Podcast Review: Is Inflation Nothing More Than Corporate Greed?
Consumer prices are up over 7.5 percent over last year. Since it’s the highest rate of inflation in 40 years, people are concerned. The rising cost of living is a topic that John Stewart tackles head on.
Stewart and his panel of experts believe that corporate greed is the driving force behind these current inflation levels. While the news and media have hyped the issue, the bottom line is the rising costs are having a negative effect on the way people live.
Read More »Corporate America is Winning Amidst These Price Hikes
While the American people struggle to put food on the table, corporations are making record profits. There’s much talk about controlling inflation and experts see increasing interest rates as a way to tame the rising costs. It’s marketed as the only thing that can be done, but Stewart says there’s one other thing that hasn’t been considered.
Companies don’t have to jack up their prices and cause such issues. The increases supersede the costs manufacturing companies pay to put the products on the shelves. Their greed is shown by their actions as everyone is getting on the price hike train.
Ironically, why is it that inflation usually occurs when they raise people’s wages? When money is pumped into the high end, such as real estate and bonuses, then everyone is okay. Strangely, the minute the Federal Minimum Wage increases, or companies have pressure to pay more, milk and other necessary items suddenly go up.
Milk has reached over $5 a gallon in some parts of the country, whereas a year ago it was an average of $2.50. Many people believe that inflation is just falling out of the sky. The truth is firms set prices, and there’s no reason why milk should double in less than a year, pandemic or not.
Corporate America is inflating things to astronomical levels. Since they have the monopoly on their market, they know people will either buy or do without.
Profits Are Okay, But Increased Profit Margins Are Alarming
What’s very disturbing is that companies aren’t just recording an increase in profits, but they’re showing an increase in profit margins. Sure, demand is up, so they will sell more products, which will increase their revenues.
The story they’re feeding the American people is that they had to charge you more because the products they use to make their items cost more. Generally, people fall for this ruse.
It’s acceptable to pass on the higher costs, but this would not drive their profit margins. The profit margins only increase when they include the extra cost for the items and then tack on a little extra for their pockets.
In a time of crisis, which this country is facing, the people can’t refuse goods based on inflated prices. The companies know that this is occurring, and they have a monopoly on the people, and it’s getting out of hand.
The Many Reasons Why There’s Inflation
Lindsay Owens, an economist, working alongside Elizabeth Warren, joined Stewart to talk about what’s happening behind the scenes. She’s a strong activist against the current inflation trends. She states that there are many reasons why inflation is so high.
1. Demand
Despite everything going on, the American people are still buying. There’s a lot of fear purchasing occurring as people think it’s the end of the world or there’s a famine coming. So, when someone posts a video on a social media platform, they cause a sense of urgency, which only drives the demand.
2. Shift in Spending
Another difference is there’s been a shift in spending. People aren’t spending money on services anymore as they prefer goods. This situation causes supply levels to be unable to meet demand. The pandemic is among the reasons for the increase in prices, but it’s not the only one.
3. Rank Profiteering
This form of profiteering is caused by nothing more than greed. These companies are out to make a profit, and they don’t consider the needs of their consumer. It’s sketchy, and in some cases, it can be illegal, such as after an emergency.
What Can Be Done to Stop the Inflation Rates?
Stewart and Owens both agree the following things can be done to help with price collusion.
1. Use the Law
Currently, 38 states in this country have laws on the books about price gouging in emergencies. This includes acts of God like floods, fires, and earthquakes. However, can the pandemic be included in using the law against such corruption?
2. Increase Tax
Raising the appropriate tax rate, like an excess profits tax, can cut into some of those willfully gained revenues. This would be a legislative fix, and with the current state of the government, Stewart feels there’s little hope in making this work. The government is slow to act, and this creates another problem.
Many companies raising such prices are giant corporations, like Johnson & Johnson and Tyson Chicken. These companies are already locked into rates with their supplies through contractual agreements. These companies won’t directly admit to wrongdoing, but their profit margins speak loud and clear.
