Yesterday, Dr. Rakeen Mabud, chief economist and managing director of research and policy at Groundwork Collaborative, testified at a hearing of the House Judiciary Subcommittee on Antitrust, Commercial and Administrative Law. The hearing, titled “Reviving Competition: Rebuilding America’s Economic Leadership and Combating Corporate Profiteering,” focused on the impact of corporate concentration and market power on rising prices.
“Groundwork has combed through hundreds of earnings calls where executives tell investors about last quarter’s performance and what they can expect going forward,” Dr. Mabud told the Subcommittee. “Over and over, the message from corporate America is clear: they aren’t just asking consumers to pay for their rising costs; they’re going for more.”
KEY EXCERPTS FROM DR. MABUD’S TESTIMONY:
“Some of the most egregious cases are corporations like Visa and Mastercard – a duopoly that controls over 70% of the payment network market – that cannot even blame supply chain disruptions for their profiteering…Visa and Mastercard are using the power afforded through their duopoly control of the market to raise fees on small businesses and consumers who have nowhere else to go.”
“Wall Street’s influence in every corner of our economy makes this period of inflation unique and puts us at risk for a profit-price spiral. As price hikes drive up profits, investor demand for those profits also goes up.”
“Small businesses have a harder time navigating global supply chains, as large corporations throw their weight around in order to jump to the front of the line with shipping companies, while small business owners sit and wait with empty shelves. Big businesses also strong-arm suppliers into deals that raise prices for small businesses and leave them waiting longer for goods and products.”
“Giant corporations’ control over our supply chains and economy more broadly has supplanted the functioning, resilient system we could have built through robust public investment and free and fair competition.”