Corporate profiteers’ pandemic strategy: gouge consumers and blame Joe Biden

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Companies are using the excuse of inflation all the while lining their shareholders’ and CEOs’ pockets. This has nothing to do with inflation and everything to do with corporate greed. –Rakeen Mabud, chief economist, The Groundwork Collaborative
It seems like the price of everything from used cars to hamburger is up-up-up these days, and right-wing politicos and pundits are all over Joe Biden for failing to stop the pain. But one wonders: What would these GOP squawkers do if they were in charge?

No need to puzzle too hard. Just look back to 1974, when workaday families were pummeled by a one-two punch of raging inflation and crushing joblessness. Price spikes then topped 12%, nearly double what we’re enduring today–and, By Gollies, President Gerald Ford and his Republican contingent in Congress met the challenge head on with a new program of economic uplift: WIN! But, in fact, Whip Inflation Now! was just a political slogan and a magic button with no magic and no action behind it. Price controls? Jawboning? Antitrust action? No, no, that would’ve been so FDR-HST-LBJ-ish, and GOP Inc. didn’t want to offend, much less punish, corporate titans for a little profiteering.

Ford went on national TV to sell WIN. “I pledge to my follow citizens,” he solemnly intoned, “that I will buy, when possible, only those products and services priced at or below present levels.” The core of Republican “program,” then, was telling hard-hit wage earners to battle the monopolistic behemoths of Big Oil, Big Pharma, Big Food, et al on their own by simply refusing to pay inflated prices for the gasoline, medicines, groceries, and such that–hellllooooo–they had to have.

New York Times columnist Russell Baker wrote that he took his WIN button to a butcher shop and focused it on a tray of hamburger meat – “The price purred and rose immediately,” he reported. Baker sent his button back, saying “This one doesn’t work, send me another.”
In exchange for that economic gut punch, everyone who signed a form promising Gerry Ford to be an “Inflation Fighter” received a nifty WIN button, indicating their patriotic participation. Sure enough, Americans responded enthusiastically–with an avalanche of ridicule. Even Ford’s own top economic advisor, Alan Greenspan, who was in a White House meeting when the WIN initiative was first revealed to senior advisors joined the skeptics: “It was surreal. …I said to myself. ‘This is unbelievable stupidity. What am I doing here?'”

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A Rube Goldberg Inflationary Spiral

So here we are 48 years later, caught in another fog of inflationary surrealism, with Republican leaders (abetted by a couple of Democratic senatorial flakes) doubling down on unbelievable stupidity. But this time we don’t even get a button. What we are getting is a pot of warmed over, right-wing political mush boiled down to a talking point: It’s Joe Biden’s fault.

Last July, several GOP senators combined their 5-watt intellects to charge that inflation was rising because of the “insane tax and spending spree of President Biden and the Democrats.” Never mind that the “insane” spending was for such sensible and enormously popular national needs as childcare and jobless benefits, Mitch McConnell’s rabidly partisan flock saw the chance to weaponize the public’s legitimate worries about rising prices. You poor consumers, they wailed, are being made to pay more for basics like groceries and gasoline because of “Socialist Joe’s” investments in grassroots people.

Follow the ricocheting pinball of GOP logic: Biden is

  1. lavishing giveaways on millions of shiftless lay-abouts. This has
  2. induced masses of slackers to refuse to go to work, leading to
  3. widespread blockages in the global supply chain, which is
  4. creating shortages of everything, so
  5. corporate bosses are forced to raise prices across the land, thus
  6. swamping the middle class with systemic inflation.

Whew! Rube Goldberg couldn’t have dreamed up a more fantastical ping-zing-ka-ching diagram for obscuring a straightforward economic power grab: What the GOP bemoans as America’s inflation problem, is actually a corporate greed problem.

