INFLATION, another name for corporate greed protected by democratic and republican politicians who are bought and paid for by the military-industrial complex, the bank-financial cabal, the authoritarian oligarchial hierarchy whose goal is increasing their wealth at the expense of the 99%. The gop/greed over people is operating a propaganda campaign that keeps many of the American people whining for the president to do something but they have no idea what that something should be and at the same time do not call on their senators and representative to address the issue. The billionaire tax needs to be pasted by Congress, that would at least provide funding for the American Social Contract and the social safety net programs that will provide the assistance needed by so many to survive. The below from the PBS NewsHour......
Why corporations are reaping record profits with inflation on the rise 12APR22
Despite rising inflation, major U.S. corporations are reporting record profits, as companies pass rising supply-chain costs onto consumers. Economics correspondent Paul Solman explores whether concentrated market power is contributing to inflation.
Read the Full Transcript
Judy Woodruff:
Despite rising inflation, major U.S. corporations are reporting record profits, as companies pass rising supply chain costs onto consumers.
Economics correspondent Paul Solman explores whether concentrated market power is contributing to inflation.
Robert Reich, Former U.S. Labor Secretary:
Inflation, inflation, everybody's talking about it.
Paul Solman:
Longtime liberal activist Robert Reich:
Robert Reich:
Corporations are raising prices, even as they rake in record profits.
Sen. Elizabeth Warren (D-MA):
Prices at the pump have gone up. Why? Well, let me give you a hint.
Paul Solman:
Senator Elizabeth Warren.
Sen. Elizabeth Warren:
This isn't about inflation. This is about price gouging.
Paul Solman:
This is a charge that pops up in lots of places, even on my Twitter feed.
So, do the facts justify the outrage? Well, you have heard the standard causes of COVID inflation, government stimulus money, a tight labor market driving up wages, clogged supply chains, imports anchored offshore, and now, to top it off, Russia's invasion of Ukraine goosing oil, gas and wheat prices.
But if all this explains an inflation rate that's just reached 10 percent for businesses, the Producer Price Index, how come profits have risen even more?
Dion Rabouin>, The Wall Street Journal
Paul Solman:
Wall Street reporter Dion Rabouin.
Dion Rabouin:
Nearly 100 of the biggest U.S. publicly traded companies booked 2021 profit margins that were at least 50 percent higher than their 2019 levels.
Paul Solman:
And 2019 was pre-pandemic, the economy solid, inflation, low. So, why the profit hike?
Lindsay Owens, Groundwork Collaborative:
The CEO of Kroger recently said:
Rodney McMullen, CEO, Kroger:
A little bit of inflation is always good in our business.
Paul Solman:
Lindsay Owens runs a progressive economic think tank that scours the earnings calls corporations hold for stock analysts and investors, like this one from Constellation Brands, which sells beer, wine and spirits.
Garth Hankinson, CFO, Constellation Brands:
We're going to look at this on a market-by-market basis, brand-by-brand basis, and we will take as much pricing as we think the consumer can absorb.
Lindsay Owens:
One of my favorite examples is Tyson Foods.
Paul Solman:
Purveyor of one out of every five pounds of beef, chicken and pork sold in the U.s. here's Tyson's chief financial officer on their latest quarterly results.
Stewart Glendinning, CFO, Tyson Foods:
Our pricing actions led to approximately $2.1 billion in sales and price/mix benefits during the quarter, which offset the higher cost of goods sold of $1.6 billion.
Paul Solman:
In other words, says Owens:
Lindsay Owens:
Our pricing is taking into account the cost of raw materials and the cost of labor, but more than offsetting it. And that more than offsetting it is that additional profit that they're able to bring in.
Paul Solman:
But profits sank when COVID hit, say companies like Tyson. This is just making up for lost time, nothing but an extreme short-term business cycle.
Noah Smith, Economist:
Capitalism requires greed to run.
Paul Solman:
Economist Noah Smith.
Noah Smith:
Corporations are always greedy. Their greed dial is always set to absolute maximum. And the idea that ameliorating greed would have any effect on inflation is wrong. And I made fun of it by making the following chart.
