Post by the Scribe on Mar 20, 2022 5:09:04 GMT
Yahoo News 360
How much is corporate greed fueling inflation?
news.yahoo.com/how-much-is-corporate-greed-fueling-inflation-210156552.html
Mike Bebernes·Senior Editor
February 28, 2022·7 min read
In this article:
Elizabeth Warren
American politician
Bernie Sanders
American politician
“The 360” shows you diverse perspectives on the day’s top stories and debates.
What’s happening
With inflation still continuing to mar what would otherwise be a rosy economic picture, some Democrats are claiming that corporate greed is a major cause of rising prices.
“Corporate executives are happy to help drive inflation and fatten their profit margins by price gouging Americans,” Sen. Elizabeth Warren, D-Mass., said in early January. Warren’s argument, echoed by left-leaning colleagues like Sens. Bernie Sanders, I-Vt., and Sherrod Brown, D-Ohio, is that wealthy corporations are taking advantage of the underlying causes of inflation to raise their prices far beyond what would be needed to offset their increased costs.
Prices in January were up about 7.5 percent from the previous year, the biggest spike in four decades. At the same time, corporations are enjoying their highest profit margins in decades despite dealing with more expensive material goods, gnarled supply chains and a labor shortage.
www.businessinsider.com/companies-pocket-largest-profits-in-70-years-amid-inflation-complaints-2021-12
Economists largely argue that inflation is too complicated of an issue to draw a simple line connecting it to corporate price gouging; a recent survey of economists found a majority rejecting that claim.
www.igmchicago.org/surveys/inflation-market-power-and-price-controls/
But polls suggest that voters find this case compelling, and the debate has reportedly divided Democrats in Washington. Earlier this month, some prominent party members ripped into what they called “pandemic profiteers” during a hearing of the House Energy and Commerce committee. The White House, however, has taken a less sweeping approach. President Biden has limited his criticisms to specific industries, like oil and meatpacking. His administration has also pinned much of the blame for inflation on rising used car prices.
morningconsult.com/2022/01/19/inflation-companies-polling/
www.washingtonpost.com/us-policy/2022/02/17/white-house-inflation-corporations/
fortune.com/2022/02/02/inflation-congress-hearing-price-gouging-pandemic-profiteering-democrats-corporations/
energycommerce.house.gov/committee-activity/hearings/hearing-on-pandemic-profiteers-legislation-to-stop-corporate-price
www.whitehouse.gov/briefing-room/speeches-remarks/2021/11/23/remarks-by-president-biden-on-the-economy-and-lowering-prices-for-the-american-people/
nypost.com/2022/01/03/biden-targets-us-meat-firms-in-effort-to-tame-surging-prices/
Why there’s debate
Warren, Sanders and others say that, though far from the only cause of inflation, corporate price gouging is pushing costs higher than needed based on the underlying economic conditions. They argue that companies are taking advantage of the fact that customers expect things to get more expensive while also pointing to a lack of real competition in some industries. As evidence, they cite companies like Starbucks, which is reportedly planning to raise prices again this year despite soaring profits in 2021.
finance.yahoo.com/news/aoc-corporate-price-gouging-is-fueling-inflation-185623394.html
www.nytimes.com/2022/02/01/business/starbucks-prices.html
Skeptics generally argue that our current inflation has a much more straightforward explanation: a lack of supply that’s unable to keep up with sky-high consumer demand. Others say framing the debate around greed treats prices as a moral decision, when in reality they’re determined by the competing pressures of the market. They say companies have an incentive to continue raising prices until consumers are no longer willing to pay them, and, so far, that hasn’t happened.
