Anyone who has read, watched or listened to any GOP based media in the last couple of months has learned that the new scare word is “inflation.” It has become the mega curse word of the Trumpian world and it’s the favorite accusation being used by what passes for Republicans in that foolish Party’s post Trump recovery period.
Inflation has always been the disaster term of the GOP but now, with the passing of the Infrastructure bill and the pending approval of the Build Back Better bill dumping mountains of cash into the economy, Republican politicians are writing it in black charcoal on the foreheads of their children.
Now that term has been picked up by every intellectually deficient member of the Trump base, who on their best days don’t understand what causes inflation, or how it works..
Inflation is usually caused by businesses growing into monopolies and thereby having the ability to raise prices because of lack of competition. That is simplifying it of course but I’m doing that so the Trumpets can understand what I’m talking about. In fact that is a large part of what’s going on right now, but just as significantly, COVID has been a moving force and everyone who has learned to read knows that COVID was allowed to become a much bigger problem than it should have been by the mismanagement of Donald Trump and his lackeys. So before we point any fingers at any politicians let’s understand that Trump leads the way simply because of the way he mishandled and ignored the whole crisis because he was afraid it would make him look bad, which it did.
Last week the US labor department published the consumer price index. Everyone gasped and clutched at their pearls when they saw those products, ranging from gasoline to health care to groceries and rents rise 6.2% from last year, the highest since 1990.
Marco Rubio has stated that’ “this will be a winter of high gas prices, shortages and inflation because far left lunatics control our government.”
Now even if he’s right and there are certainly some lunatics among the far left, none of that is a reason for inflation. If little Marco had wrapped his tiny brain around the concept that supply bottlenecks were responsible for at least part of the problem we might still be paying attention, but that’s just part of the problem. The supply and delivery problems are basically a result of the COVID pandemic. When COVID hit, factories all over the world shut down. Nothing was manufactured to fill the huge demand that was the inevitable result of people having extra money they couldn’t spend while everyone was sitting indoors watching TV. So those companies that did have product understood that a public eager to acquire would be happy to pay more to get whatever it was they wanted.
That’s part of the inflation problem but a bigger part involves the economic concentration of money and power in the hands of a few corporate giants who have systematically, with the help of Republican administration’s failures to enforce anti-trust legislation, eliminated competition and now remain free to overcharge by as much as they think they can get away with. Competitive markets would have prevented this but the GOP didn’t get rich by favoring competitive markets.
Just look at this example from Robert Reich.
In April Proctor & Gamble announced that it would be charging more for household staples, citing “rising costs for new materials and higher expenses to transport goods.”
But P&G was already making huge profits that could have easily offset those increases in materials. In September, after the price increases went into effect it reported a whopping 24.7% profit margin even while it spent $3 billion buying back its own stock. It could do this because it has almost no competition. For example, P & G and Kimberly Clark control the diaper market where they were able to coordinate their prices and, just to leave no doubt they were in cahoots, Kimberley Clark raised their prices at the same time as P&G.
I could bore you with a list of other consumer supply corporations like PepsiCo, Monsanto and all the oil giants but it would take pages.
Those gas prices that Americans are bitching about are not because of Democratic mismanagement but because oil conglomerates are able to jam up prices as a result of multiple GOP administrations ignoring anti-trust legislation and the oil companies graciously filling the politicians pockets with gold.
Airlines have merged from 12 companies in1980 to four at present. Boeing and McDonald Douglas have merged leaving only one producer of civilian aircraft. Three companies; Comcast, AT&T and Verizon dominate broadband.
Only six companies are left to compete for the multi-trillion-dollar prescription drug business.
The Federal Reserve has stated it will not raise the interest rates. The Biden administration has been consulting with oil corporations about lowering gas prices even as it is seeking ways to get more truck drivers on the job as they open container ports for longer hours. All this will help a little but mostly it’s like pissing in the ocean and waiting for the salt count to rise. If we want to stop inflation, we must enforce the anti-trust laws and as a desirable side affect that will cause half the GOP legislators to walk out windows.
As people stayed home during the COVID crisis they spent less on entertainment and all the other things they would normally spend money on. As the crisis wanes they have all this money to spend and as sellers see this, prices go up.
The virus has also affected markets across Europe and the rest of the world. Factories shut down, shipping stayed at the docks and truckers stayed home with their families. This hasn’t stopped because the virus has slowed. The difference is that now people are emerging from their caves with money to spend and an appetite to spend it. They care that prices have risen but they are spending anyhow.
As people stayed home during the crisis they spent less on entertainment and all the other things they would normally spend money on. As the crisis wanes they have all this money to spend and as sellers see this, prices go up.
The virus has also affected the markets across Europe and the world. Factories shut down, shipping stayed at the docks and truckers stayed home with their families. This hasn’t stopped because the virus has slowed. The difference is that now people are emerging from their caves with money to spend and the appetite to spend it. They care that prices have risen but they are spending anyhow.
The pandemic is actually the driver of inflation. But expecting people who think Trump won the election to understand the cost and effect of a medical problem moving an economic situation is truly a fool’s errand.