachusetts) pushed energy companies to explain their exporting practices last month, criticizing their “corporate greed.”

    “The cause of rapidly rising energy prices for consumers and manufacturers is clear: some of the nation’s largest and most profitable oil and gas companies are putting their massive profits, share prices and dividends for investors, and millions of dollars in CEO pay and bonuses ahead of the needs of American consumers and the nation’s recovery from the pandemic,” Warren wrote in a letter to the nation’s largest natural gas producers.

    The oil and gas industry isn’t the only industry taking advantage of the American public to pad their pockets during this time of economic turmoil. Corporations have seen huge increases in profits this year, which consumer advocates say is because companies are exploiting media cycles about inflation to raise prices precipitously.

    This post was originally published on Latest – Truthout.

  • Inflation Is Bad for Those Who Profit From Your Mortgage Debt and Student Loans

    Corporate media has largely failed to tell both sides of the inflation story, says journalist Jon Schwarz.

    Janine Jackson: A New York Times headline read, “Inflation Warning Signs Flash Red, Posing Challenge for Washington.” A subsequent Times piece underscored the problem and the solution: “The White House Says Its Plans Will Slow Inflation. The Big Question Is When?”

    That framing is echoed and adumbrated everywhere in corporate media. “Inflation Is Coming for Your Cup of Coffee Next,” says CNN. “Inflation’s Wrath Hits Home” was USA Today’s rubric. And then—surprise, surprise — CNBC has “Inflation Has 88% of Americans Worried.”

    True, there’s an admixture of, for example, The New York Times columnist Paul Krugman’s “History Says Don’t Panic About Inflation.” But anyone can see that, judging by sheer focus and attention, “serious, smart people” organize their thinking around “inflation” more than many another economic indicator.

    In the recent words of our guest, whenever the corporate media moves en masse like this, it’s a good idea to slow down and consider what’s actually happening and why. Jon Schwarz writes for TheIntercept.com. He joins us now by phone. Welcome back to CounterSpin, Jon Schwarz.

    Jon Schwarz: I’m so happy to be here, especially to talk about this in particular. Because this is one issue where you realize that there is no one room where all the people get together and decide what is going to be in the US media, but it really does seem like there is.

    Yeah, exactly. Exactly. We hear media complain about how we used to all talk around the water cooler and agree on everything. And we know that’s not true. And yet, you have to acknowledge the power of media of making it seem as though we’re all in one conversation. And so the phenomenon really here is corporate media alarm, and the worldview that that reflects. But let me ask you, first, about what “there” there is there. What reality is it that these headlines are referring to?

    The reality is that inflation went up from last October to this past October by 6.2%, I believe it was, according to one measure that includes food and fuel. And so that tends to go to extremes more than the standard measure, which excludes them. But just to be fair, because food and fuel are important for people, the number to think about is legitimately 6.2%. So that’s over a year. And it happened that inflation went up from September to October by 0.9%, meaning that if something cost $10 in September, it now cost $10.09.

    So is that the bare understanding? Because if I’m reading headlines, I’m reading about costs of things that I want to buy going up in a way that’s really going to affect my life. And it seems as though the increase in inflation is most meaningful in terms of how much it’s going to affect the price of my coffee, or how much it’s going to affect something else that I as an individual are buying. But there’s other things that inflation means that are really maybe more at work behind the alarm here.

    That’s right. It’s funny. The Washington Post had not one but two above the fold stories about inflation this week on one particular day. One talking about how terrible inflation was, and one about how it destroyed Biden’s agenda. And they also had a chart covering, I don’t know, the last 10 or 15 years, that by itself explained that their story was not what they were telling you. It was a chart showing real wages going down a little bit over the last year when inflation is taken into account, meaning that inflation was 6.2% over the last year. Wages for regular people went up by 5.8%, so the purchasing power went down a bit.

    But the chart itself showed that people’s purchasing power being eroded, going down in real terms when inflation was taken into account, had happened a lot over the past 10 years. And it wasn’t a gigantic, front-page emergency then. Like, what was the difference?

    The difference was this, was that there were not high rates of inflation making that happen in the past, during the Obama administration, and I think even during a little bit of the Trump administration. And the difference is that now it is happening with higher rates of inflation, and higher rates of inflation affect people with tons of money in a way that is never described in the corporate media, to my knowledge. I literally have never seen this.