What’s next
The Department of Justice and FBI announced earlier this month that they had opened a joint investigation into companies that may be using “supply chain disruptions as a cover for collusive schemes.” That inquiry will focus on possible coordination between companies to fix prices and divvy up markets, which are violations of antitrust law.
www.justice.gov/opa/pr/department-justice-announces-initiative-protect-americans-collusive-schemes-amid-supply-chain
Perspectives
Accusers
Prices are spiking far more than they should be
“Like everything else to do with the economy, those rising prices aren't established by some objective, all-seeing, all-knowing ‘free market’ that assesses every aspect of the economy and sets prices accordingly. In fact, a good number of the rising prices we're paying weren't strictly necessary at all.” — Paul Constant, Business Insider www.businessinsider.com/how-measure-inflation-raise-prices-corporate-profits-supply-chain-2022-2
Greed isn’t the underlying cause of inflation, but it’s making it worse
“Critics of major corporate price increases aren’t arguing that the consolidation is the only force driving inflation; rather, that because these conglomerates hold so much of the market share, they are able to raise prices out of step with the actual price increases they’re incurring and passing on to consumers.” — Ellen Ioanes, Vox www.vox.com/2022/2/20/22943257/inflation-corporations-price-hikes-consumer-price-index
Corporate profit margins were already out of balance before inflation struck
“One reason it’s particularly painful in the U.S. is that prices were already high, people’s purchasing power, the real value of their wages was already being eroded by market power before. Then when you add to that a burst of inflation, it’s even more painful.” — Thomas Philippon, economist, to FiveThirtyEight fivethirtyeight.com/features/what-democrats-and-republicans-get-wrong-about-inflation/
Pro-corporate interests are eager to place blame on other causes of inflation
“Instead of letting Wall Street apologists create the impression that inflation is simply the result of supply chain kinks and pent-up consumer demand after two years of pandemic lockdowns, and instead of letting Republicans suggest that federal and state investments in health care and housing are the problem, Democrats should be speaking like Warren.” — John Nichols, The Nation www.thenation.com/article/politics/inflation-price-gouging/
Corporations are making enough to absorb extra costs without passing them to consumers
“With corporate profits at near record levels, they could easily absorb the cost increases. They’re raising prices because they can — and they can because they don’t face meaningful competition.” — Robert Reich, former secretary of labor, Guardian www.theguardian.com/commentisfree/2022/feb/19/white-house-biden-inflation-corporate-power
The core of the problem is America’s inequitable economic system
“There’s something fundamentally wrong about an economic system that rewards corporate greed and ignores the needs of poor and middle-class families. A growing middle class is essential to a stable democracy. Corporate greed that trumps public need is an open invitation to continued conflict and chaos.” — Brad Bonnon, The Hill thehill.com/opinion/finance/594886-corporate-greed-trumps-public-need
Greed is responsible for the broken supply chain that’s the root cause of inflation
“We spent a half-century allowing business executives and financiers to take control of our supply chains, enabled by leaders in both parties. They all hailed the transformation, cheering the advances of globalization, the efficient network that would free us from want. Motivated by greed and dismissive of the public interest, they didn’t mention that their invention was supremely ill-equipped to handle inevitable supply bottlenecks.” — David Dayen and Rakeen Mabud, American Prospect
prospect.org/economy/how-we-broke-the-supply-chain-intro/
Defenders
There’s nothing illegal, or even immoral, about raising prices to meet high demand
“Let’s clear the air: Making a healthy profit is not the same as price gouging or even unfairly profiting off the pandemic. Nor does simply raising prices constitute price gouging.” — Megan Leonhardt, Fortune fortune.com/2022/02/19/inflation-profits-prices-companies-pandemic/
Inflation is too complex to place outsize blame on any one factor
