There seems to be a “consensus” among the “very smart people” that inflation we are seeing is being caused by anything from supply chain bottlenecks to government giving people too much unearned money which is causing them to quit their service jobs and buy too much stuff. Larry Summers (who has been predicting sustained inflation for a long time now) is preening across editorial pages like Rooster ready to tackle some new found hens. Steve Ratner, always the voice of moderation (at least in his mind) says that we have to stop helping people eat because it is reducing his net worth which cannot be allowed to stand. Rich people have to be in control...because since they are rich they must be smarter.
While we do have a high level of inflation currently, let me present you with perhaps another reason that you will not hear from these two people I mentioned, and also show that you can be right about your prediction even if your reasoning is wrong that got you there.
The current reasoning for high inflation of VSP (very smart people) falls along 2 lines. Either it is pandemic related where supply chain disruptions caused by covid have left workers sick or just not wanting to work on the front lines exposing themselves to illness in low paying jobs. I think this had merit at first, but those reasons are fading, and some in this camp keep saying inflation has already peaked, yet it is consistent.
The second camp think people just have too much money (Ratner and Summers), and that the government should not help working families any more. Not one cent. Summers thinks QE should end yesterday, and I tend to agree with that. If there is anyone that should be denied extra income it is the mega wealthy who have expanded their wealth well in excess of one TRILLION (with a T) during the pandemic. The problem is that this argument about too much money in circulation seems to be little more than the old tired excuse rich people put out there to deny the poor and working poor a better life.
Let me present a third reason...epic industry consolidation. I am sure when you go to the grocery store you don't see labels that say Conagra, Cargill, WH Group, or know that Walmart and Kroger control 75% of the entire grocery store market. But I go to Albertsons or Ralphs...guess what, owned by Kroger. It is literally impossible to own a Mom and Pop grocery store, or even a regional grocery chain. You cant compete. You might not know that brands pay for their spot on store shelves so the ones with the most money are the ones you see first. You might not know that farmers are increasingly getting less and less (15% of what you spend for the things they grow actually makes it to them), and they are being forced to plant seeds provided by Monsanto (Bayer). If you don’t use their seeds but their seeds cross pollinate yours, you have to discard them or pay up. This all goes well past food. It is across the board from internet to video content with vertically stacked companies like Comcast Universal, Disney/ABC, AT&T/Warner (CNN), or airlines that have through sweeping mergers and acquisitions have whittled the number of major airlines from 12 down to 4, and two more Spirit and Frontier just announced another one. There are a lot of very wealthy people associated with an ever consolidated and powerful financial industry who make a whole lot of money seeing these mergers through, so it doesn’t really hold much water when you see these people write hair on fire editorials when they have an obvious conflict of interest (Ratner)
One only has to look at almost any of these companies earnings to know whats up. For all the Free Market is God types out there, if you own a company that makes product “A” and your costs increase from anything to raw materials to employees demanding better wages, you will raise prices...UNLESS and that’s a very important word here...unless there are several other companies that also make “A” and they have found a way to have happy employees and maybe hedged their raw material prices so they don’t raise prices. What happens? The first company will not raise their price. They are afraid of COMPETITION. They will reduce their profits to compete.
There are several companies that have raised prices blaming supply chain issues which are a minor nuisance that they could easily eat, but have no competition so they raise prices even more than their costs are increasing...because they can. They do not fear the competition undercutting them or anyone out innovating because there isn’t anyone of scale that can threaten their market share. If a company is raising prices and also showing record profits, there is a problem that does not fit into either supply chain, nor excess capital that is causing inflation. Supply chain bottlenecks initially might have been the the thing that got the ball rolling (and the catalyst that started raising prices), but it is now nothing short of an excuse.
Thing is, we really don’t need more laws to fight this. We need enforcement of existing AntiTrust laws and to give the agencies responsible the funding they need to do their jobs. They were decimated over the past several administrations though accelerated by Trump, Obama didn’t really do much to help on this front as he appointed way to many people that go through the revolving door between regulator and regulated. Senator Warren has been on top of this and recognizes the problem. The problem is that most people have no idea how truly consolidated most industries are, and we are starting to pay the price in higher costs, unsafe products and companies so large they can lobby their way around any kind of regulation or competition. It is time to start seeing the problem for what it really is and demand our representatives in Congress act by funding the cops on the beat.
If you want a rundown of how the products on grocery shelves are from fewer and fewer companies it is HERE
That is from July 2021 and it has done nothing but get worse.