Today, The American Prospect and Groundwork Collaborative launched a sweeping new special issue for June: “How Pricing Really Works.” The issue explores how corporations have combined their market dominance with high-powered technology to deploy a “dizzying array of sophisticated and deceitful tricks” to hike prices on consumers. The lesson for policymakers is clear: pricing today is about corporate power, not Econ 101.
Groundwork’s Executive Director Lindsay Owens and The Prospect’s Executive Editor David Dayen opened the issue with a piece detailing the “Age of Recoupment,” where they identify the shift the corporate world has made from cost-cutting to price-hiking:
“For decades, the most ruthless form of American capitalism centered on cost-cutting…But there is a tipping point to all this cost-cutting. There’s only so much fat to cut before you hit bone. The strategy eventually had diminishing returns, and without a new strategy, profits would hit a plateau. That wouldn’t cut it on Wall Street. Enter the age of recoupment. Instead of cutting costs, the new mantra is raising prices.
“Price hikes are old as dirt. But today’s companies have reinvented them. They’re using a dizzying array of sophisticated and deceitful tricks to do something pretty darn simple: rip you off…
“The outcome in 2024 will be determined at least in part by whether Joe Biden can convince the country that he’s on the side of the people against the powerful. In that sense, the stakes for understanding and reacting to the age of recoupment are nothing less than the future of the country.”
Owens and Dayen are on Bloomberg’s Odd Lots podcast today to discuss the special issue and the importance of pricing in our economy. Over the next 10 days, The Prospect will release additional articles covering algorithmic collusion, personalized pricing, predatory junk fees, and more:
June 4: “One Person One Price” by David Dayen, Prospect executive editor
June 5: “Three Algorithms in a Room” by Luke Goldstein, Prospect writing fellow
June 6: “Loaded Up With Junk” by Hassan Ali Kanu, Prospect staff writer
June 7: “The Urge to Surge” by Sarah Jaffe, independent journalist
June 10: “The One-Click Economy” by Joanna Walsh, writer
June 11: “What We Owe” by Kalena Thomhave, freelance journalist and researcher
June 12: “War in the Aisles” by Jarod Facundo, antitrust correspondent at The Capitol Forum
June 13: “Fantasyland General” by Robert Kuttner, Prospect co-editor
June 14: “Taming the Pricing Beast” by Bilal Baydoun, Groundwork Collaborative director of policy and research
June 14: “Parting Shot: Interview with Lina Khan” by Prospect staff
The issue comes as families struggle with the weight of high prices and continue to identify inflation as a key concern. Meanwhile, the Consumer Financial Protection Bureau, the Federal Trade Commission, and the Department of Justice have taken action against unfair corporate pricing practices in our economy. You can read each article as it comes out here.
Email press@groundworkcollaborative.org to speak with one of Groundwork’s experts about the role of corporate power in high prices.
EXCERPTS
“Something has changed in our economy. Companies are laser-focused on wringing as much out of Americans as possible, unleashing new schemes and building information advantages to either confuse, outsmart, or simply gouge the consumer.”
“Price hikes are old as dirt. But today’s companies have reinvented them. They’re using a dizzying array of sophisticated and deceitful tricks to do something pretty darn simple: rip you off.”
“Technological innovations such as cloud computing, artificial intelligence, and surveillance targeting have enabled companies to collect reams of personal information on consumers…Technology, in short, has hyper-charged the time-honored tactics of gouging, hidden fees, and price-fixing.”
“The new tricks have fancy new names…Stealing your online shopping data to predict the maximum price you would be willing to pay for your next e-commerce purchase: That’s personalized pricing. Using software to coordinate pricing with other companies to make sure they don’t undercut each other: That’s algorithmic price-fixing (or plain old-fashioned collusion).”
“What if inflation is increasingly a problem of data privacy and technological surveillance, not aggregate demand? What if the almighty power of America’s vaunted central bank is no match for the pricing power of corporate America?…Without a whole-of-government strategy, companies will seek out unregulated corners and deploy the full weight of their superiority over consumers to take advantage of them.”
“Law enforcers have brought lawsuits against algorithmic price-fixing. Regulators are working to ban junk fees, increase price transparency, and outlaw certain types of price increases seen as unfair. They’re also trying to tear down the monopolies in our economy, companies with the confidence and the power to price-gouge relentlessly. But there’s so much more to be done. We are not at the end but the beginning of a cycle of recoupment.”
“The outcome in 2024 will be determined at least in part by whether Joe Biden can convince the country that he’s on the side of the people against the powerful. In that sense, the stakes for understanding and reacting to the age of recoupment are nothing less than the future of the country.”