“It's natural to want a clear story to tell about inflation, with an obvious villain. But prices are rising for all kinds of reasons — yes, fiscal stimulus but also busted supply chains, increased demand, changing consumer preferences. It's not a simple story.” — Emily Peck, Axios www.axios.com/wanted-inflation-scapegoat-79bd4280-d757-4bf1-a27f-ccce1e8f8a1d.html
Consumers, not companies, are the ones that are really driving up prices
“They’re charging higher prices, and booking higher profits, because that’s what happens when demand shoots up and supply is relatively constrained. As is the case today.” — Catherine Rampell, Washington Post www.washingtonpost.com/opinions/2022/01/10/biden-inflation-rhetoric-corporate-greed-fed-nominees/
Higher prices are needed to keep the supply chain running
“The alternative to rising prices in the current economic environment probably isn't a better consumer experience. It would be more empty shelves and longer delays. Companies that are finding ways to navigate the current weirdness and keep supplies flowing deserve praise, not the threat of an FBI investigation.” — Eric Boehm, Reason reason.com/2022/02/17/doj-fbi-will-police-companies-for-illicit-profits/
Inflation is a result of economic pressures, not moral decisions
“The public tends to think of inflation as an indicator of a cycle of greed and inhumanity, as a conspiracy to rob them of their buying power. In reality, the cause is more technical, like an increase in the money supply or disruptions in the supply chain.” — Robert J. Shiller, New York Times www.nytimes.com/2022/02/08/opinion/dont-blame-greed-for-inflation.html
Democrats are desperate for someone to blame for their failure to control inflation
“This story is about the challenge for President Joe Biden and fellow Democrats in discussing inflation without mentioning its true causes. The politicians running Washington want consumers to believe that behind every price increase is a greedy capitalist.” — James Freeman, Wall Street Journal www.wsj.com/articles/the-biden-era-of-greed-11637965598
Finger-pointing makes it harder to actually fix inflation
“Focusing on the convenient political target, greedy companies, takes attention away from what really caused inflation and, thus, what can curb it.” — Tom Campbell, Orange County Register www.ocregister.com/2022/01/31/the-truth-about-inflation-is-more-nuanced-than-biden-or-his-critics-suggest/
Is there a topic you’d like to see covered in “The 360”? Send your suggestions to the360@yahoonews.com.
Photo illustration: Yahoo News; photos: Getty Images
How much is corporate greed fueling inflation?
news.yahoo.com/how-much-is-corporate-greed-fueling-inflation-210156552.html
Mike Bebernes·Senior Editor
February 28, 2022·7 min read
In this article:
Elizabeth Warren
American politician
Bernie Sanders
American politician
“The 360” shows you diverse perspectives on the day’s top stories and debates.
What’s happening
With inflation still continuing to mar what would otherwise be a rosy economic picture, some Democrats are claiming that corporate greed is a major cause of rising prices.
“Corporate executives are happy to help drive inflation and fatten their profit margins by price gouging Americans,” Sen. Elizabeth Warren, D-Mass., said in early January. Warren’s argument, echoed by left-leaning colleagues like Sens. Bernie Sanders, I-Vt., and Sherrod Brown, D-Ohio, is that wealthy corporations are taking advantage of the underlying causes of inflation to raise their prices far beyond what would be needed to offset their increased costs.
Prices in January were up about 7.5 percent from the previous year, the biggest spike in four decades. At the same time, corporations are enjoying their highest profit margins in decades despite dealing with more expensive material goods, gnarled supply chains and a labor shortage.
www.businessinsider.com/companies-pocket-largest-profits-in-70-years-amid-inflation-complaints-2021-12
Economists largely argue that inflation is too complicated of an issue to draw a simple line connecting it to corporate price gouging; a recent survey of economists found a majority rejecting that claim.
www.igmchicago.org/surveys/inflation-market-power-and-price-controls/
But polls suggest that voters find this case compelling, and the debate has reportedly divided Democrats in Washington. Earlier this month, some prominent party members ripped into what they called “pandemic profiteers” during a hearing of the House Energy and Commerce committee. The White House, however, has taken a less sweeping approach. President Biden has limited his criticisms to specific industries, like oil and meatpacking. His administration has also pinned much of the blame for inflation on rising used car prices.
