How Corporations “Get Away With Murder” to Inflate Prices on Rent, Food, and Electricity

Yves here. It can’t be said too often: a significant amount of our current inflation is due to companies increasing prices because they can, not because they are seeing corresponding increases in costs. And that’s before getting to the fact that corporate profit share is at a record high level of GDP, nearly twice the level of the early 2000s, which was then deemed unsustainably elevated by none other than Warren Buffett. In other words, some companies are using this inflation as yet another opportunity for grifting, instead of going on a modest profit diet to increase worker pay.

By Lynn Parramore, Senior Research Analyst at the Institute for New Economic Thinking and Hal Singer, Visiting Professor of Economics, University of Utah. Originally published at the Institute for New Economic Thinking website

Microeconomist Hal Singer studies the topic on everyone’s mind: prices. Singer, who teaches advanced pricing at Georgetown’s McDonough School of Business and frequently serves as an economic expert in antitrust litigation (often concerning how firms set prices), says that those who hold workers’ wages responsible for inflation are not only wrong but making the problem worse with policies that fail to hit the real mark.

His work shows that among industries dominated by a few mega-companies, bouts of inflation act as a handy cover for price hikes that have little or nothing to do with costs. You, the consumer, end up paying the price for predatory profit-seekers who have little to fear from soft antitrust laws and lax enforcement. Singer argues that when a company is making huge profits and workers’ wages aren’t keeping up with inflation, you can bet that something shady is happening – like collusion and price-gouging.

Singer spoke to the Institute for New Economic Thinking about practices that hurt consumers and argues that antitrust laws must be updated –- and enforced — to protect us from further harm.

Lynn Parramore: As inflation worries continue, we hear a lot of people blaming the problem on wage increases for workers. You disagree. Why?

Hal Singer: I think that in the present or new economy, wages don’t really enter the calculus of pricing by the firm. You may have heard the expressions “superfirms” [very large and successful companies] or “Network Economy” [an emerging hyperconnected, digitized, interactive economic system]. The idea is that in today’s economic reality, if you’re in a high fixed-cost industry where it costs you a ton to get started and then you take over the industry, the pricing problem basically devolves into one of maximizing revenues. In that situation, costs like the wages of your staff are really secondary considerations.

LP: Can you give an example?

HS: Sure. Think of an airline setting prices on an across-the-country flight. Are they taking into consideration the salaries of the flight stewards when setting that rate? Most likely not. What about a pharmaceutical company? Does it look at the wages of its chemists when pricing the products? Again, probably not. There’s been a severing of the relationship between wages and prices in so many sectors of the economy, particularly those in which inflation is running rampant. I could go on with many examples. I’m in a hotel in New York City right now. You think they’re charging rates based on the wages of the cleaning crews that come in? Not likely. They’re revenue maximizers. They’re just looking at the demand curve. The only thing that enters the calculus is what economists call demand-side elasticity considerations. In other words, how much you can get away with on the demand side in setting prices. The costs are no longer entering the equation.

One thing that has happened in the current economy is that worker power has been completely demolished. That has been recognized by tons of economists, including those at the Federal Reserve (Fed). That lack of power has broken down the historical relationship between unemployment and inflation. Economists call it the flattening of the Phillips curve [a theory that inflation and unemployment have a stable and inverse relationship]. What it means is that it’s going to be very difficult, if not extremely painful, to arrest inflation by targeting all of our energies at the labor market. If the relationship between wages and prices has been severed by a combination of network effects, superstar firms, monopsony power [when a single firm has all the power to buy labor in a market], then employing this policy is like pushing a rope. We’ll never get to the finish line. Look, inflation is still rampant despite these rate hikes and employees are suffering as firms pull back from hiring or lay off workers. The question is, have we really done anything to arrest inflation? The answer is no.

LP: Is your approach to pricing distinct from what most students of economics are taught today?

