‘We’re Not Having An Inflation Problem. We’re Having A Corporate Greed Problem.’ Put The Blame Where It Belongs

If Congress is so concerned about inflation, why have we heard nothing from Congress about companies engaging in illegal price fixing, price gouging and profiteering from pandemic supply-chain disruptions? Why have we heard nothing about corporate monopoly power which makes this possible?

More importantly, why has the corporate media not been reporting about this? (The question answers itself: corporate media also enjoys monopoly power. These 6 corporations control 90% of the media outlets in America. The illusion of choice and objectivity.)

Dr. Meg Jacobs, who teaches history and public affairs at Princeton and the author of “Pocketbook Politics: Economic Citizenship in Twentieth-Century America,” explains Fighting Inflation Means Taking On Corporations:

Since the Carter administration, monetary policy has been the chief tool presidents use to curb inflation, which has been on the rise: The Consumer Price Index rose by 6.8 percent in the year through November — the fastest pace since 1982. The Federal Reserve chair, Jerome Powell, has pivoted to a tighter monetary policy, announcing plans to taper the central bank’s bond purchases and raise interest rates next year.

Yet inflation doesn’t rise and ebb just because of monetary policy. It’s largely the result of choices businesses make. And history shows presidents have the power to stem inflation by taking on corporate power — if they choose.

While Franklin Roosevelt is best known for the New Deal expansion of the social safety net, he also protected Americans against wartime inflation. During World War II, his Office of Price Administration imposed price ceilings on three million businesses and more than eight million goods. The office also put caps on rents in 14 million dwellings occupied by 45 million residents and issued ration stamps for goods like meat to manage supply. According to Gallup polls, more than three-quarters of the public favored extending controls after the war.

When Harry Truman lost a bitter fight in Congress to do just that, there were consequences. When peace came, Americans eager to spend their stored-up savings ran headlong into a supply shortage: Manufacturers had yet to convert back from wartime production.

In the summer of 1946, without controls, the cost of living jumped. That July, meat prices doubled to 70 cents a pound. In the 1946 midterm elections, Democrats lost control of Congress for the first time since 1932.

In 1948, with inflation running at 7.7 percent, Truman condemned the “do-nothing” Republicans who placed blame for rising prices on newfound union power. In his re-election campaign that year, he promised to expand the New Deal and ran hard against corporate power. “The Republicans don’t want any price control for one simple reason: the higher prices go up, the bigger the profits for the corporations,” he said that year.

At a campaign stop in Kentucky in October 1948, he lashed out at the National Association of Manufacturers, a business lobbying group that opposed price controls, for engaging in a “conspiracy against the American consumer.” He called Congress into a special summer session to restore price controls, but that effort failed.

Democrats returned to the polls; automobile workers gave Truman 89 percent of their vote, helping him secure re-election in a close contest. One key to his success: doubling down on tough talk against inflation and support for liberal programs to raise living standards for ordinary Americans.

From the presidencies of Truman through Lyndon Johnson, Democrats stuck to the program. Like Truman, who went so far as to order a takeover of the nation’s steel mills when they announced a price hike, John F. Kennedy and Johnson also publicly reprimanded steel executives for price increases.

They all spoke out against efforts by William McChesney Martin, the Fed chairman, to raise interest rates. Martin famously asserted his independence and raised rates anyway; as he saw it, the job of the Federal Reserve was “to take away the punch bowl just as the party is getting good.” Truman called him a “traitor.”

When inflation struck in the 1970s, Richard Nixon understood the expectations created by Roosevelt’s Office of Price Administration. As a World War II-era inspector for the agency, Nixon had been horrified at the thought of bureaucrats checking up on the pricing decisions of private business, and he quit. Yet once in the White House, he didn’t hesitate to slap on price controls in response to the soaring costs of beef and gas.

Milton Friedman, the free-market economist [and the source of our current problems], and other conservatives denounced Nixon’s response as heavy-handed — a message that his successor, Gerald Ford, absorbed. Instead of price controls, Ford distributed “Whip Inflation Now” buttons [stupidest damn idea ever] and called for budgetary austerity.

As American economic thinking fell under Friedman’s influence, the Roosevelt-Truman tools lost favor. With inflation reaching double digits in 1979, President Jimmy Carter appointed Paul Volcker to the Federal Reserve to use monetary policy to fight inflation. When Ronald Reagan came into office, he endorsed Mr. Volcker’s muscular move to raise interest rates and drive the economy into recession to fight inflation. Subsequent presidents have largely stuck to this approach of controlling inflation.