Paul Solman:
Smith, a liberal, mocks the idea that newfound greed explains the inflation surge with a tongue-in-cheek greed index chart.
Noah Smith:
And I labeled the rises in inflation as rising greed and the drops in inflation as falling greed.
Paul Solman:
Which would imply rising corporate generosity.
Noah Smith:
The reason this is a joke is because the big drop in inflation in the '80s would have to be caused by surges in corporate altruism, the altruism of Gordon Gekko and the '80s people.
Michael Douglas, Actor
Paul Solman:
Yes, that Gordon Gekko.
Michael Douglas:
Greed works.
Paul Solman:
So, back to the original question: If corporate America is no greedier than ever, how come profits have soared?
Lindsay Owens:
What we're seeing in this moment is really when that profit maximization and opportunity collides. And the opportunity is the cover of inflation.
Paul Solman:
Aha, the opportunity caused by the pandemic. And when companies like Tyson blame higher costs, as their CEO has?
Donnie King, President and CEO, Tyson Foods: Labor costs have gone up 20 percent, cattle costs are up 22 percent, and freight is up 32 percent. We're not asking customers or the consumer ultimately to pay for our inefficiencies. We're asking them to pay for inflation.
Dion Rabouin:
Woe is me. We have no choice but to raise our prices. Our labor costs are going up, our inputs, our inputs.
But, in reality, companies aren't being forced to raise prices because of inflation. They're raising prices because they can.
Paul Solman:
And why can they now, with so little resistance, I asked Rabouin.
Dion Rabouin:
Inflation sort of disguises these price increases. When prices for everything around you are rising, it's much easier for companies to raise their prices and not experience that consumer blowback.
Paul Solman:
The point is, when consumers come to expect inflation, the process can begin to feed on itself.
Lindsay Owens:
Companies know that consumers expect higher prices right now. And they're really seeing how far they can push that.
Paul Solman:
And, says Robert Reich, Wall Street is egging them on, saying:
Robert Reich:
Look, this is a great time to raise your profit margins. And, of course, those Wall Streeters are saying the same thing to everybody else in the industry.
Paul Solman:
But in a competitive market economy, won't newcomers emerge offering lower prices? That's a lot less likely these days, says Rabouin and Reich.
Dion Rabouin:
Seventy-five percent of all American industries have become more concentrated in the last two decades.
Robert Reich:
Most are now dominated by a handful of corporations that coordinate prices and production. This is true of banks, broadband pharmaceutical companies, airlines, meat-packers.
President Joe Biden:
You got four basic meat-packing facilities. And you pay a hell of a lot more because there's only four.
Paul Solman:
Now, it's not literally just 4, but four do dominate the market. And its not just meat.
President Joe Biden:
You see what's happening with ocean carriers. During the pandemic, about half-a-dozen foreign-owned companies raised prices by as much as 1000 percent and made record profits.
Paul Solman:
The traditional check on consolidation, of course, is antitrust enforcement. Reich worked at the Federal Trade Commission in the 1970s.
Robert Reich:
Antitrust used to be a real thing. But since the early 1980s, antitrust has taken a backseat. In fact, some would say it's been thrown out of the car altogether. And big companies now routinely have the power to raise prices.
Customers will note that there is almost an exact price matching among all major so-called competitors, because they're not really competing.
Paul Solman:
So, what is to be done?
President Joe Biden:
Tonight, I'm announcing a crackdown on those companies overcharging American businesses and consumers.
(CHEERING AND APPLAUSE)
Paul Solman:
A crackdown on the shipping industry by regulators.
Brian Deese, Director, National Economic Council:
If they identify that there is market manipulation or price gouging going on.
Paul Solman:
The president's national economic adviser, Brian Deese.
Brian Deese:
And the agencies have now committed to partnering where the Department of Justice has significantly more enforcement resources and investigatory resources.
Paul Solman:
And the administration says it's working to lessen concentration in the food sector too.
Brian Deese:
You need scale to be competitive, and it takes capital to get to scale. So the USDA is actually right now working with smaller processors in rural areas across the country to try to give them grants, give them low-cost capital, so that they can scale, they can get into the game more quickly and easily.
