99 online
 
Most Popular Choices
Share on Facebook 60 Printer Friendly Page More Sharing
OpEdNews Op Eds    H2'ed 11/12/21

We need to talk about the real reason behind US inflation


Robert Reich
Follow Me on Twitter     Message Robert Reich
Become a Fan
  (130 fans)

From Guaardian

Corporate giants are raising prices even as they rake in record profits. How can this be? Because of their unchecked power.

Wall Street
Wall Street
(Image by Alex E. Proimos from flickr)
  Details   DMCA

On Wednesday, the US labor department announced that the consumer price index -- a basket of products ranging from gasoline and health care to groceries and rents -- rose 6.2% from a year ago. That's the nation's highest annual inflation rate since November 19.

Republicans are hammering Biden and Democratic lawmakers over inflation -- and attacking his economic stimulus plans as wrongheaded. "This will be a winter of high gas prices, shortages and inflation because far left lunatics control our government," Marco Rubio, the Republican senator from Florida posted on Twitter Thursday. A major reason for price rises is supply bottlenecks, as Jerome Powell, chair of the Federal Reserve, has pointed out. He believes they're temporary, and he's probably right..

If energy markets were competitive, producers would have quickly ramped up production to create more supply, once it became clear that demand was growing. But they didn't. Why not? Industry experts say oil and gas companies saw bigger money in letting prices run higher before producing more supply. They can get away with this because big oil and gas producers don't operate in a competitive market. They can manipulate supply by coordinating among themselves.

In sum, inflation isn't driving most of these price increases. Corporate power is driving them. Since the 1980s, when the US government all but abandoned antitrust enforcement, two-thirds of all American industries have become more concentrated. Monsanto now sets the prices for most of the nation's seed corn.

The government green-lighted Wall Street's consolidation into five giant banks, of which JP Morgan is the largest. Airlines have merged from 12 in 1980 to four today, which now control 80% of domestic seating capacity. Boeing and McDonnell Douglas have merged, leaving the US with just one large producer of civilian aircraft: Boeing.

Three giant cable companies dominate broadband: Comcast, AT&T and Verizon. A handful of drug companies control the pharmaceutical industry: Pfizer, Eli Lilly, Johnson & Johnson, Bristol-Myers Squibb and Merck.

All this spells corporate power to raise prices. So what's the appropriate response to the latest round of inflation? The Federal Reserve has signaled it won't raise interest rates for the time being, believing that the inflation is being driven by temporary supply bottlenecks. Meanwhile, Biden administration officials have been consulting with the oil industry in an effort to stem rising gas prices, trying to make it simpler to issue commercial driver's licenses (to help reduce the shortage of truck drivers), and seeking to unclog overcrowded container ports.

But none of this responds to the deeper structural issue -- of which price inflation is a symptom: the increasing consolidation of the economy in a relative handful of big corporations with enough power to raise prices and increase profits. This structural problem is amenable to only one thing: the aggressive use of antitrust law.

Rate It | View Ratings

Robert Reich Social Media Pages: Facebook page url on login Profile not filled in       Twitter page url on login Profile not filled in       Linkedin page url on login Profile not filled in       Instagram page url on login Profile not filled in

Robert Reich, former U.S. Secretary of Labor and Professor of Public Policy at the University of California at Berkeley, has a new film, "Inequality for All," to be released September 27. He blogs at www.robertreich.org.

Go To Commenting
The views expressed herein are the sole responsibility of the author and do not necessarily reflect those of this website or its editors.
Writers Guidelines

 
Contact AuthorContact Author Contact EditorContact Editor Author PageView Authors' Articles
Support OpEdNews

OpEdNews depends upon can't survive without your help.

If you value this article and the work of OpEdNews, please either Donate or Purchase a premium membership.

STAY IN THE KNOW
If you've enjoyed this, sign up for our daily or weekly newsletter to get lots of great progressive content.
Daily Weekly     OpEd News Newsletter
Name
Email
   (Opens new browser window)
 

Most Popular Articles by this Author:     (View All Most Popular Articles by this Author)

Trump Cornered

The Republican's Big Lies About Jobs (And Why Obama Must Repudiate Them)

Paul Ryan Still Doesn't Get It

What Mitt Romney Really Represents

What to Do About Disloyal Corporations

The Gas Wars

To View Comments or Join the Conversation:

Tell A Friend