Re: Inflation
by Rich Lowry
https://www.politico.com/news/magazine/ ... urd-525086
(Politico) President Joe Biden has the misfortune to be president at the moment when corporate America has decided to get together and gouge American consumers.
That, at least, is the story the White House and its allies, most prominently Sen. Elizabeth Warren (D-Mass.), want to tell.
caltrek's comment: Yes, because the problem is systemic in nature.
No one on the left seems to deny that supply chain disruptions are playing a role in inflation, but the focus on corporate greed is an absurdly reductive depiction of the U.S. economy — as if a broad-based, multicausal economic phenomenon is being mainly or at least significantly driven by a handful of corporate malefactors wielding nearly unchecked power over the consumer price index. It is a fairy tale transparently intended to shift the political blame for an economic discontent that is hobbling Biden’s presidency.
caltrek's comment: No...it is a realization that the problem is systemic in nature. Incidentally, that systemic problem looks remarkably like " handful of corporate malefactors wielding nearly unchecked power.
Did the American economy, after 30 years of notably low inflation, suddenly become more concentrated earlier this year, such that companies could arbitrarily jack up prices?
caltrek's comment: The author answers his own question:
And why was it that this economic power made itself felt just as supply chain disruptions took hold and the Democrats’ massive Covid relief bill further stoked demand in an already growing economy?
caltrek's comment: i.e. Covid. Yes, the economy was growing....until Covid caused it to shrink. How soon we forget.
If greedy corporations are to blame, they are at work across the board.
caltrek's comment: Yes, because the problem is systemic
It is true that most big companies have increased their profit margins.
caltrek's comment: Thank you.
But demand is higher than it was pre-pandemic in many sectors of the economy, providing a strong foundation for profitability, and a standard feature of an inflationary environment is companies seeing how much they can raise prices without hitting a wall of consumer resistance.
caltrek's comment: A systemic problem. One that is especially acute within the monopoly sector of the economy.
This is one reason it’s best not to have an inflationary environment in the first place.
caltrek's comment: Which is why there is today a heavy reliance on stabilizer mechanisms to keep inflation in check.
Regardless, they are operating in a complex, highly competitive environment in which misjudging the market can do serious harm. Also, just because a company is highly profitable in the current quarter doesn’t mean it was nearly as profitable a year ago, or will be as profitable a year from now. If a persistent inflation takes hold, the recent price increases and enhanced profits will be eroded away again by still higher wages and increased costs.
caltrek's comments: Oh, the poor little capitalists. My heart bleeds.
As for the meatpackers... What’s happened during the pandemic is that there has been high demand that, combined with labor disruptions at meatpacking plants, has disrupted supply
caltrek's comment: Ok.
All the hokum about the causes of inflation is basically a confession of impotence. If the Biden administration had a good story to tell about how it’s fixing inflation, it wouldn’t need to create cartoon villains.
caltrek's comment: No, it would need to help us understand that it is a systemic problem. So, greedy capitalists are simply playing the role that has been assigned to them. An assignment which they seem to wildly embrace.
It would be better served by focusing on a whole host of barnacles on the U.S. supply chain — from union rules and environmental laws that have hampered U.S. ports and other infrastructure; to the Jones Act, which increases the costs of shipping; to the foolish tariffs on truck chassis at a time when they are in short supply.
caltrek's comment: The problem is systemic in nature. These are just band aids, many of which will endanger worker health, remove protection for workers earnings, and/or damage the environment. If truck chassis are so strategically critical, then perhaps we should provide incentives for their domestic production. Better late than never, although it is particularly painful during a time of inflation.
Of course, all these measures would be politically painful to address, and none would be a magic bullet.
Yes, and addressing the systemic problems of capitalism as Elizabeth Warren and others suggests would be "politically painful." Monopoly capitalists would see to that.
It is easier to pretend that, sometime earlier this year, corporate America suddenly decided out of nowhere to get greedy.
caltrek's comment: I, for one, would not argue that corporate America has "suddenly decided" to get greedy. It has always been greedy. Again, a role assigned to it by the current system.
Don't mourn, organize.
-Joe Hill