The quarterly earnings reports are undeniable, and these are filed with the SEC. These reports are not fabricated for bragging rights. However, that doesn’t mean that these shareholders aren’t boasting, as they see a significant increase in their bottom line.
The Illusion of the Free-Market System
Stewart believes the American people are under the assumption that they live in a free-market capitalist system. However, the news reporters only present one side of the facts and negate what’s truly going on behind the scenes.
Everyone’s crying for the government to step in and help, but not one person has stated that solving the problem might be as simple as not increasing prices. While the news may not report everything, Owens states that you’ll find such things in business reports like Forbes, Business Insider, Yahoo Finance, and other similar outlets.
These companies cover earnings calls as they feel it’s vital information to track the stock market. Investors come to these sources for the truth. They don’t cover it as the news does with doom and gloom, but they cover it with the stance that inflation has been good for business.
The news paints a very different picture to the American people when they act as if this is coming out of thin air and don’t know how to resolve it. Stewart says the answer is relatively easy.
The Great Deception
It’s relatively straightforward what’s going on, so why do these companies deceive the American public? What’s the disconnect, and why aren’t more people seeing what’s happening? Analysts estimate that the average family pays $276 a month in response to the inflation.
These are a combination of expenses from the gas pump to the grocery store and everything in-between. While it doesn’t sound like a lot, it’s an increase of around $69 a week. This is a significant boost for families already struggling to make ends meet.
Recent polls show that Americans aren’t as deceived as one might think. Owens says that people are starting to realize what’s going on across the political spectrum, which includes republicans, democrats, and independents combined.
Could part of this be politically driven? There’s a vested interest in using inflation to wedge President Joe Biden. People also believe the fiscal policies are contributing. Lastly, there’s a lot of reporting about the supply chain and all the issues there.
Why can these companies charge such exorbitant amounts without fearing being cut by competition? For the past 50 years, America has been reshaping the economy. Businesses have used mergers and acquisitions to create mega giants dominating their area of expertise.
The panel of experts joining Stewart believes this is a lot different than what you learn in economics and more like what you see on mafia shows like the Sopranos. Someone needs to scream this from the hilltops because inflation gets out of control as soon as the economy is stimulated on the demand side.
However, stimulating it on the supply side has the opposite effect. Why can’t the government start to alleviate these supply chain issues and manufacturing lags and handle some of these companies who are gouging the public?
Is the Average Worker Becoming the Scapegoat?
Since people are demanding more money for their jobs as the cost-of-living increases, inflation has also risen. Undoubtedly, workers are being held responsible for the rise in costs. Some unions are starting to organize protests against the supply shortages.
It’s only normal for people to worry about a wage-priced spiral. When salaries go up, companies will increase the price of goods and services to cover the wages. Currently, it’s not a wage-priced spiral that’s driving the market, which Owens says is good news.
The bad news is that these increases are purely driven by greed and is a profit-priced spiral. CEOs of the major companies are increasing prices because they can, and they know there’s more room to continue because people don’t have a choice.
Is America back in the trust-busting days like during the Teddy Roosevelt presidency? Stewart believes it’s time for the government to step in and create a market that isn’t so monopolistic. There must be a way to create price competition and less collusion to fix the matters at hand.
The Department of Justice Must Step In
In theory, it took over five decades for this problem to come to a head, but there are other factors. These businesses have become giants, and this has allowed them to capitalize on a crisis, which is criminal. The Department of Justice can step in and prosecute these companies for collusion and tackle these matters criminally.
President Biden and Elizabeth Warren have asked the DOJ to investigate these matters, and hopefully, the public will see some action. For now, the American people need to hold on a bit longer, as there’s no definitive answer in sight and no real way to resolve the issue. Sadly, Stewart and Owens agree that inflation is at the five-alarm fire level.
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