Janine Jackson: In a section labeled “Core of the matter,” the Economist declared: “Despite rosier figures, America still has an inflation problem. Is higher unemployment the only cure?”
I guess we’re meant to find solace in the idea that the magazine thinks there might conceivably be other responses, in addition to what we are to understand is the proven one: purposely throwing people out of work, with all of the life-changing harms that come with that.
CNBC’s story, “Inflation Fears Spur Shoppers to Get an Early Jump on the Year-End Holidays,” encouraged us to think that “inflation is a Scrooge.”
So — an abstraction that is somehow stealing Christmas, to which the healthy response is to make more people jobless while corporate profits soar. It makes sense to corporate media, but if it doesn’t make sense to you, you are far from alone.
Chris Becker is the associate Director of Policy and Research at The. Groundwork Collaborative. He joins us now via phone. Welcome to “CounterSpin,” Chris Becker.
Chris Becker: I am grateful for your time and this important conversation.
I know that lots of people don’t really understand much about how the economy works, and I don’t hold it against them, frankly. I do hold it, in part, against corporate news media, who I think rely on that lack of knowledge to sell ideas that people wouldn’t buy if they understood them.
So if you’re having a first conversation with someone who says, “Boy, prices are high, this inflation is killing us. And, you know, the paper says it’s wages,” how would you try to reorient that conversation? Where would you begin?
Right. There is a lot misinformation and misunderstandings that are propagated by the media. And so where I would start with the conversation is to say that when we’re thinking about inflation, we need to understand that there are stark differences in how American households and consumers are experiencing the post-pandemic economy, versus how corporations are faring.
This has resulted in higher prices for consumers: higher prices at the grocery store lineThe address is: pumpEven for essential goods, baby formula they are required for the basic nutrition of infants. And so the bottom line for consumers is that it’s become harder and harder to make ends meet.
But corporations have turned consumers’ pain into their own gain. So what we’ve seen corporations do is that they’ve used all these crises as an excuse to pass on higher prices to consumers, padding their pockets in this process, and then funneling the extra cash back to their wealthy shareholders or investors.
There are many stories out there that corporations were forced raise prices because they had higher input costs or wage demands. simply too largeThey had to raise prices in order to compensate.
But what we’ve seen, actually, is that not only have corporate profits hit Record highs, far surpassing what we saw prior the pandemic. But also profit margins have surpassed their previous records. highest level in 70 years.
And so what that means is that for every dollar that these corporations are earning, a larger percentage of that is going to corporate profits, rather than paying off input costs or paying wages, than what we’ve seen since the 1950s. So not only are corporations making a lot of money, they’re actually squeezing consumers for more than they have in 70 years.
And so, yes, input costs have gone up, wages have gone up, but corporations have passed all of that onto consumers in the form of higher prices, and then a little bit more, so they’re actually making more and more profits than they used to.
And I just want to add, the way that media framing tends to talk about workers and consumers as though they were different people is very frustrating in terms of understanding what’s going on, right? I’m the one paying at the pump and at the grocery store, and I’m also the one working for wages. So it’s very obfuscating to separate those groups rhetorically.
Yes, absolutely. One of the greatest problems is that wages don’t rise quickly. Enough. We’ve seen that wages have gone up, but not by as much As inflation has risen.
This has resulted in a decrease in the purchasing power of these workers as a function of their actual wage. We need higher wages and not lower wages. We need to ensure that workers are being fairly compensated for the higher prices that they’re seeing. That’s exactly right.
When I see outlets that look like the EconomistToss off phrases like the “remorseless mathematics” of economic policy-making, that’s sending a message, right, to readers that choices aren’t being made. It’s as if it’s the hand of God.
And as well as misrepresenting what you and I know is the very contested nature of economics — if you have different goals, you want different policies — it also seems to encourage a kind of passivity on the part of people. “There’s really nothing you can do about it. It’s just math, you know, it’s just math.” It’s very frustrating.
I think that’s exactly right. And when we’re thinking about corporations, they do have options. They have many options for how they want profits to be made. We often frame it as if it’s this question of, should corporations be allowed to make profits or not? And, of course, in a strong economy, where everyone’s doing well and everyone’s making money, corporations will make profits too.
The real issue is how they’ve gone about making these profits. And so, unfortunately, we’ve incentivized these corporations to really go after this price-gouging, profiteering strategy, rather than pursuing other strategies that could be good for all of us.
So, for example, one option that corporations have is that it’s not obvious that higher prices are always better for corporations either; if corporations keep their prices low, consumers can afford to buy more from them, and they’ll make more money. They have instead put all their eggs into this price-gouging basket.
Low prices can work in the long term for corporations. If you keep your prices low and the products are affordable, consumers will see that, and they’re more likely to keep shopping with you. They’re able to expand your customer base.
So, even high prices may be short-sighted for some corporations.
Another problem is that corporations don’t invest this money. We know that corporations are making all these profit. They could be taking this extra money and saying, “Let’s actually invest it so that we can have long-term profitability, long-term sustainability. Let’s try to bring our costs down. Let’s try to expand our productive capacity, so we can produce more in the future and make more money.”
Unfortunately, they’re not doing that either. What we’re seeing instead is that corporations are taking all those extra profits and doing share buybacks Dividends, and funneling extra money To their shareholders.
These shareholders don’t necessarily have the best interest of the corporations in the long run, or the economy as a whole, in mind. They want a quick return so they can make their money now. And so they’re incentivizing these corporations to go all in on price-gouging; funnel the money back rather than taking the more risky investments in the long run that could benefit all of us.
We must get rid of this model in which corporations are dependent on shareholders, who prioritize short-term profits and profiteering over investment.
I was stunned by the sight of a recent tweetYours, in which you stated that we can continue to argue about the exact causes of inflation but we must link it to corporate profiteering. And you said:
Whether this profiteering is a cause of inflation or just a distributional consequence, we don’t have to accept this. We can create institutions that guarantee that every American gets a larger share of this pie.
I wonder if you could talk a bit more about that. How do we grow institutions? How do we create them? Please tell us a bit about your positive vision.
Sure. Yes. Are workers.
And, unfortunately, we have built a system that relies on exploitation of labor rather than building up workers’ rights and good pay. So corporations are not paying workers well, they’re not giving them proper rights, they’re not respecting their dignity in the workplace. We can see the results.
We’ve seen it very recently in the labor strike that we’ve seen in the railroad industry. Railroad workers are the backbone of our economy. they’re essential workers within our supply chains That allow consumers to get the goods and services they need. If there’s one thing we’ve learned in this crisis, it’s how important our supply chains are.
Instead of treating these workers with respect and taking care of their needs, railroads have assumed they can continue to exploit them and that those workers are always available when we need.
And finally, these railroad workers have decided enough is enough. They’re making very simple demands, just to have basic paid sick leave so that they don’t worry about losing all their income when they get sick.
Now we find ourselves in this situation, where we may have a railway strike. This will cause disruption to our economy once more and raise prices for everyone.
And so we should be investing in workers, investing in higher wages, investing in unions because it’s the right thing to do, but also because it will allow workers to focus on their jobs, get the essential tasks they do done without having to worry about having enough money, being able to make the right choices for their family.
I believe that a lot of it starts with investing first in workers, and not in corporate exploitation.
We’re going to end on that note. We’ve been speaking with Chris Becker, associate director of policy and research, and senior economist, at the Groundwork Collaborative. Their work can be found online at GroundworkCollaborative.org. Chris Becker, thank you so much for being with us this week at CounterSpin.
We are very grateful.