Paul Solman:
As the meat industry points out, though, it's been concentrated for decades, decades of low inflation, even in meat.
In the end, this is any administration's challenge, to effect real change amidst economic forces bigger than all of us. Meanwhile, with company costs rising at about 10 percent, corporate profits are rising at 12.4 percent. That extra 2.5 percent or so seems to be at least part of the inflation we're all paying for right now.
For the "PBS NewsHour," Paul Solman.
Judy Woodruff:
Despite rising inflation, major U.S. corporations are reporting record profits, as companies pass rising supply chain costs onto consumers.
Economics correspondent Paul Solman explores whether concentrated market power is contributing to inflation.
Robert Reich, Former U.S. Labor Secretary:
Inflation, inflation, everybody's talking about it.
Paul Solman:
Longtime liberal activist Robert Reich:
Robert Reich:
Corporations are raising prices, even as they rake in record profits.
Sen. Elizabeth Warren (D-MA):
Prices at the pump have gone up. Why? Well, let me give you a hint.
Paul Solman:
Senator Elizabeth Warren.
Sen. Elizabeth Warren:
This isn't about inflation. This is about price gouging.
Paul Solman:
This is a charge that pops up in lots of places, even on my Twitter feed.
So, do the facts justify the outrage? Well, you have heard the standard causes of COVID inflation, government stimulus money, a tight labor market driving up wages, clogged supply chains, imports anchored offshore, and now, to top it off, Russia's invasion of Ukraine goosing oil, gas and wheat prices.
But if all this explains an inflation rate that's just reached 10 percent for businesses, the Producer Price Index, how come profits have risen even more?
Dion Rabouin>, The Wall Street Journal
Paul Solman:
Wall Street reporter Dion Rabouin.
Dion Rabouin:
Nearly 100 of the biggest U.S. publicly traded companies booked 2021 profit margins that were at least 50 percent higher than their 2019 levels.
Paul Solman:
And 2019 was pre-pandemic, the economy solid, inflation, low. So, why the profit hike?
Lindsay Owens, Groundwork Collaborative:
The CEO of Kroger recently said:
Rodney McMullen, CEO, Kroger:
A little bit of inflation is always good in our business.
Paul Solman:
Lindsay Owens runs a progressive economic think tank that scours the earnings calls corporations hold for stock analysts and investors, like this one from Constellation Brands, which sells beer, wine and spirits.
Garth Hankinson, CFO, Constellation Brands:
We're going to look at this on a market-by-market basis, brand-by-brand basis, and we will take as much pricing as we think the consumer can absorb.
Lindsay Owens:
One of my favorite examples is Tyson Foods.
Paul Solman:
Purveyor of one out of every five pounds of beef, chicken and pork sold in the U.s. here's Tyson's chief financial officer on their latest quarterly results.
Stewart Glendinning, CFO, Tyson Foods:
Our pricing actions led to approximately $2.1 billion in sales and price/mix benefits during the quarter, which offset the higher cost of goods sold of $1.6 billion.
Paul Solman:
In other words, says Owens:
Lindsay Owens:
Our pricing is taking into account the cost of raw materials and the cost of labor, but more than offsetting it. And that more than offsetting it is that additional profit that they're able to bring in.
Paul Solman:
But profits sank when COVID hit, say companies like Tyson. This is just making up for lost time, nothing but an extreme short-term business cycle.
Noah Smith, Economist:
Capitalism requires greed to run.
Paul Solman:
Economist Noah Smith.
Noah Smith:
Corporations are always greedy. Their greed dial is always set to absolute maximum. And the idea that ameliorating greed would have any effect on inflation is wrong. And I made fun of it by making the following chart.
Paul Solman:
Smith, a liberal, mocks the idea that newfound greed explains the inflation surge with a tongue-in-cheek greed index chart.
Noah Smith:
And I labeled the rises in inflation as rising greed and the drops in inflation as falling greed.
Paul Solman:
Which would imply rising corporate generosity.
Noah Smith:
The reason this is a joke is because the big drop in inflation in the '80s would have to be caused by surges in corporate altruism, the altruism of Gordon Gekko and the '80s people.
