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top of the heap to third world status in one generation

Gry

Gry

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What’s Really Driving Inflation? Corporate Power


Wednesday, November 10, 2021
The biggest culprit for rising prices that’s not being talked about is the increasing economic concentration of the American economy in the hands of a relative few giant big corporations with the power to raise prices.
If markets were competitive, companies would seek to keep their prices down in order to maintain customer loyalty and demand. When the prices of their supplies rose, they’d cut their profits before they raised prices to their customers, for fear that otherwise a competitor would grab those customers away.
But strange enough, this isn’t happening. In fact, even in the face of supply constraints, corporations are raking in record profits. More than 80 percent of big (S&P 500) companies that have reported results this season have topped analysts’ earnings forecasts, according to Refinitiv.
Obviously, supply constraints have not eroded these profits. Corporations are simply passing the added costs on to their customers. Many are raising their prices even further, and pocketing even more.
How can this be? For a simple and obvious reason: Most don’t have to worry about competitors grabbing their customers away. They have so much market power they can relax and continue to rake in big money.
The underlying structural problem isn’t that government is over-stimulating the economy. It’s that big corporations are under competitive.
Corporations are using the excuse of inflation to raise prices and make fatter profits. The result is a transfer of wealth from consumers to corporate executives and major investors.
This has nothing to do with inflation, folks. It has everything to do with the concentration of market power in a relatively few hands.
It’s called “oligopoly,” where two or three companies roughly coordinate their prices and output.
Judd Legum provides some good examples in his newsletter. He points to two firms that are giants in household staples: Procter & Gamble and Kimberly Clark. In April, Procter & Gamble announced it would start charging more for everything from diapers to toilet paper, citing “rising costs for raw materials, such as resin and pulp, and higher expenses to transport goods.”
Baloney. P&G is raking in huge profits. In the quarter ending September 30, after some of its price increases went into effect, it reported a whopping 24.7% profit margin. Oh, and it spent $3 billion in the quarter buying its own stock.
How can this be? Because P&G faces very little competition. According to a report released this month from the Roosevelt Institute, “The lion’s share of the market for diapers,” for example, “is controlled by just two companies (P&G and Kimberly-Clark), limiting competition for cheaper options.”
So it wasn’t exactly a coincidence that Kimberly-Clark announced similar price increases at the same time as P&G. Both corporations are doing wonderfully well. But American consumers are paying more.
Or consider another major consumer product oligopoly: PepsiCo (the parent company of Frito-Lay, Gatorade, Quaker, Tropicana, and other brands), and Coca Cola. In April, PepsiCo announced it was increasing prices, blaming “higher costs for some ingredients, freight and labor."
Rubbish. The company recorded $3 billion in operating profits and increased its projections for the rest of the year, and expects to send $5.8 billion in dividends to shareholders in 2021.
If PepsiCo faced tough competition it could never have gotten away with this. But it doesn’t. In fact, it appears to have colluded with its chief competitor, Coca-Cola – which, oddly, announced price increases at about the same time as PepsiCo, and has increased its profit margins to 28.9%.
And on it goes around the entire consumer sector of the American economy.
You can see a similar pattern in energy prices. Once it became clear that demand was growing, energy producers could have quickly ramped up production to create more supply. But they didn’t.
Why not? Industry experts say oil and gas companies (and their CEOs and major investors) 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 face much competition. They’re powerful oligopolies.
Again, inflation isn’t driving most of these price increases. Corporate power is driving them.

Since the 1980s, when the federal 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 JPMorgan is the largest.
It okayed airline mergers, bringing the total number of American carriers down from twelve in 1980 to four today, which now control 80 percent of domestic seating capacity.
It let Boeing and McDonnell Douglas merge, leaving America with just one major producer of civilian aircraft, Boeing.
Three giant cable companies dominate broadband [Comcast, AT&T, Verizon].
A handful of drug companies control the pharmaceutical industry [Pfizer, Eli Lilly, Johnson & Johnson, Bristol-Myers Squibb, Merck].
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 over-crowded container ports.
But none of this responds to the deeper structural issue – of which price inflation is 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.

