Robert Reich (How corporations use inflation to deprive you of…)

How Corporations Use Inflation to Take Your Money

Corporations are using inflation as an excuse to drive up prices, hurting workers and consumers while they are making record profits.

Prices are rising, but let’s be clear: corporations No the increase in prices is simply due to the increase in the cost of materials and labor. They could easily cover these higher costs, but instead they pass them on to consumers and even raise prices higher than this cost increase.

Corporations get away with it because they face little to no competition. If markets were competitive, companies would hold back their prices to prevent competitors from capturing customers. But in a market where only a few competitors can negotiate prices, consumers have no real choice.

As a result, corporations are raking in their highest profit in 70 years.

Are they using these record profits to raise the real wages of their workers? No. With one hand, they hand out meager pay raises to attract or retain workers, and with the other, they effectively eliminate those raises by raising prices.

Wages increased by 5.6% compared to last year. – but prices rose by 8.5 percent. This means that, adjusted for inflation, workers actually received a 2.9 percent pay cut.

So what are corporations doing with their record profits? Using them to drive up stock prices by buying back a record number of their own shares. Goldman Sachs expects buybacks to be reached 1 trillion dollars this year is a record high.

This is tantamount to a direct upward transfer of wealth from the pockets of ordinary workers to the pockets of CEOs and shareholders.

Billionaires have become at least $1.7 trillion got richer during the pandemicwhile the CEO salary (mostly based on stock value) is now at an all-time high. 350 tis the typical wage of a worker.

The Federal Reserve intends to curb inflation by continuing raise interest rates. This would be a serious mistake, because it does not concern corporate concentration, but slow growth in employment and wages. The labor market is not “Unhealthy tightness” according to Fed Chairman Jerome Powell. Corporations are unhealthy fat.

So what’s the real solution?

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First, tougher antitrust laws to address the growing concentration of the economy in the hands of a few giant corporations. Since the 1980s more than two-thirds of American industry became more concentrated, allowing corporations to coordinate price increases.

Then a temporary windfall tax that takes a corporation’s record profits and redistributes it in direct payments to ordinary Americans trying to cover skyrocketing prices.

Thirdly, a ban on the redemption of corporate shares. Ransoms were illegal before Ronald Reagan’s Securities and Exchange Commission legalized them in 1982. – and they should be made illegal again.

Fourth, higher taxes on the rich and corporations. Corporate tax rates are at the levelrecord lowc, even if corporate profits are at almost record highWith. And most of the billionaire income from the pandemic evaded taxes altogether..

Finally, stronger alliances. As corporate power grows union membership has declined as well as economic inequality has risencause most workers didn’t see a real boost in 40 years. All workers deserve the right to collectively bargain for higher wages and better benefits.

In short, the real problem is not inflation. The real problem is the rise in corporate power and the decline in worker power over the last 40 years. If we don’t fix this growing imbalance, corporations will continue to funnel economic profits into the pockets of their executives and shareholders while regular Americans get fucked.