Amid a pandemic, President Biden has shown a willingness to lean hard on corporate America and embrace New Deal-style tools to lighten inflationary pressures. Through his supply chain task force, he is working to reverse offshoring and outsourcing, expand domestic production and help the ports in Los Angeles stay open round the clock to ease the cargo pileup. His infrastructure bill will allocate billions to construct and operate coastal ports and inland waterways, further easing prices.

Through the Federal Trade Commission, Mr. Biden has called for an investigation into the prices set by large oil and gas companies and authorized the release of 50 million barrels of oil from the Strategic Petroleum Reserve to dampen OPEC’s ability to raise prices. He also met with the chief executives of Walmart, Mattel, Food Lion, Kroger and other companies to discuss their plans to overcome supply-chain problems and keep prices in check for the holidays.

In the coming weeks, Mr. Biden should use his bully pulpit to make clear to Americans that corporations are padding their profits while working families are struggling through the pandemic. Almost two-thirds of publicly traded companies had substantially larger profit margins this year compared with the same period in 2019, before the pandemic. In 2021, close to 100 of them saw their profit margins go up at least 50 percent relative to 2019, The Wall Street Journal reported.

Showing working Americans that he gets it will help Mr. Biden demonstrate that he cares, as the Democratic pollster Joel Benenson told me. “We’re not having an inflation problem,” he said. “We’re having a corporate greed problem. And the president should put the blame where it belongs.”

As Mr. Biden leans on big businesses to temper rising prices, he also needs to push hard for policies that have a much greater impact than fluctuations in gas or meat prices: His stalled Build Back Better legislation would go a long way to ease the burden of major expenses. Mr. Biden promised the bill would lower out-of-pocket costs for child care, care for the elderly, housing, college, health care and prescription drugs — some of the biggest costs that most families face.

Like his Democratic predecessors, Mr. Biden needs to get tough.

Maybe Biden’s not Franklin Roosevelt, so much as Teddy Roosevelt. As Prices Rise, Biden Turns to Antitrust Enforcers:

As rising inflation threatens his presidency, President Biden is turning to the federal government’s antitrust authorities to try to tame red-hot price increases that his administration believes are partly driven by a lack of corporate competition.

Mr. Biden has prodded the Agriculture Department to investigate large meatpackers that control a significant share of poultry and pork markets, accusing them of raising prices, underpaying farmers — and tripling their profit margins during the pandemic. As gas prices surged, he publicly encouraged the Federal Trade Commission to investigate accusations that large oil companies had artificially inflated prices, behavior that the administration says continued even after global oil prices began to fall in recent weeks.

The push has extended to little-known agencies, like the Federal Maritime Commission, which the president has urged to search for price gouging by large shipping companies at the heart of the supply chain.

The turn to antitrust levers stems from Mr. Biden’s belief that rising levels of corporate concentration in the U.S. economy have empowered a few large players in each industry to raise prices higher than a more competitive market would allow.

Corporate culpability for rising prices remains unclear. Inflation is at a 40-year high because of pandemic-related factors such as broken supply chains and high demand for goods from consumers still flush with government-provided cash. But as the price increases have spread across sectors, including food and gasoline, the administration has come under increasing pressure to find ways to respond.

White House officials concede that their antitrust moves are unlikely to reduce costs for U.S. businesses or consumers immediately. The efforts, they say, will be more effective down the road. But the rise of inflation has given the White House an opportunity to take action that Democrats have long encouraged, and that Mr. Biden made an early focus of his tenure: using the power of government to break up monopolies and promote economic competition.

In July, before the recent run-up in prices, Mr. Biden issued an executive order that included 72 directives for cabinet and independent agencies to more vigorously enforce antitrust laws and to pursue specific actions to promote competition, such as eliminating noncompete agreements for workers and forcing tech companies like Apple to allow consumers to repair their own products.

He has also tapped antitrust crusaders for key roles, including Lina Khan to be chairwoman of the Federal Trade Commission, and Jonathan Kanter, an adversary of Facebook and Google, to lead the antitrust division of the Justice Department. Tim Wu, a proponent of breaking up Facebook and other large companies, was brought on as a special White House adviser to Mr. Biden on competition issues.

White House officials say fighting inflation was not the initial motivation for Mr. Biden’s competition agenda. But, they say, the push has given the president some of his most powerful tools to take action against rising prices, and it will play a central role in federal efforts to reduce costs for consumers over the long term.

The administration’s focus on increasing competition “will spawn more innovation, more disruption, more start-up businesses in the U.S.,” said Brian Deese, who heads the White House’s National Economic Council. And, he added, it “will deliver lower prices for Americans right away.”

The president’s efforts to promote competition and potentially break up large players have rattled big companies and angered prominent industry groups in Washington, at a time when businesses are already grappling with supply chain problems, higher input costs and labor shortages.

