VOODOO ECONOMICS: It’s The Corporate Greed, Stupid – By Robert Reich

Source – commondreams.org

  • “…Big corporations continuing to raise their prices above their rising costs (including their labor costs). Why? Because they can”

It’s the Corporate Greed, Stupid

Robert Reich

corporate_tax_reform

People participate in a “March on Billionaires” event on July 17, 2020 in New York City. (Photo: Spencer Platt/Getty Images)

Big corporations continuing to raise their prices above their rising costs (including their labor costs). Why? Because they can.

Employers added 261,000 jobs in October on a seasonally adjusted basis, the Labor Department said Friday. That was down from 315,000 in September. The unemployment rate rose to 3.7 percent.

As American corporations report their highest profit margins the United States has seen in over seventy years, executives of leading companies are admitting on earnings calls that they’re taking advantage of inflation.  

Average hourly earnings climbed by 4.7 percent in the year through October. Consumer prices grew 8.2 percent through September.

Bottom line: Workers are losing purchasing power more rapidly now than they have at any point over the last year.

This may explain why the share of Americans between the prime working ages of 25 and 54 who are working or looking for work fell to 82.5 percent in October—down from 82.7 percent in the previous month. At the beginning of 2020, the number stood at 83.1 percent.

Why aren’t more people working? Because pay is lousy.

So why does Jerome H. Powell, the Fed chair, insist, as he did at a news conference this week, that “the broader picture is of an overheated labor market where demand substantially exceeds supply”?

Overheated?

No, Mr. Chairman. The broader picture is of slowing job and wage growth—even though prices continue to rise and the Fed continues to raise interest rates.

Powell and the Fed lifted interest rates by three-quarters of a point this week, and signaled more increases to come. Presumably, they’ll continue to raise rates until they push the economy into recession, thereby pushing most working people into ever-greater peril.

This borders on insanity.

The broader picture is of big corporations continuing to raise their prices above their rising costs (including their labor costs). Why? Because they can. They have enough market power to get away with this—using inflation as a cover.

As American corporations report their highest profit margins the United States has seen in over seventy years, executives of leading companies are admitting on earnings calls that they’re taking advantage of inflation.  

One executive argued that “a little bit of inflation is always good in our business” while another admitted that his company’s prices wouldn’t fall with decreasing costs, stating “we don’t reduce prices on the back end of these increases.”

Last weekend, ExxonMobil posted the highest quarterly profit in its 152-year history, and Chevron the second-highest quarterly profit since its own founding. Oil company profits have been soaring for the past year, prompting many other nations (including the U.K., governed by those crazy left-wing Tories) to adopt windfall profits taxes of their own. 

Finally, last Monday, President Biden called for a windfall profits tax on oil companies if their prices didn’t drop or didn’t offer rebates to consumers.

A bit late, perhaps?

We’re just three days before one of the most consequential elections in history. Democrats should be—and should have been—raising the alarm about corporate power.


Robert Reich, is the Chancellor’s Professor of Public Policy at the University of California, Berkeley, and a senior fellow at the Blum Center for Developing Economies. He served as secretary of labor in the Clinton administration, for which Time magazine named him one of the 10 most effective cabinet secretaries of the twentieth century. His book include:  “Aftershock” (2011), “The Work of Nations” (1992), “Beyond Outrage” (2012) and, “Saving Capitalism” (2016). He is also a founding editor of The American Prospect magazine, former chairman of Common Cause, a member of the American Academy of Arts and Sciences, and co-creator of the award-winning documentary, “Inequality For All.” Reich’s newest book is “The Common Good” (2019). He’s co-creator of the Netflix original documentary “Saving Capitalism,” which is streaming now.

https://www.commondreams.org/

One thought on “VOODOO ECONOMICS: It’s The Corporate Greed, Stupid – By Robert Reich

  1. The basic premise is flawed. Our debt-backed dollar has triggered a culture addicted to debt, with no regard for those who will have to carry the load.

    Why does the Fed even exist?

    Since the US began, and even before, the bankers have controlled governments world wide; and stock markets in the US, UK, and other governments have kowtowed to stock markets and bankers throughout history.

    Why work, in this scenario?

    Ultimately, people and animals learn they must fend for themselves, so it helps to have a sense of community to share the responsibilities of living. But how far must it reach before it becomes a liability to itself and everything around it?

    The compulsive desire to expand without limit ultimately leads to collapse, whether as individuals, nations, worlds, or cancers. They begin to involute and create black holes in space as they absorb everything into themselves.

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