HS: It’s distinct from neoliberal economists, who think that firms, which are setting the prices, bear no culpability on inflation and instead scapegoat workers and consumers as the problem. In my pricing class, we study the pricing decision of the firms. I guess you have to look at where the funding is coming from. It’s very convenient to let the firms off the hook.

LP: Some are blaming Biden and the stimulus. Any truth to that claim?

HS: I just saw a story to this effect and I disagree. The stimulus was largely a lump-sum $1,400 payment that occurred in 2021 and likely spent in 2021. So, the idea that it’s continuing to have ripple effects in 2022, which we’re nearly at the end of, seems preposterous. I would also note that Biden also continued a direct payment that I believe came at the end of the Trump administration. So it’s not like that policy was new, it was just a continuation. I think that it’s very hard to connect Biden’s payment in 2021 to what’s happening in terms of inflation in late 2022.

LP: When businesses raise prices now, they claim to be simply passing on rising costs to consumers. But your work shows there’s more going on, and you’ve placed blame on corporate profit-seeking for inflation. What’s the evidence?

HS: If firms were simply passing along higher costs, then we wouldn’t expect to see their profits go up. Yet profits are at a historical high right now. That’s telling you that they’re not passing along cost increases. I’m not sure that they have any cost increases. The prices are rising much more quickly that the costs. So that kind of rejects the idea in the abstract.

To be concrete, I think that electricity is a market that people should focus on. And rental markets and food. These are the largest contributors to inflation. It’s very hard to believe, when you look at the profits of the electricity firms, which are skyrocketing right now, that they’re dealing with increased costs. Really, it suggests that their costs are not going up, or to the extent that they’re going up at all, the price hikes are far outpacing those costs.

Look at rental properties. If an institutional investor bought a bunch of rental properties in a neighborhood in say, Miami or Atlanta, how have their costs been going up? What costs are they facing at the margin, exactly? Are we talking about the clean-up crew? The security guards? The prices are clearly being set on the demand side. There’s no cost to explain why rents are exploding.

LP: Why aren’t companies afraid of driving away consumers away with predatory pricing? In your work, you’ve mentioned the profit-seeking price hikes in the meat-processing industry, putting a steak dinner out of reach for many. Why isn’t the meat processor worried about driving away business?

HS: It’s hard for consumers to move away, particularly when you’re talking about food. You could change your diet, but it’s pretty hard after you’ve developed certain preferences for meat over your lifetime. It’s hard to switch on a dime. There’s a central tenet in pricing theory that the more concentrated an industry, all things being equal, the easier it is to coordinate on prices. This coordination can be happening explicitly, like you pick up the phone and you tell your competitor, hey, let’s go and do this. Or you can do it tacitly. If there are just a few of you there, you can feel your way through to higher prices.

There’s a story I love telling. I was in a courtroom in December 2021. A price-fixing case. Under oath, one of the executives said that his cartel, which concerned capacitors [energy storage components], functioned most efficiently during times of inflation! I nearly fell out of my chair. What he was basically saying was that a small dose of inflation can serve as a focal point. A way for a bunch of different firms in a concentrated industry to focus their attention on a new target to kind of move in unison, to coordinate their pricing. It occurred to me right at that moment that we’re in big trouble, given how concentrated all markets in the U.S. economy have become over the last 15 to 20 years.

The other thing that a small bout of inflation does is that it softens the beachheads, to use a war analogy about how they would drop bombs on the beaches to allow the troops to march in. Today, when a consumer goes into a restaurant, say a steakhouse, and she sees a $50 price, she’s already been conditioned to expect that the price was going to be higher. She’s more likely to go along, to just tolerate the price hikes. She doesn’t see it as evil, just something that everyone’s doing. This is another reason we don’t see people just defecting and imposing price discipline. It’s going to be very hard for consumers to defeat this by protesting en masse.