[M]uch of the business community concern is aimed at the F.T.C., which, empowered by Mr. Biden’s executive order, has targeted companies without looping in the White House.

An F.T.C. official said that the agency was pursuing its own agenda under Ms. Khan.

Late last month, the commission ordered nine large retailers, including Walmart, Amazon and Kroger, to turn over detailed information to help root out the sources of supply chain disruptions that were “harming competition in the U.S. economy.”

The demand for documents was news to the White House, which had arranged for Mr. Biden to meet that same day with a group of retailers to discuss the administration’s efforts to relieve backlogs at the nation’s ports and to highlight the companies’ promises that their shelves would be well stocked for the holiday season. Among the top executives attending the White House event were officials from Kroger and Walmart.

Overall, though, White House officials say they are pleased with the zeal federal agencies have shown for Mr. Biden’s antitrust efforts. Administration officials say the biggest successes so far include blocking the merger of a large American railroad, Kansas City Southern, with a Canadian counterpart and the merger of two large insurance companies, Aon and Willis Towers Watson, which officials say could both have resulted in higher costs for consumers. They also cite a regulation allowing hearing aids to be sold without prescriptions and the auctioning of some gate slots at Newark Liberty International Airport to low-cost airlines.

More dramatic results could emerge from a Justice Department fight against consolidation in the sugar industry and new efforts by the White House’s Office of Management and Budget to require that future federal regulations be evaluated, in part, based on how they might affect competition in regulated industries.

The Agriculture Department has distributed $500 million to help seed new entrants in the meatpacking industries to challenge the small group of corporate giants that dominate it.

The Federal Maritime Commission has investigated the handful of corporate shipping alliances that effectively control the flow of goods across the world’s oceans and that have raised prices as much as ninefold during the pandemic, according to data from the freight-tracking firm Freightos. The commission’s analysis determined that market forces — particularly the rising demand for furniture and other items by consumers who have cut down on travel and dining out — are driving the increases, said Daniel B. Maffei, the former New York congressman who is chairman of the commission.

But, Mr. Maffei said, the focus on antitrust has given the commission tools and confidence to investigate other abuses by shipping companies, now and in the future, when demand falls and companies might be tempted to try to keep their freight rates artificially high. “I think it has upped our credibility” with companies and discouraged anticompetitive behavior, he said.

Perhaps the administration’s most sustained focus, in the near term, has been on the meat industry. A report from the National Economic Council this month accused the largest meat processing companies of price gouging to pad profits. According to the latest data from the Bureau of Labor Statistics, prices for meat were up 16 percent in November compared with the same month last year.

“We’re seeing the dominant meat processors use their market power to extract bigger and bigger profit margins for themselves,” the report said. “Businesses that face meaningful competition can’t do that, because they would lose business to a competitor that did not hike its margins.”

[T]he clash between Mr. Biden and “Big Meat” has put the spotlight on Tom Vilsack, the agriculture secretary, who held the same position for the eight years of the Obama administration. Some agricultural groups criticized Mr. Vilsack’s nomination because he had failed to mount an antitrust effort during his previous tenure and instead oversaw an era of consolidation in the farm sector, including the merger of Monsanto and Bayer. After leaving the Obama administration, Mr. Vilsack became a dairy industry lobbyist.

Mr. Vilsack is now responsible for developing new rules to strengthen a law, the Packers and Stockyards Act of 1921, that is intended to protect farmers from anticompetitive practices in the meat industry and to promote ways for consumers to buy directly from farmers. But the rules, which were assigned as part of Mr. Biden’s July executive order on competition, have yet to be announced. That has revived suggestions that Mr. Vilsack is beholden to big agricultural corporations.

“These markets have been concentrated for a long time,” said Austin Frerick, deputy director of the Thurman Arnold Project at Yale University, which researches competition policy and antitrust enforcement. “He didn’t fix it in his first eight years. Why do we think he’s going to fix it now?”

A spokeswoman for Mr. Vilsack, Kate Waters, said the agency was working as quickly as possible through the rule-making process. She also noted that Mr. Vilsack had deployed economic relief money to bolster capacity at small meat processing plants, pointing to the agency’s new “Food Supply Chain Guaranteed Loan Program” that provides loan guarantees to help meat and poultry processors expand capacity.

Progressive groups have pushed the administration to target more industries, such as retail and grocery chains, which they say are also driving up prices and profit margins.

“The Biden administration understands this and knows this,” said Rakeen Mabud, the managing director of policy and research at the Groundwork Collaborative, a liberal advocacy group in Washington. But, she said, “I would like to see more.”