The Inflation Blame Game

Almost all big corporations are playing a tricky inflation blame game while publicly moaning about supply chain delays and the like.

The problem with our so-called “free market” is that it’s not free for you and me. It’s largely controlled by monopolies, which are free to inflate prices just because they can, without worrying that consumers will be able to flee to cheaper sellers. In turn, this market punch lets the noncompetitive gougers gleefully extract unwarranted monopoly profits. It’s a phenomenon that corporatists euphemistically label “pricing power,” and allows them to play the “Inflation Blame Game.”

This economy-wide milking of consumers by tightly consolidated industries is the unbridled force propelling today’s surging price hikes. Brand-name corporations claim they are being forced to mark up price tags just to cover rising costs for raw materials, labor, transportation, etc. But 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. Instead, they’re raising prices not simply to maintain exorbitant profits, but to squeeze even greater profits from hard-hit consumers. It’s a game of corporate greed that socks America’s economy: Monopolies cynically exploit the public’s worry about inflation to create more inflation.

Consider diapers, a necessity for many families. As corporate watchdog Judd Legum reported, the huge consumer product seller Procter & Gamble Co. announced a year ago that COVID-19-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, so 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 it 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. And — get this — the two companies control 80% of the global disposable diaper market. Welcome to the monopoly merry-go-round.

Almost all CEOs of big corporations are playing this tricky inflation blame game. Publicly, they moan that the pandemic is slamming their poor corporation with factory shutdowns, supply chain delays, labor shortages, wage hikes and other increased costs. But wait — inside their boardrooms, executives are high-fiving each other and pocketing bonuses. What’s going on?

It turns out that inflation is a boon for monopolies, for it gives them cover to flash their pricing power. The trick is that these giants are in noncompetitive markets operating as monopolies, so they can set higher prices, mug you and me, and scamper away with a record-busting share of America’s total economic output. In 2019 for example, before the pandemic hit, big U.S. corporations hauled in roughly a trillion dollars in profit. In 2021, 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 U.S. families!

Take Rodney McMullen, CEO of the supermarket goliath Kroger. He 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 (price) increases” to consumers. “Comfortable” indeed. Last year, Kroger used it’s “monopoly pricing” power to reap record profits, then it spent $1.5 billion of those gains not to benefit consumers or workers, but to buy back its own stock — a scam that gives more money to top executives and big shareholders.

Or take fast-food purveyor McDonald’s. It 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!

Jim Hightower