Inflation’s Real Cause: Corporate Lust for More Greed, Profit and Power

Typical Corporate Board Marketing Agreement

(Great Cartoon: Far too funny and realistic in fact)

Inflation below is discussed from an expert on the subject and reported on and outlined below by Robert Reich in his great article (formatted to fit the blog) with the article headline and video presentation up front introduction:

“The Truth About Inflation”

The underlying problem is not inflation. It’s corporate power. The entire American economy is concentrated into the hands of a few greedy, corporate giants with the power to raise prices.

Biggest causes: Corporate concentration. 

Now, prices are undeniably rising. 

In response, the Fed is about to slow the economy — even though we’re still at least 4 million jobs short of where we were before the pandemic, and millions of American workers won’t get the raises they deserve.

Republicans haven’t wasted any time hammering Biden and Democratic lawmakers about inflation.

Everybody’s ignoring the deeper structural reason for price increases: 

The concentration of the American economy into the hands of a few corporate giants with the power to raise prices.

If the market were actually competitive, corporations would keep their prices as low as possible as they competed for customers. 

Even if some of their costs increased, they would do everything they could to avoid passing them on to consumers in the form of higher prices, for fear of losing business to competitors.

But that’s the opposite of what we’re seeing:

1. Corporations are raising prices even as they rake in record profits.

2. Corporate profit margins hit record highs last year.

You see, these corporations have so much market power they can raise prices with impunity. So the underlying problem isn’t inflation per se. It's a lack of competition. 

Corporations are using the excuse of inflation to raise prices and make fatter profits.

For example the Energy Sector: 

Only a few entities have access to the land and pipelines that control the oil and gas powering most of the world. 

They took a hit during the pandemic as most people stayed home. 

But they are more than making up for it now, limiting supply and ratcheting up prices.

 “Chevron, Exxon have doubled their profits. This isn’t about inflation. This is about price gouging.” 

Consumer goods: 

In April 2021, Procter & Gamble raised prices on staples like diapers and toilet paper, citing increased costs in raw materials and transportation.

But P&G has been making huge profits.

After some of its price increases went into effect, it reported an almost 25% profit margin.

Looking to buy your diapers elsewhere? Good luck. 

The market is dominated by P&G and Kimberly-Clark, which — NOT entirely coincidentally — raised its prices at the same time. 

Another example: In April 2021, PepsiCo raised prices, blaming higher costs for ingredients, freight, and labor.

It then recorded $3 billion in operating profits through September.

How did it get away with this without losing customers?

Pepsi has only one major competitor, Coca-Cola, which promptly raised its own prices.

Coca-Cola recorded $10 billion in revenues in the third quarter of 2021, up 16% from the previous year.

Food prices are soaring, but half of that is from meat, which costs 15% more than last year. There are only four major meat processing companies in America, which are all raising their prices and enjoying record profits.

Thus, the underlying problem isn’t inflation: It’s Greedy Power:

Since the 1980’s, when the U.S. government all but abandoned antitrust enforcement, American industries have become more concentrated. 

Most are now dominated by a handful of corporations that coordinate prices and production.

This is true of: banks, broadband, pharmaceutical companies, airlines, meatpackers, and yes, even soft drink producers. 

Corporations in all these industries could easily absorb higher costs — including long overdue wage increases — without passing them on to consumers in the form of higher prices. But they aren’t.

They’re using their massive profits to mine and line the pockets of major investors and executives; while consumers and workers get shafted.

How can this structural problem be fixed?

Simple, with more aggressive antitrust enforcement – for example: President Biden asked the FTC to investigate oil companies, and he’s appointed experienced antitrust lawyers to both the FTC and the DOJ.

The bottom line: Don’t fall for Republican fear mongering hype about inflation – the real culprit is corporate greed and more money.

My 2 Cents: My summary of this fine article by very smart man is this just this simple:

This GOP like decades of older GOP’s is skilled in the game for twisting what is real and what is hype as noted above by Mr. Reich and that is the source of most of their campaign money to stay in office, and that comes to them via Corporations who bleed the public dry while blaming everyone except themselves in their big quid pro quo game where only one side wins: Theirs.

It always comes down to two things members in Congress seek and BTW, it’s from both sides just to be fair that sustains them in office with big corporate money: I’ll scratch your back, as you continue to pad my wallet.

All the while as those members in Congress seek more money to stay in power for the public that they always profess they do, while in reality, their only goal is a tripod of: Name, Fame, and Fortune. It’s just that simple.

Thanks for stopping by.