While some politicians and some powerful voices in mainstream media are blaming our current inflation on underpaid workers finally getting some modest pay increases — or vague “supply chain” problems — a very serious cause of inflation is BIG BUSINESS GREED and HIGH PROFITS and OVERPAID TOP EXECUTIVES. This is true especially in oil companies, which are overcharging ordinary people and getting away with it.
Extremely rich people and big businesses are allowed to PAY FAR LESS THAN THEIR FAIR SHARE OF TAXES (in some cases, ZERO taxes) because they fund politicians’ campaigns and corrupt Congress into giving them immorally corrupt tax breaks. But that’s a topic for a different blog post.
HERE ARE SOME RECENT ARTICLES ABOUT INFLATION:
Inflation 101: “What’s causing the current surge in inflation? And what should be done about it? Jim Stanford from the Centre for Future Work shows it’s not higher wages driving higher prices — in fact, wages are lagging far behind prices, and falling in real terms. The real culprit is corporations, who have taken advantage of the disruptions of the pandemic to jack up their prices (and their profits). This inflation is different than the 1970s, and it needs a different solution.” SEE THIS: https://www.youtube.com/watch?v=8DgwM7nruQg
The Economic Policy Institute (www.epi.org) is an expert source of information. They explain economic matters clearly. On June 6, 2022, they DEBUNKED 5 MYTHS ABOUT INFLATION:
The labor market is largely strong right now, but inflation continues to be a pressing economic concern.
The reasons for escalating inflation are hotly debated, but some theories gaining traction have not been grounded in the data. EPI research sets the record straight on the causes of inflation—and how policymakers can best restrain it. Below, we debunk 5 top inflation myths.
- Myth #1: Workers’ wage growth is driving inflation. Nominal wage growth—while faster relative to the recent past—has lagged far behind inflation, meaning that labor costs have been dampening, not amplifying, inflationary pressures all along.
- Myth #2: Corporate profits are not contributing to inflation. In fact, fatter corporate profit margins have driven over half of the increase in prices in the nonfinancial corporate sector between the second quarter of 2020 and the end of 2021. This is not normal. From 1979 to 2019, profits only contributed about 11% to price growth. Ignoring the role of profits makes inflation analyses a lot weaker.
- Myth #3: Federal relief and recovery measures overheated the economy and fed inflation. Evidence from the past 40 years suggests strongly that profit margins should shrink and the share of corporate income going to labor compensation should rise as unemployment falls and the economy heats up. But the exact opposite pattern has happened so far in the recovery—casting much doubt on inflation expectations rooted simply in claims of macroeconomic overheating. In short, the labor market is strong, but it’s not overheating.
- Myth #4: Removing import tariffs would be a major tool to fight inflation. Tariffs were put in place far before early 2021 when inflation began rising, and eliminating tariffs could not significantly restrain it. Further, removing tariffs would not be costless. Tariff removal could result in job losses, plant closures, cancellations of planned investments, and further destabilization of the domestic manufacturing base, which would increase domestic dependence on unstable import supply chains.
- Myth #5: Investments in child and elder care would accelerate inflation. In fact, investments in child and elder care could help restrain inflationary pressures. By subsidizing families’ use of child and elder care and providing direct investments to providers, such investments could boost future labor supply by allowing working-age parents or children who want to look for paid employment to do so while remaining confident their family members are receiving care.
On April 27, 2022, the same organization (Economic Policy Institute, www.epi.org), reported: “Corporate profits have contributed disproportionately to inflation. Read their April 21, 2022, blog post at this link: https://www.epi.org/blog/corporate-profits-have-contributed-disproportionately-to-inflation-how-should-policymakers-respond/?mc_cid=eafb65e302&mc_eid=95250a4bc6
Another credible source reported this in April 2022:
There is no single cause for inflation, which reached an annual rate of 8.5% in March. That’s the fastest increase in prices since 1981. There are continuing problems with supply chains, rising prices for raw materials, and limited supply. There is a tight job market, which increases costs for labor. And, in many sectors, there is pent-up demand from the pandemic.
But there is also corporate profits. Faced with rising prices, corporations had three options:
1. Corporations could absorb some or all of the costs, reducing profits
2. Corporations could pass on the increased costs to consumers, keep profits relatively flat
3. Corporations could raise prices beyond their increased costs, increasing profits
Most corporations have enthusiastically selected option 3. In 2021, “[c]orporate pretax profits surged 25% year over year to $2.81 trillion.” This was “the largest annual increase since 1976.” After-tax profits increased even more dramatically, rising “37% year over year, more than any other time since the Fed began tracking profits in 1948.” Prior to 2021, corporate profits have reached 13% in a quarter once in 70 years. In 2021, corporate profits exceeded 13% in every quarter.
Robert Reich, a previous Secretary of the Department of Labor, is a great progressive on economic issues. He has written many articles about the inflation we are experiencing now. Instead of listing the articles individually, you can read some of his articles from the past several months by scrolling down through this website: https://substack.com/search/robert%20reich