morningconsult.com/2022/01/19/inflation-companies-polling/
www.washingtonpost.com/us-policy/2022/02/17/white-house-inflation-corporations/
fortune.com/2022/02/02/inflation-congress-hearing-price-gouging-pandemic-profiteering-democrats-corporations/
energycommerce.house.gov/committee-activity/hearings/hearing-on-pandemic-profiteers-legislation-to-stop-corporate-price
www.whitehouse.gov/briefing-room/speeches-remarks/2021/11/23/remarks-by-president-biden-on-the-economy-and-lowering-prices-for-the-american-people/
nypost.com/2022/01/03/biden-targets-us-meat-firms-in-effort-to-tame-surging-prices/
Why there’s debate
Warren, Sanders and others say that, though far from the only cause of inflation, corporate price gouging is pushing costs higher than needed based on the underlying economic conditions. They argue that companies are taking advantage of the fact that customers expect things to get more expensive while also pointing to a lack of real competition in some industries. As evidence, they cite companies like Starbucks, which is reportedly planning to raise prices again this year despite soaring profits in 2021.
finance.yahoo.com/news/aoc-corporate-price-gouging-is-fueling-inflation-185623394.html
www.nytimes.com/2022/02/01/business/starbucks-prices.html
Skeptics generally argue that our current inflation has a much more straightforward explanation: a lack of supply that’s unable to keep up with sky-high consumer demand. Others say framing the debate around greed treats prices as a moral decision, when in reality they’re determined by the competing pressures of the market. They say companies have an incentive to continue raising prices until consumers are no longer willing to pay them, and, so far, that hasn’t happened.
What’s next
The Department of Justice and FBI announced earlier this month that they had opened a joint investigation into companies that may be using “supply chain disruptions as a cover for collusive schemes.” That inquiry will focus on possible coordination between companies to fix prices and divvy up markets, which are violations of antitrust law.
www.justice.gov/opa/pr/department-justice-announces-initiative-protect-americans-collusive-schemes-amid-supply-chain
Perspectives
Accusers
Prices are spiking far more than they should be
“Like everything else to do with the economy, those rising prices aren't established by some objective, all-seeing, all-knowing ‘free market’ that assesses every aspect of the economy and sets prices accordingly. In fact, a good number of the rising prices we're paying weren't strictly necessary at all.” — Paul Constant, Business Insider www.businessinsider.com/how-measure-inflation-raise-prices-corporate-profits-supply-chain-2022-2
Greed isn’t the underlying cause of inflation, but it’s making it worse
“Critics of major corporate price increases aren’t arguing that the consolidation is the only force driving inflation; rather, that because these conglomerates hold so much of the market share, they are able to raise prices out of step with the actual price increases they’re incurring and passing on to consumers.” — Ellen Ioanes, Vox www.vox.com/2022/2/20/22943257/inflation-corporations-price-hikes-consumer-price-index
Corporate profit margins were already out of balance before inflation struck
“One reason it’s particularly painful in the U.S. is that prices were already high, people’s purchasing power, the real value of their wages was already being eroded by market power before. Then when you add to that a burst of inflation, it’s even more painful.” — Thomas Philippon, economist, to FiveThirtyEight fivethirtyeight.com/features/what-democrats-and-republicans-get-wrong-about-inflation/
Pro-corporate interests are eager to place blame on other causes of inflation
“Instead of letting Wall Street apologists create the impression that inflation is simply the result of supply chain kinks and pent-up consumer demand after two years of pandemic lockdowns, and instead of letting Republicans suggest that federal and state investments in health care and housing are the problem, Democrats should be speaking like Warren.” — John Nichols, The Nation www.thenation.com/article/politics/inflation-price-gouging/
Corporations are making enough to absorb extra costs without passing them to consumers