What I’m calling for is a different approach entirely to how we arrest price increases that are coming largely from a very specific segment of the economy. The analogy I give is that if there’s a fire in your guest bedroom, you don’t go and bulldoze the whole house. You don’t start spraying water in the den. You go to the source of the fire and put the fire out there. It’s hard for me just watching this unfold because we know exactly where the price hikes are coming and we think we know who is implementing them and why. And yet we’re going to try to correct it through some general prescription that involves throwing sand in the gears of the economy writ large and aimed particularly at the labor market.

LP: How is this behavior of these companies to coordinate on prices legal? Isn’t that anti-competitive?

HS: The antitrust law is soft on this area known as tacit collusion. So firms in concentrated industries kind of feel their way to price hikes tacitly as opposed to via an explicit agreement. They don’t pick up the phone and say “Hey what should we charge our customers today?” but they do it through dynamic interaction over time. I was an expert for plaintiffs in a case involving an antitrust class action against Delta and AirTran for seeking to collude to overcharge for bag fees. A CEO of AirTran told the world during an earnings call that he would never impose the first bag fee, but if Delta were to go first, AirTran would follow with certainty. So he basically made a conditional pledge to a rival over the airwaves. The judge decided that this was not in violation of the anti-trust laws because he saw it more as tacit collusion than explicit collusion.

Now, there is one place where you could stop this under the current laws: the Federal Trade Commission (FTC). The FTC has special powers to enforce what are called “invitations to collude.” That would be under Section 5 of the FTC Act. No other agency, no other private enforcer could stop invitations to collude. But we’re not seeing it yet. The FTC is doing a lot more these days. It’s more vibrant than it has been in the last 30 or 40 years, but they’re limited in their resources and I don’t think there’s a focus yet on what firms are saying during earnings calls. The Groundwork Collaborative [an economic activist group] has been documenting all the shenanigans that have been taking place during earning calls where rivals are effectively cajoling their compatriots to reduce capacity or raise prices with them. You’ll hear an executive say, “oh, there’s too much capacity in this industry.” Or, “we’re going to take the lead on this.” They’re suggesting that others should follow without explicitly asking for it.

We don’t think that companies should be discussing their future pricing or capacity plans via conference calls. The Department of Justice (DOJ) and FTC’s Collaboration Guidelines say that this is likely to be anti-competitive. But there’s really nothing that we can do short of the FTC prosecuting under Section 5 of the FTC Act to stop it from happening.

LP: We’re hearing some economists asserting that their research shows no link between market concentration and producer price inflation. Why are they wrong?

HS: Well, I guess we’re in a world of dueling studies, but I and others have found the opposite. I was looking for the relationship between concentration and prices in 2020 and I found that the most highly concentrated industries were the source of the biggest price hikes in 2021. And the relationship was pretty robust. Concentration in industries in 2020 predicted price hikes in 2021. I did it again for an earlier time using a larger data set and I found the same relationship.

LP: Some economists even hold that market concentration is not a bad thing.

HS: Yeah, there’s a fight between neoconservative and progressive economists. Neoconservatives would argue that concentration is a reflection of some kind of superstar firms taking over with lower costs, and those savings will all rebound to the benefit of consumers. That’s not my view.

LP: What can be done in terms of regulation and the legal framework to curb collusion and price-fixing?

HS: One thing that we need to look at is how to deconcentrate the economy generally. There have been studies, including by the Fed, showing that in a (pre-Covid) city where institutional investors own more of the rental properties, the rental prices were higher than what would be expected. There was a story that came out this week in ProPublica about an algorithm that’s being used by rental property owners to coordinate price hikes. I’m also worried that in addition to institutional ownership in general, there could be a concentration of ownership – the same institutional equity firms buying up a large swathe of properties in a given neighborhood. No one has studied it yet but it’s something that I want to move to next. It seems to me that if we can establish a linkage between concentration and rental inflation at the neighborhood level, the simple fix would be that no individual owner could, say, control more than 5% of the properties in a given neighborhood.

