I live in a bubble. It’s a tiny bubble of ten percent of American voters. By the latest New York Times/Sienna College poll, we 10% think the state of American democracy and political division is the gravest problem facing this country. Twenty percent believe the economy and jobs is most important. Another 15% are most disturbed by inflation and the cost of living.
Let’s look at inflation since it’s the headline grabber of late. At 9.1% it’s the highest it’s been since 1982. On CNN the other night, the cause was explained by an economist from the University of Chicago (famed school of supply siders). Three trillion dollars, he said, was pumped into the economy by the federal government to reduce pandemic losses. Then another two trillion. And then another trillion.
All this money went into the pockets of Americans like you and me. It caused demand to increase followed by price increases. Now, I don’t know about you, but I can’t recall receiving or spending any significant part of those trillions of dollars. Nor did it allow my partner to quit work and thus contribute to the unfilled demand for workers (I am retired and receive a limited income from Social Security). Our household collected a total of $3,600, which is nothing to sneeze at but would only pay expenses for one to two months.
Other than former workers lazing about eating Cheetos and watching soaps on their new large screen TVs, what might have contributed to inflation and the state of the economy? Have you noticed that the oil industry made huge profits as prices at the pump sky-rocketed? “Almost two-thirds of publicly traded companies had substantially larger profit margins [in 2021] compared with the same period in 2019. . . . Close to 100 of them saw their profit margins go up at least 50 percent relative to 2019, the Wall Street Journal reported.” As Atlantic journalist Annie Lowrey wrote: “In one of the best decades the American economy has ever recorded, families were bled dry by landlords, hospital administrators, university bursars and child-care centers.”
That’s just Capitalism, huh? It’s also monopoly. Corporate consolidation over the last decade has created monopolies in more than one industry. A June report by three economists for the Federal Reserve Bank of Boston noted that “The US economy is at least 50 percent more concentrated today than it was in 2005,” and that such concentration amplifies the degree to which companies pass price hikes onto consumers as businesses overcompensate for rising production costs. In the oil industry, the report notes, as prices have spiked, companies have posted jaw-dropping profits.
Somebody is making money, but I don’t know them. We’re not in the same bubble.
Is inflation Joe Biden’s fault? Princeton Professor and author Meg Jacobs writes that inflation is “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.” “President Franklin Roosevelt imposed price ceilings on three million businesses and more than eight million goods.” His Office of Price Administration 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.”
Biden didn’t cause inflation, but he can take steps to lower it by setting price controls.
As Democratic pollster Joel Benenson said, “We’re not having an inflation problem. We‘re having a corporate greed problem.”