“With corporate profits at near record levels, they could easily absorb the cost increases. They’re raising prices because they can — and they can because they don’t face meaningful competition.” — Robert Reich, former secretary of labor, Guardian www.theguardian.com/commentisfree/2022/feb/19/white-house-biden-inflation-corporate-power
The core of the problem is America’s inequitable economic system
“There’s something fundamentally wrong about an economic system that rewards corporate greed and ignores the needs of poor and middle-class families. A growing middle class is essential to a stable democracy. Corporate greed that trumps public need is an open invitation to continued conflict and chaos.” — Brad Bonnon, The Hill thehill.com/opinion/finance/594886-corporate-greed-trumps-public-need
Greed is responsible for the broken supply chain that’s the root cause of inflation
“We spent a half-century allowing business executives and financiers to take control of our supply chains, enabled by leaders in both parties. They all hailed the transformation, cheering the advances of globalization, the efficient network that would free us from want. Motivated by greed and dismissive of the public interest, they didn’t mention that their invention was supremely ill-equipped to handle inevitable supply bottlenecks.” — David Dayen and Rakeen Mabud, American Prospect
prospect.org/economy/how-we-broke-the-supply-chain-intro/
Defenders
There’s nothing illegal, or even immoral, about raising prices to meet high demand
“Let’s clear the air: Making a healthy profit is not the same as price gouging or even unfairly profiting off the pandemic. Nor does simply raising prices constitute price gouging.” — Megan Leonhardt, Fortune fortune.com/2022/02/19/inflation-profits-prices-companies-pandemic/
Inflation is too complex to place outsize blame on any one factor
“It's natural to want a clear story to tell about inflation, with an obvious villain. But prices are rising for all kinds of reasons — yes, fiscal stimulus but also busted supply chains, increased demand, changing consumer preferences. It's not a simple story.” — Emily Peck, Axios www.axios.com/wanted-inflation-scapegoat-79bd4280-d757-4bf1-a27f-ccce1e8f8a1d.html
Consumers, not companies, are the ones that are really driving up prices
“They’re charging higher prices, and booking higher profits, because that’s what happens when demand shoots up and supply is relatively constrained. As is the case today.” — Catherine Rampell, Washington Post www.washingtonpost.com/opinions/2022/01/10/biden-inflation-rhetoric-corporate-greed-fed-nominees/
Higher prices are needed to keep the supply chain running
“The alternative to rising prices in the current economic environment probably isn't a better consumer experience. It would be more empty shelves and longer delays. Companies that are finding ways to navigate the current weirdness and keep supplies flowing deserve praise, not the threat of an FBI investigation.” — Eric Boehm, Reason reason.com/2022/02/17/doj-fbi-will-police-companies-for-illicit-profits/
Inflation is a result of economic pressures, not moral decisions
“The public tends to think of inflation as an indicator of a cycle of greed and inhumanity, as a conspiracy to rob them of their buying power. In reality, the cause is more technical, like an increase in the money supply or disruptions in the supply chain.” — Robert J. Shiller, New York Times www.nytimes.com/2022/02/08/opinion/dont-blame-greed-for-inflation.html
Democrats are desperate for someone to blame for their failure to control inflation
“This story is about the challenge for President Joe Biden and fellow Democrats in discussing inflation without mentioning its true causes. The politicians running Washington want consumers to believe that behind every price increase is a greedy capitalist.” — James Freeman, Wall Street Journal www.wsj.com/articles/the-biden-era-of-greed-11637965598
Finger-pointing makes it harder to actually fix inflation
“Focusing on the convenient political target, greedy companies, takes attention away from what really caused inflation and, thus, what can curb it.” — Tom Campbell, Orange County Register www.ocregister.com/2022/01/31/the-truth-about-inflation-is-more-nuanced-than-biden-or-his-critics-suggest/
Is there a topic you’d like to see covered in “The 360”? Send your suggestions to the360@yahoonews.com.
Photo illustration: Yahoo News; photos: Getty Images