That would be a fairly sensible rule. After deconcentrating the economy, which I realize is easier said than done, the next thing, I think, is price controls. There are a lot of economists, like Isabella Weber at the University of Massachusetts, who now are coming out and saying it. The idea here is that we do have a tradition of price controls in this country. Some of them have been more successful than others.

LP: Can you say a bit about what worked and what didn’t?

HS: During wartime, in the forties, we used price controls fairly effectively. In the seventies under Nixon, we tried again, and those seem to have been considered less successful. But Weber has explained that she didn’t feel that Nixon put full faith and effort of the White House behind it. In any event, I think that as a short-term targeted fix, say, in the rental example, it could work. If it was going to take us a few years to deconcentrate holdings of rental properties, then I think it would make a lot of sense to subject the institutional owners to some sort of price cap for the rate at which they could accelerate rents while they were divesting their properties. And I know that this is, in fact, being tried in certain countries, such as France, where rents have skyrocketed. I feel like we’re heading in that direction. Folks are basically just being priced out of these rental properties.

LP: How do you assess what Biden has done on inflation? What should he do going forward?

HS: I would give him a strong B+. His heart is in the right place. The Inflation Reduction Act is a good bill but the problem is that it isn’t really going to take effect until way out in the future. The list of drugs – the ones Medicare could bargain over — was shrunk down and it won’t take effect until years from now. So for me, that prescription, while helpful, isn’t going to bring the immediate relief that we need.

I don’t think that Biden uses the bully pulpit as effectively as he could. There’s a great episode where President Kennedy, at the onset of his administration, called out steel makers who were engaging in a massive collective price increase and effectively called them un-American. I realize that’s fairly harsh, but you can use the bully pulpit to call out certain firms that are engaging in outrageous profit-taking. And I feel like Biden would be well-served to pick on certain industries in particular and basically say, look, you’re causing a bunch of suffering, you’re making huge profits, and if you don’t knock it off, we’re going to start to consider everything, including price controls. We’ll have congressional hearings and we’ll call up your CEOs. I don’t feel like there’s been any serious threat leveled at executives either in the electricity industry or with these rental properties. They’re just getting away with murder and they’re going to continue to do so until someone calls them out.

LP: You mentioned action in France. Any other notes to take from other countries?

HS: We’re seeing price controls in the U.K. with respect to electricity and France with respect to rent, and I also saw a clever idea in Spain where I think they’re giving away train tickets to encourage people to stop getting in cars and driving. The point is that the FTC could use its powers to enforce invitations to collude. We could tweak the antitrust laws in a way that allows the DOJ and the attorneys general to go after firms for tacitly colluding. There’s this whole array of policies outside of the Fed’s rate hikes that could be tried to curb inflation in the U.S. but aren’t. So, as much as I’m upset with what the Fed is doing, they’re looking out and they don’t think that anyone’s going to give them help with this problem. They think they’re the only ones and they only have one tool and they’re using it. There’s this weird stand-off where no one is communicating to the Fed that we will pursue alternative remedies.

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  1. Cristobal

    Concentration in the ownershipp of residential rentals is occuring because it is profitable. As this article explains, it is difficult to break up this type of collusion through regulation of ownership. I wonder if other types of regulation would be succesfull – for instance a prohibition on rent increases would make the enterprise less profitable and the perpetrators would voluntarily divest. Establishment of minimum standards on owners of multiple units would also impose costs (as well as improving the quality of housing). Having recently had to deal with the disaster of private health insurance and hospitals in Spain, I have thought about this approach as applied to health care. Although the horse is long since out of the barn, establishing strict requirements on private hospitals would make them less profitable, raise costs, and drive people back to the publc system. Of course, due to the EU´s explicit promotion of privatization for all previously public services this would probably not be allowed to occur. Connor Gallagher´s piece above regarding the EU´s means and methods to enforce neoliberal policies in Italy explains the problem well. USA! USA! USA!

