The billionaire masters of the universe have been saying, "Let them eat cake," and now they haz a sad because the peasants are constructing guillotines.
The fact that an increasingly large number of people are calling for smashing the existing neoliberal consensus, and they are doing so because neoliberalism only works well for the ⅒ of ⅒ of 1%.
When costs go up, so do profits? That’s not how capitalism is supposed to work, but that is the recent trend. For over a year now, consumers and businesses, both in the U.S. and worldwide, have struggled with stubborn inflation. But the soaring costs haven’t prevented corporations from raking in record profits. The companies in last year’s Fortune 500 alone generated an all-time high $1.8 trillion in profit on $16.1 trillion in revenue. Voices largely on the left side of the political spectrum have been sounding the alarm on this—think: Bernie Sanders in Congress or Jon Stewart’s recent grilling of former Treasury Secretary Larry Summers—but now an economist at one of the world’s oldest and greatest investment banks is singing the same tune.
Albert Edwards, a global strategist at the 159-year-old bank Société Générale, just released a blistering note on the phenomenon that has come to be called Greedflation. Corporations, particularly in developed economies like the U.S. and U.K., have used rising raw material costs amid the pandemic and the war in Ukraine as an “excuse” to raise prices and expand profit margins to new heights, he said. And the French investment bank isn’t just historic: It’s one of the select banks considered to be “systemically important” by the Financial Stability Board, the G20’s international body dedicated to safeguarding the global financial system.
Furthermore, Edwards wrote, in the Tuesday edition of his Global Strategy Weekly, after four decades of working in finance, he’s never seen anything like the “unprecedented” and “astonishing” levels of corporate Greedflation in this economic cycle. To his point, a January study from the Federal Reserve Bank of Kansas City found that “markup growth”—the increase in the ratio between the price a firm charges and its cost of production—was a far more important factor driving inflation in 2021 than it has been throughout economic history.
Typically, higher commodity prices and labor costs squeeze corporate margins, especially if the economy is slowing. But Edwards pointed to data released by the Bureau of Economic Analysis (BEA) last week that showed profit margins still near a record high relative to costs in the fourth quarter. The strategist said he assumed margins would have “declined sharply” at the end of last year as the economy slowed, but instead, “How wrong I was!”
Well duh.
This is why you need aggressive enforcement of antitrust laws.
This is not just greed, it is greed and opportunity, and the opportunity is created by increasing market concentration.
We need to aggressively break up firms, and when executives are caught colluding, they need to be charged criminally, and frog-marched out of their offices in handcuffs.
1 comments :
You don’t need collusion to get price fixing in a market with few suppliers. You just need few enough that nobody’s hurting for market share, so no one sees starting a price war as in their interest.
Post a Comment