    And the story there is that household debt in the United States is about $14.5 trillion. So that’s a very big number. It’s about 75% of the size of the entire US economy. And when there is inflation, most of that debt is a fixed rate debt like mortgages, student loans, things like that. And the inflation erodes the value of that debt, because it’s set in nominal terms. Like, it stays at $15.5 trillion, no matter what level of inflation there is.

    Right.

    And so 6.2% inflation, that works out to a transfer of wealth from creditors to debtors of about $850 billion. So almost a trillion dollars. That is a lot of money. It doesn’t work out precisely, as different people have different levels of debt. It’s not totally a transfer of $850 billion from the rich to the poor. But it is a significant amount. And you may have noticed people with a lot of money do not like to lose it. And that’s really at the root of this inflation freak-out.

    It’s that plus the fact that there’s a very tight labor market right now, meaning that there’s low unemployment, and workers have much more power than they generally do. And the standard treatment for an economy with high levels of inflation is to increase interest rates, slow the economy, which throws people out of work. And that is the goal, that they do not like a booming economy. They do not like low levels of inflation, creditors in general do not. And what they would like to see is a slower economy, with lower rates of inflation and higher rates of unemployment. So it’s these two things — their goal to slow the economy, raise unemployment, and the eroding value of the debt that they hold.

    You’re talking about differential impacts, both of inflation and of proposed responses to inflation, and differentiating that impact is exactly what elite media don’t generally do. They talk about us and them in a way that is meant to collapse other folks into the us that really don’t belong there.

    And so The New York Times’ Neil Irwin has an explainer that’s a kind of piece where it’s like, you don’t need to know the details, just here’s the nuts and bolts of this issue that you’re hearing about. And it’s called, “Who’s to Blame for Rising Prices?” And this is already collapsing inflation to rising prices in ways that are unnuanced, as you’ve just discussed. But still, in this let’s-make-it-simple, let’s-break-it-down, “Who’s to Blame for Rising Prices?,” one of The New York Times’ acceptable answers is “all of us.”

    Ha! Exactly.

    And the reason is we — I’m quoting — ”we shifted our spending toward stuff, rather than services.” That’s one of the reasons. And then, also, “and many of us elected to stop working, or work less.” This is The New York Times, the paper of record, trying to talk to people and say: Prices are going up. Here’s why. And their reason is, you messed up, you know? You messed up during the pandemic. You started buying the wrong things, and you made wrong choices about employment.

    I mean, we talk about this as an economic issue. But it’s obviously a media, a corporate media issue as well.

    Yeah, it’s a class issue. It’s one of the issues where the class bias of the media really shows up in its most powerful form. It’s absolutely unmistakable.

    Yeah, I don’t know what I wanted you to say in response to that New York Times article, except that these kinds of headlines and stories, they’re not just lamentations. They’re also calls for action.

    The call for action is to get back to work.

    Exactly. And in terms of actions that are responses from various entities about dealing with this abstract-sounding “inflation,” well, some of those responses are going to also affect people in their day-to-day lives, so it’s meaningful to unpack what media think, or are telling us is the right thing to do here.

    Yeah, there is another class-based aspect of this that the media should be covering, and are not. People have generally and rightfully said that you do have to take into account, especially, elderly people who are living on a fixed income. But the reality that, again, many people don’t actually understand this, is that Social Security is not a fixed-income benefit. Social Security is inflation-adjusted, and so people who are anxious about being able to pay their bills, inflation means that Social Security benefits will be raised by 6%, almost, in January. So that is going to be a welcome help for people in that situation.

    But, again, not something that people are saying: Hey listen, don’t panic, because your benefits are going up. People don’t hear that, because that is not being covered for the most part.

    Just finally, looking forward in terms of what folks are going to be hearing, including about themselves: Before we got on, I saw a Yahoo Money headline: “Americans Are Feeling Lousy About Their Finances, Even Though They’re Doing Fine.” I mean, I don’t know. Isn’t that gaslighting? Just looking forward to the headlines we’re going to be seeing about inflation, what are some questions you would have folks just keep in mind as they read and hear that media coverage?

    Yeah, so just keep in mind the class bias of the media. As I say, it is particularly apparent now. They do not tell both sides of the inflation story by any means.

    And also keep this in mind a year from now, when they are going to have completely forgotten about this issue, because inflation almost certainly will dissipate, and will be more like 2 or 3%.

    Absolutely.

    We’ve been speaking with Jon Schwarz. You can find his work on TheIntercept.com. Thank you so much Jon Schwarz, for joining us this week on CounterSpin.

    Thank you very much for having me.

    This post was originally published on Latest – Truthout.