Cartoon by Brian Duffy

Of course, the greedmeisters and their apologists are deeply offended by this charge, huffing in outrage that their pursuit of corporate profit has not driven any price surges. In our economy of free market competition, they snap, consumer prices are established by the Holy Law of Supply and Demand. They lecture that when shortages occur, prices naturally rise, and that incentivizes additional production, which magically establishes a new supply/demand balance. Even if one producer or a monopolistic cabal of producers tries to overcharge consumers, these theoretical new competitors will draw customers from the gougers and keep prices in check. In the sanctuary of this concept, the free market is a virtuous, self-regulating circle of competitive fairness. Its zealous devotees have successfully convinced nearly all public policy makers to avoid government intrusion into its delicate mechanism.

But there’s one big problem with their virtuous circle: It’s a laissez-fairyland fraud that implodes when it hits the hard reality that our economy doesn’t remotely resemble a competitive marketplace. As the Lowdown detailed in October, nearly every economic sector in the US (from high tech to farm and food) has been locked down by a handful of overpowering corporate giants. For some 40 years, corporate-directed government policies have (1) intentionally promoted (even subsidized) mega-mergers; (2) gleefully green-lighted anticompetitive business tactics; and (3) aggressively inculcated and celebrated the economic lie that bigger is better. Thus, in short order and with practically no public awareness, much less discussion, America has been transformed into Monopoly Nation.

Paying the Price

A glaring indicator of a non-competitive market is a phenomenon that corporatists euphemistically label “pricing power” – i.e., the leeway for monopoly suppliers to inflate prices just because they can, without worrying that consumers will be able to flee en masse to cheaper sellers. In turn, this market punch lets the non-competitive gougers gleefully extract unwarranted “monopoly profits.” This economy-wide milking by our tightly consolidated industries is the unbridled force propelling today’s surging consumer price hikes. Brand name corporations are not being forced to markup price tags just to cover rising costs for raw materials, labor, transportation, etc. Indeed, in a competitive marketplace, they’d have to eat much of those increases by taking a bit less in profits. (The giants have been stockpiling record profits for years, so they could easily weather a downtick.) They’re now raising prices not simply to maintain exorbitant profits, but instead to squeeze even greater profits from hard-hit consumers. And then they cynically exploit the public’s worry about inflation to create more inflation.

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Consider diapers, a necessity for many families. As corporate watchdog Judd Legum recently reported, the huge consumer product seller Procter & Gamble announced last April that Covid-driven production costs were forcing it to raise the price for its Pampers brand. At the time, it had just posted a quarterly profit of $3.8 billion, and P&G could easily have absorbed a temporary rise in its costs. But instead of holding the price to ease their customers’ economic pain, the conglomerate used a global health crisis to justify upping diaper prices. Six months later, P&G’s quarterly profit topped $5 billion and, in that same quarter, P&G spent $3 billion to buy back shares of its own stock–a Wall Street manipulation that artificially bloats the wealth of top execs and other big shareholders. In sum, P&G used the excuse of inflation to inflate the price of diapers, then used the extra money extracted from families to inflate the value of its stock in a ploy to further enrich its biggest shareholders. And why wouldn’t savvy consumers switch from Pampers to Huggies, the brand sold by Kimberly-Clark, P&G’s main “competitor”? Because co-monopolist Kimberly-Clark goosed up its prices at the same time. (The two companies control 80% of the global disposable diaper market.)

Hocus Pocus, the rich get richer and inequality “happens.” Almost all CEOs today are in on this game. They publicly moan that the pandemic is slamming their poor corporation with factory shutdowns, supply chain delays, labor shortages, wage hikes, and other increased costs, but inside the board rooms, executives are high fiving each other and pocketing bonuses. The inflationary economy is a boon for monopolies, for it gives them cover to flash their pricing power, mug you and me, and scamper away with a record-busting share of America’s total economic output.