  2. John

    Monopoly pricing is a long recognized phenomenon. Adding the insanity of neo-liberalism’s focus on the highest profit at any and all cost brings you to the present moment.

  3. Carla

    I wish Hal Singer had included some links to the studies he constantly referred to. While I’m certainly kindly disposed toward his point of view, I think more hard evidence would be very helpful in convincing others who may see only the upside of market concentration and not its many downsides. This is good to know: “The point is that the FTC could use its powers to enforce invitations to collude. We could tweak the antitrust laws in a way that allows the DOJ and the attorneys general to go after firms for tacitly colluding.”

    But while we’re on the subject of the FTC, has Biden nominated his 5th member of the commission, and if not, why the hell not? I mean, Lina Khan is great, but without a majority on the commission, what’s she going to be able to accomplish?

    Not sure I agree that “Biden’s heart is in the right place,” but even if it is, Hal Singer, what does that get us?

    1. Rolf

      But while we’re on the subject of the FTC, has Biden nominated his 5th member of the commission, and if not, why the hell not? I mean, Lina Khan is great, but without a majority on the commission, what’s she going to be able to accomplish?

      Not sure I agree that “Biden’s heart is in the right place”

      Great point Carla. And Biden’s trademark volubility seems to evaporate when it could be used to actually make plain to people who really is profiting here (but this should come as no surprise to anyone).

      It seems that far too many cut Biden too much slack. If you look at his track record — what he really has done versus what he promised, amidst all of the opportunities he’s squandered: he really deserves none. I really don’t know where his heart is, but it seems clear where his head is at.

    2. lyman alpha blob

      About that collusion. Around twenty years ago I worked at Washington Mutual bank. We were coming off of a year of record profits and had received some pretty good monthly bonuses as a result, which were given to all branch employees right down to the teller level. This bonus was the only thing that made the compensation at all reasonable given the cost of living in the area, because the base salary was pretty negligible. WAMU decided to cap our bonuses going forward at a much lower level that what we’d been earning the previous year, no matter what the overall profits were. We had a meeting with one of the VPs to discuss the rationale behind this pay reduction, and he told us that executives from all the major banks get together and compare notes every year, and by that it had been determined that WAMU had paid much higher wages than the industry average so bonuses were being capped in an effort to keep WAMU’s wages competitive with the rest of the industry. Even though the bank had made record profits while paying the higher bonuses.

      To this day I regret that I did not have a tape recorder at that meeting, because if that wasn’t some extremely illegal collusion, then I don’t know what is.

      I quit immediately as a result of the pay cut. A few years later WAMU went belly up and became the largest bankruptcy in US history at the time. Couldn’t have happened to a nicer bunch – sometimes karma works.

      1. JTMcPhee

        Who in the upper levels of the WaMu hierarchy suffered AT ALL IN ANY WAY in that bankruptcy proceeding? The .gov (FDIC) covered the collapse of what was a “conservative bank” that was not deep into the liars’ loans racket, only a fraction of their loans were on less than 20% of market price down. Lots of losses covered by MMT resources, I believe, but there’s no indication I can find that the WaMu executives suffered from the windup. Just like pretty much everybody else at the executive level that was involved in the runup to the Collapse.

        A cousin’s husband was one of the conservative executives, working in Human Resources. He got to be the hatchet man, going around to branches and departments and handing out “separations.” A job he carried forward to positions in several successors to WaMu, until he finally retired with a very, very comfortable monthly income.

        1. lyman alpha blob

          You are correct of course – my reference to karma was based on the fact that at least that particular capitalist enterprise ceased to exist, but there was not nearly enough pain inflicted on those individuals whose recklessness caused it all. CEO Kerry Killinger got a golden parachute when things started turning south. Not only that, I believe the new CEO they brought in for mop-up duty also got paid millions for a few month stint.

