The Wall Street Journal’s Dion Rabouin recently challenged the corporate narrative that inflation is up because businesses have no choice. “Our inputs! Our inputs” they cry.
It is a lie. Companies love inflation. He knows from listening to company earnings calls. “We view a little bit of inflation as always good in our business,” says Kroger CEO Rodney McMullen. Companies are exploiting the growing economy to suck more cash from it, and from consumers with more money in their pockets because of government Covid relief spending and higher wages. Sure, some costs are rising. Their prices are rising faster. Companies are raising prices because they can.
Thanks to the neutering of antitrust enforcement since the Reagan administration, massive corporate concentration drives down competition and makes raising prices largely consequence free. (There’s that theme again.) Rabouin reports, “75% of all American industries have become more concentrated” over the last two decades. During the coronavirus pandemic, Federal Reserve backstopping of the markets and corporate debt allowed companies to borrow heavily and further consolidate, reducing competition even more.
With no place else to go, consumers keep paying higher prices big businesses claim they just have to raise. You know, because.
Democrats should stop being defensive about inflation that’s worldwide and start pointing fingers at its real source. If they don’t define the real problem for voters, Republicans will define them.
“Nearly 100 of the biggest, U.S. publicly traded companies booked 2021 profit margins that were at least 50 percent higher” than 2019 profits, says Rabouin. “Companies are raising prices and, as a result, inflation’s probably going to keep rising.” No matter why they say it is in public. Truth is not a corporate value.
“Respect for the truth and a concern for the truth are among the foundations for civilization. I was for a long time disturbed by the lack of respect for the truth that I observed… bullshit is one of the deformities of these values.” — Harry G. Frankfurt, Princeton University professor of philosophy emeritus. His original Reagan-era essay, “On Bullshit,” is here.
(h/t John Neffinger)
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