Michael Douglas, Actor
Paul Solman:
Yes, that Gordon Gekko.
Michael Douglas:
Greed works.
Paul Solman:
So, back to the original question: If corporate America is no greedier than ever, how come profits have soared?
Lindsay Owens:
What we're seeing in this moment is really when that profit maximization and opportunity collides. And the opportunity is the cover of inflation.
Paul Solman:
Aha, the opportunity caused by the pandemic. And when companies like Tyson blame higher costs, as their CEO has?
Donnie King, President and CEO, Tyson Foods: Labor costs have gone up 20 percent, cattle costs are up 22 percent, and freight is up 32 percent. We're not asking customers or the consumer ultimately to pay for our inefficiencies. We're asking them to pay for inflation.
Dion Rabouin:
Woe is me. We have no choice but to raise our prices. Our labor costs are going up, our inputs, our inputs.
But, in reality, companies aren't being forced to raise prices because of inflation. They're raising prices because they can.
Paul Solman:
And why can they now, with so little resistance, I asked Rabouin.
Dion Rabouin:
Inflation sort of disguises these price increases. When prices for everything around you are rising, it's much easier for companies to raise their prices and not experience that consumer blowback.
Paul Solman:
The point is, when consumers come to expect inflation, the process can begin to feed on itself.
Lindsay Owens:
Companies know that consumers expect higher prices right now. And they're really seeing how far they can push that.
Paul Solman:
And, says Robert Reich, Wall Street is egging them on, saying:
Robert Reich:
Look, this is a great time to raise your profit margins. And, of course, those Wall Streeters are saying the same thing to everybody else in the industry.
Paul Solman:
But in a competitive market economy, won't newcomers emerge offering lower prices? That's a lot less likely these days, says Rabouin and Reich.
Dion Rabouin:
Seventy-five percent of all American industries have become more concentrated in the last two decades.
Robert Reich:
Most are now dominated by a handful of corporations that coordinate prices and production. This is true of banks, broadband pharmaceutical companies, airlines, meat-packers.
President Joe Biden:
You got four basic meat-packing facilities. And you pay a hell of a lot more because there's only four.
Paul Solman:
Now, it's not literally just 4, but four do dominate the market. And its not just meat.
President Joe Biden:
You see what's happening with ocean carriers. During the pandemic, about half-a-dozen foreign-owned companies raised prices by as much as 1000 percent and made record profits.
Paul Solman:
The traditional check on consolidation, of course, is antitrust enforcement. Reich worked at the Federal Trade Commission in the 1970s.
Robert Reich:
Antitrust used to be a real thing. But since the early 1980s, antitrust has taken a backseat. In fact, some would say it's been thrown out of the car altogether. And big companies now routinely have the power to raise prices.
Customers will note that there is almost an exact price matching among all major so-called competitors, because they're not really competing.
Paul Solman:
So, what is to be done?
President Joe Biden:
Tonight, I'm announcing a crackdown on those companies overcharging American businesses and consumers.
(CHEERING AND APPLAUSE)
Paul Solman:
A crackdown on the shipping industry by regulators.
Brian Deese, Director, National Economic Council:
If they identify that there is market manipulation or price gouging going on.
Paul Solman:
The president's national economic adviser, Brian Deese.
Brian Deese:
And the agencies have now committed to partnering where the Department of Justice has significantly more enforcement resources and investigatory resources.
Paul Solman:
And the administration says it's working to lessen concentration in the food sector too.
Brian Deese:
You need scale to be competitive, and it takes capital to get to scale. So the USDA is actually right now working with smaller processors in rural areas across the country to try to give them grants, give them low-cost capital, so that they can scale, they can get into the game more quickly and easily.
Paul Solman:
As the meat industry points out, though, it's been concentrated for decades, decades of low inflation, even in meat.
In the end, this is any administration's challenge, to effect real change amidst economic forces bigger than all of us. Meanwhile, with company costs rising at about 10 percent, corporate profits are rising at 12.4 percent. That extra 2.5 percent or so seems to be at least part of the inflation we're all paying for right now.
For the "PBS NewsHour," Paul Solman.
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