          The ones who likely took it hard were the mid-level execs like the branch manager/VP/corporate cheerleader I would have liked to record. Either he was dense and didn’t realize he was admitting to collusion, or he thought we were too naive to realize the scenario he described was a crime. Anyway, he also used to regale us with the wonders of stock options and how great it was that the company was handing them out to everybody (in lieu of actually paying us more of course). I will also never forget the icy stare I got from him in a different meeting when I pointed out to the other tellers and branch employees that stock options were not the same as actual stock, and that the options we were granted were not worth anything yet as we had to wait to exercise them, and may never be if the stock price didn’t continue to go up. Turns out I was 100% right about that.

    3. N

      I agree about Biden. I almost fell out of my chair when I got to the part where he said Biden gets a B+ and his heart is in the right place.

      Its shocking how someone could so easily understand all the stuff he talked about and still not recognize that politicians like Biden work for the same oligarchs raising the prices.

  4. rick shapiro

    In Teddy Rooseveldt’s day, the purpose behind antitrust law was to limit political power, as well as economic power, of concentrated industries. In the Reagan/Posner era, this aspect of antitrust was destroyed, leading to the unbridled anticompetitiveness of the present, and to soaring company profits at the expense of both consumers and workers. Without Democratic congressional majorities and better court appointments, it will only get worse.

    1. Adam

      You’re forgetting one thing. The Democrats and their judges are perfectly happy with neoliberalism therefore nothing will change except for some minor rearranging of the deck chairs.

      1. KD

        Exactly, in the Reagan/Posner era, the Democratic Party was crawling into bed with the corporations leading to the Clinton Administration and killing Glass-Steagall and the rest of it. Of the last 7 presidential cycles, Clinton was in power 2 terms, 2 terms for Obama versus 3 for the GOP. They had plenty of opportunity to appoint judges to take on corporate power, and instead you got Breyer (Clinton) and people like Garland (on the attempt, anyways).

    2. Carolinian

      You think the Dems are not, if anything, even more neoliberal than the Republicans? LOL. If the above, very interesting article has a flaw it is the assumption of good faith by “nothing will fundamentally change” Biden.

      And surely the history that you talk about is all one needs in order to assert that “managed capitalism” should be the goal for a successful economy rather than the current laissez-faire snow job.

      As for the above, perhaps it’s the postwar wealth of American society that has allowed companies to get away with such “what the market will bear” economics. Indeed where I live you can see it everywhere as cars and houses are bought with with status seeking in mind as much as practicality. Meanwhile the poor are still around and flock to Walmart which is a company that is all about price. There the price incentives are just the opposite and if Aldi or Lidl lower their price on a food item Walmart will follow to block them. For these low cost stores the cost of labor is very much a factor and they’ve been blamed for exploiting their workers. But at least somebody other than tycoons is enjoying the benefit because, I’d argue, the lower class customers are getting value for their money.

    3. lyman alpha blob

      IIRC it was in Matt Stoller’s book Goliath where he discussed this aspect of Roosevelt’s trust busting. Teddy wasn’t necessarily opposed on principle to what big business of his day was doing – he just wanted to be the one calling the shots as POTUS, and not the other way around. Once that was made clear to the monopolists after taking the trusts down a peg, Roosevelt was more than happy to work with them.

  5. Daniel Raphael

    Surprise, surprise. You were expecting the corporations to do something other than garner profits? Since when? It’s capitalism.

    1. semper loquitur

      Thanks for the insight. I doubt anyone is surprised around here. The point is that workers fighting for living wages are being blamed for it, the miserly 1400$ checks are being blamed for it, the rising cost of resources is being blamed for it, Mercury in retrograde is being blamed for it. But what’s really going on is corporate greed.

      1. JCC

        Of course… “quiet quitting” is the de jure headline nowadays. Productivity down? Of course it is the workers’ fault. What we need is massive layoffs to nip this in the bud.