Robert Reich
https://robertreich.org/post/667491205931745280

 
buzzmobile

buzzmobile

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Gry

Gry

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Can imagine a time in the not so distant future, when older printed material will be held in much greater
esteem than digital content.
 
dramamine

dramamine

Well-known member
Gry said:
Can imagine a time in the not so distant future, when older printed material will be held in much greater
esteem than digital content.
Click to expand...

Probably applies to tangible things in general too. Records are popular again. Things that can't be disappeared or changed with a keystroke. The actual world. Good post, Gry.
 
armedoldhippy

armedoldhippy

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Gry said:
Digital Dunkirk: What the Afghan Evacuation Should Teach Us about the Future of Volunteer Support to the US Military
https://mwi.usma.edu/digital-dunkir...ture-of-volunteer-support-to-the-us-military/
Click to expand...

every attempt we make at "nation building" always turns to shit. this country has overdosed on the idea that "everyone wants to be like us, we are SO wonderful!" we go in, toss their dictator or whatever, then proceed to fuck everything up in a biblically epic fashion. then, we (mostly) abandon those folks that assisted us the most; interpreters etc. with our record, exactly WHY anyone would actively assist us in ANYTHING except packing our shit up & getting the hell out is a mystery... plus, we screw those in our military on the ground that developed those relationships to start with, leaving them turning in the breeze when orders/priorities change. with our history, we should probably stay home & work on OUR nation...
 
Hammerhead

Hammerhead

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armedoldhippy said:
every attempt we make at "nation building" always turns to shit. this country has overdosed on the idea that "everyone wants to be like us, we are SO wonderful!" we go in, toss their dictator or whatever, then proceed to fuck everything up in a biblically epic fashion. then, we (mostly) abandon those folks that assisted us the most; interpreters etc. with our record, exactly WHY anyone would actively assist us in ANYTHING except packing our shit up & getting the hell out is a mystery... plus, we screw those in our military on the ground that developed those relationships to start with, leaving them turning in the breeze when orders/priorities change. with our history, we should probably stay home & work on OUR nation...
Click to expand...

It's simple Money and power. I do agree.
 
Gry

Gry

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armedoldhippy said:
every attempt we make at "nation building" always turns to shit. this country has overdosed on the idea that "everyone wants to be like us, we are SO wonderful!" we go in, toss their dictator or whatever, then proceed to fuck everything up in a biblically epic fashion. then, we (mostly) abandon those folks that assisted us the most; interpreters etc. with our record, exactly WHY anyone would actively assist us in ANYTHING except packing our shit up & getting the hell out is a mystery... plus, we screw those in our military on the ground that developed those relationships to start with, leaving them turning in the breeze when orders/priorities change. with our history, we should probably stay home & work on OUR nation...
Click to expand...

Honestly think it has been quite a while since we have actually intended to rebuild any place.
Hell we do not even maintain this place worth a damned any longer, as demonstrated by things like the Flint Michigan water problem...
We did do a pretty decent job of rebuilding, when that actually is our intent - as the Marshall plan does still demonstrate.
Have always thought it really lousy that we left Iraq a fucking heavy metal contaminated wasteland that will result in generations of birth defects.
I do firmly believe there is a moral cost that we all do pay for such actions, and sooner or later everything comes home.
I would also sadly maintain that we install more strong man dictators than we have knocked over. We have more interest in cheap resources
than furthering democracy. Sadly I have to say that small d democracy seems to be more like bread and circus that we feed ourselves to feel good more so than any reality.
The powers that be have found something they vastly prefer to democracy- profit, and frankly democracy inhibits profit for it's own sake. Which is why it is now privately cursed in the land where it was once revered.
 
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