ICYMI – INFLATION: Groundwork’s Executive Director Pens New York Times Op-ed: “I Listened In on Big Business. It’s Profiting From Inflation, and You’re Paying for It.”
May 5, 2022 Groundwork Collaborative
This morning, the New York Times published a new op-ed by Dr. Lindsay Owens, executive director of the Groundwork Collaborative. The piece makes the strong case that corporate profiteering is contributing to rising prices and calls on policymakers to step in to address it.
Dr. Owens and the Groundwork Collaborative have been sounding the alarm for months in the media, the halls of Congress, and alongside partners about corporate profiteering. The organization has pored over hundreds of corporate earnings calls to expose how megacorporations are exploiting supply chain bottlenecks, foreign war, and a global pandemic to bring in record profits.
Visit Groundwork’s new site – endcorporateprofiteering.org – to learn more.
Key excerpts below (read full op-ed here)
“Executives from the nation’s largest publicly traded companies had a lot to report to their shareholders about supply chain snarls, product shortages and rising prices — mostly that they were very good for business. What was striking in the earnings calls was not the supply chain shortages or companies’ typical profit motives; it was the plain old corporate profiteering.”
“…This raises the question: When companies are exploiting consumers in a time of national crisis, when should the government step in?”
“Executives on their earnings calls crowed to investors about their blockbuster quarterly profits. One credited his company’s ‘successful pricing strategies.’ Another patted his team on the back for a ‘marvelous job in driving price.’ These executives weren’t just passing along their rising costs; they were going for more.”
“Companies have pricing power when consumers don’t have a choice. Sometimes this is because demand for consumer staples like toilet paper, toothpaste and hamburger meat is relatively inelastic. If you need a box of diapers, you need a box of diapers. Other times pricing power comes from concentrated market power.”
“What we learned on these earnings calls was quickly reflected in data. Despite the rising costs of labor, energy and materials, profit margins reached 70-year highs in 2021.”
“Lawmakers must do even more. They should pursue a federal price-gouging statute to give regulators the authority to stop companies from exploiting crises to wring out more profit. Last week, Democrats in Congress announced plans to do just that. They could go further to discourage profiteering through the tax code — whether by increasing the corporate tax rate or by imposing excess-profits taxes like those proposed by Senators Sheldon Whitehouse and Bernie Sanders. This is not new; the government took similar action during times like World War II and as recently as 1980 for oil and gas. Regulators, even without new legislation, should start by enforcing existing laws, including ones against price fixing, price gouging and collusion.”
“More scarcity will undoubtedly bring more opportunities for profiteering, and policymakers need to close their introductory economics textbooks and actually look at the economy. The question we should be asking is not whether companies will exploit those disruptions — we know they will — but what we can do to stop it, or else companies will just make the rest of us pay the price.”