In 2019, the year before Covid-19 hit, big US corporations hauled in roughly a trillion dollars in profit. Only two years later, during the pandemic, they grabbed more than $1.7 trillion. Antitrust analyst Matt Stoller finds that this huge profit jump accounts for 60% of the inflation now slapping US families. The CEO of Kroger, the supermarket goliath, gloated last summer that “a little bit of inflation is always good in our business,” adding that “we’ve been very comfortable with our ability to pass on the increases” to consumers. “Comfortable” indeed. Last year, Kroger spent $1.5 billion of its monopoly profits on stock buybacks to reward executives and other big shareholders. In January, McDonald’s gushed to its shareholders that 2021 had been “a banner year.” Executives bragged that despite the supply disruptions of the pandemic and higher costs for meat and labor, they used the chain’s pricing power to up prices, thus increasing corporate profits by a stunning 59% over the previous year. And the party goes on: “We’re going to have the best growth we’ve ever had this year,” Wall Street banking titan Jamie Dimon exulted at the start of 2022.

Bovine Excrement

It’s not widely discussed, but market concentration is a devastating double-edged sword, cutting deeply not only into household budgets, but also into the financial heart of small businesses.

The same monopoly pricing power that abuses consumers can simultaneously exert “monopsony” power. While monopoly refers to a market with very few sellers, monopsony is a concentrated, non-competitive market with only a handful of dominant buyers. Monopsony empowers those few buyers to dictate prices and onerous terms of business to myriad independent sellers of components, ingredients, and services.

For a brief tutorial on monopsony, let me call in Professor Hamburger. More than any of the other price hikes in 2021, the 21% spurt in the cost of hamburger and other beef products may have jolted Americans the most. Over a few short months, a restaurant burger or a package of ground beef became noticeably pricier, and tight-budget families wondered why cattle ranchers were hitting them with such an increase.

They weren’t. In fact, back at the ranch, the hardy families that raise cattle were being slammed, too–not by price increases, but by disastrous decreases. As Prof. Hamburger explains, this double whammy is the direct result of our government’s abdication of its antitrust responsibility. Since the 1980s, state and federal politicians and regulators have blithely allowed a handful of ever-bigger meat processors to buy out or force out hundreds of feedlots and packing houses that previously competed to purchase from local cattle raisers.

Consequently, we have a BS beef economy in which producers and consumers alike are now at the tender mercies of a meat cartel: 85% of the US beef market is controlled by just four multibillion-dollar goliaths. (JBS and National Beef are Brazilian owned; Tyson Foods and Cargill Inc are US-based multinationals.) Despite already wallowing in fabulous profits, this beef cartel has been raising consumer prices during the pandemic, not to stay afloat, mind you, but to profiteer. And it’s working nicely for them. Their profit margin at the end of 2021 was 300%(!) higher than the previous year.

Meanwhile, the same monopoly that’s ripping off customers has been using its monopsony power to bankrupt the beef industry’s last competitive segment: independent cattle raisers. Not only have the Big Four eliminated local and regional cattle-buying competition, but they’ve also divided the national ranching territory, so they don’t have to bid against each other. The result is a corrupted marketing system that traps and strangles ranchers.

The New York Times recently reported, Steve Charter, a third-generation Montana rancher, hoped for a good sale when he saw supermarket beef prices rising, so he took 120 head to an auction that delivers cattle to a JBS plant. He was told he had to commit to selling only to JBS, at a price to be dictated later by the Brazilian behemoth. “I wanted to tell him to go to hell,” Charter says, “But what choice did I have?” There were no other bidders, and cattle are expensive to keep. His break-even price was $1.30 a pound. “Without any consulting or dealing,” he says, “they just decided that they were going to pay me $1 a pound.”

That was Charter’s fifth year in a row without a profitable price. Choking back tears, this lifelong rancher who had hoped his grandchildren would be able to keep the family enterprise going, told the Times: “We’re contemplating getting out . . .We need a food system that serves everyone, and not just a handful of companies.”

Calling Joe Biden

For years, as ever-bigger corporate combines grabbed ever-bigger chunks of market power, America’s political, media, and academic establishment scoffed at critics, drowning them out with jolly rounds of “Zip-a-Dee-Doo-Dah.” But the concentration of corporate power can no longer be dismissed, for it’s all too real. It wreaks real havoc on entire economic sectors, workaday families, communities and our nation’s essential uniting value of fairness. Pontificators of the status quo can coo all the free enterprise platitudes they want, but a rising grassroots majority (including supposedly conservative farmers and ranchers) is experiencing corporate repression firsthand. Those families are doing their own kitchen-table tabulations and realizing that the game has been deliberately rigged against them. A mad-as-hell moment is percolating at the grassroots.

Biden at least recognizes this, seems to feel people’s pain and anger, and (unlike other recent Democratic presidents) has put it on his national agenda: “Capitalism without competition isn’t capitalism,” he recently said, “it’s exploitation.” All right, then: You go, Joe!

But he hasn’t. Yes, he’s made some good reform proposals, appointed a couple of top-notch antitrust regulators, issued a few useful procedural changes, held some closed-door White House meetings on the topic, and been willing to call out a few of the worst gougers and profiteers. That’s good. But wholly inadequate. It’s all inside-the-beltway stuff, and even though Biden has been a consummate, 48-year inside player who promised that his collegial skills would let him “get things done,” the people being run over just see more political talk without action. Supermarket beef prices still rise, cattle prices fall, meatpacker power and profits soar, and grassroots people keep getting bulled. In fairness, Biden has a heavy load: sour old Mitch McConnell, the Manchin-Sinema blob, the monopoly lobby, milquetoast Democrats, a clueless media corps, etc. But don’t whine . . . get out of Washington!

Breaking the stranglehold that monopolistic corporations have on our economy and our people is not a job for the politically meek. The establishment’s standard responses of loud denunciation, investigative task forces, and regulatory proposals don’t do anything but stall actual change. Rather, asserting democracy over plutocracy is a momentous, brawling struggle for fundamental structural repair, requiring gutsy leaders willing to go right at the bastards with unconventional outsider strategies. The key to winning is not by schmoozing McConnell and Manchin, but by going into the countryside and rallying the majority of people fed up with corporate arrogance and abuse. So, Joe  . . .

  • Go to the people. Embark on a series of whistle stop tours to excite and enlist grassroots fighters.
  • Join ranchers and workers at the Big Four meatpacking plants to dramatize and protest the abuses.
  • File actions under the Justice Department’s authority to break up anti-competitive combines.
  • Pursue high-profile criminal charges against price-fixing executives.
  • Ban stock buybacks.
  • Deploy cabinet members across the country to publicize local abuses and demand stronger anti-trust laws.
  • Bring outsiders like Steve Charter to the White House to tell their stories and personalize the issue.

In short, stop telling people you’re on their side and start showing them that you are. As historian Meg Jacobs recently put it: “Inflation is largely the result of choices that businesses make. And history shows that presidents have the power to stem inflation by taking on corporate power–if they choose.


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Study up–and pitch in. You’re not likely to read about the devastating effects of monopoly from your local, hedge-fund owned newspaper, but a few taps on a keyboard will take you to a wealth of resources. Our favorites include Yale’s Thurman Arnold Project (som.yale.edu/centers/thurman-arnold-project-at-yale), the Roosevelt Institute (rooseveltinstitute.org), and The Groundwork Collaborative (groundworkcollaborative.org).

Food system monopoly is particularly distasteful, squeezing both growers and eaters. The Family Farm Action Alliance (farmaction.us) inspired President Biden’s billion-dollar plan to expand independent meat processing capacity and re-inject competition into those markets.

The National Farmers Union (nfu.org) has launched a “Fairness for Farmers” campaign, “fighting for stronger enforcement of antitrust laws and breaking up . . .  corporate monopolies.”

The Ranchers-Cattlemen Action Legal Fund (r-calfusa.com) is pushing for a federal “50/14 Spot Market Protection Bill” aimed at stopping the sell-now, we’ll-dictate-your-price-later BS that Brazilian meat Goliath JBS pulled with rancher Steve Charter.

And the Missouri Rural Crisis Center (morural.org)–founded with a grant from the first Farm Aid!–aims to help family farmers not only battle corporate predators, but also offer assistance with sustainable farming practices, accessible rural healthcare, and more.

“Battling the bastards is about as much fun as you can have with your clothes on.”

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