        What I get a kick out of is the hand-picked quotes of various employees “proving” this. At any one point in time during my 50+ years of employment I could have cited tens of examples of the same, “why should I bust my butt?” sorts of statements.

        Personally, what I think is that this country is desperately in need of a Great Walkout. People like Jerome Powell and Larry Summers need to be branded as terrorists.

        1. semper loquitur

          Agreed. As a former cook/chef, I’ve encountered the “you’re wrong because you are a worker” attitude most of my adult life. When you are treated like crap as a cook, you are supposed to take it because toughness etc. What you must never, ever do is quit. That, no matter how badly you are being treated, is literally considered immoral.

          1. deplorado

            Thank you for your comments. In a simple but profound way they summarize what is missing from the discourse and from political life.

    2. Dida

      Have you ever heard of the regulatory powers of the state? If the government didn’t regulate the myriad of corporations that impact your life, you would die before breakfast, murdered in your bed by any number of defective products.

      I not am expecting anything good from the gang of sociopaths that own and run corporations, but I am expecting that the government protects me from disease or immiseration at their hands. The state is supposed to act in the interest of the entire population, not only in the interest of top predators.

      Surprise, surprise, but under Western political doctrines, where the ultimate source of political power is popular sovereignty, the 99% have a formal right to expect protection from Elon Musk and its ilk.

  6. Louis Fyne

    latest example of “wokeism” asleep at the Twitter app: Kroger buying Albertsons, nary a peep from “progressives”—even E. Warren.

    Twitter/MSNBC pundits would rather scream about the culture wars—not something as dry as the impeding grocery (and pharmacy) duopoly between Walmart and Krogers for the vast majority of the population.

    Feature, not a bug as I doubt E. Warren has bought groceries at a Walmart, Shaw’s (Albertsons in Mass.), Kroger in the past decade.

    1. Carla

      More to the point, what are Jonathan Kanter, head of the Antitrust Div of the Dept of Justice, and Lina Khan, head of the FTC, going to do about it? (And per my previous comment, what CAN Lina Khan do, if she doesn’t have a majority on the FTC? Sleepy Joe, do yer f—-n job.

  7. Dave in Austin

    The food supply and housing markets.

    Food is a classic supply-and-demand problem. We produce food. We are using all available land. The total farmland has been fixed for more than a century but we got a boost from 1960 to 2010 by using better, genetically-engineered seeds, more efficient use of fertilizers and the problematic increases in the use of pesticides and the loss of topsoil. Production went up based on the technological improvements but that seems to have slowed and to a degree stalled. See:

    So basic US food production (wheat, corn, soy beans and the meat they are used to create) is probably not going to rise much.

    When we had a population of 120-150 million in WWII and the early cold war, we had surpluses to sell or give away. Based on the US birthrates and population in 1970, the population should have peaked at 220 million, give-or-take a few million. Instead because of immigration we have 340 million. If you increase demand by 50% and supply by 20-30% you get a shortfall, which is handled by price increases. This doesn’t take into account the increase in foreign sales because of more money in the Third World and the tripling of the world population since 1950:–1950-2050.html

    The same chart applies to housing. US lumber was so plentiful in 1940 that it was one of the few products not rationed in WWII. There was easily enough wood to build all the post WWII housing. Today the wood supply is stagnant and the population to be housed had doubled.

    Blaming greedy corporations, speculators and all the other “bad guys” for the price increases is the equivalent of what primitive societies did during shortages. Traditional societies used technical advances and more land to increase food supplies, and that allowed for population increases- up to the limit of what the food supply would support. Then when the usual cycle of weather, barbarian invasions and pests led to a period of lower production and provoked a food crisis, the priests blamed the gods and the evil spirits for the shortages. They sacrificed oxen and virgins. We hold Congressional hearings and write editorials.

  8. Oh

    The airlines are example of collusion in pricing. Their prices move together because these use the same price tracking software. It’s about time the FTC sued the airlines. They let them buy each other out and now they watch while the consumer is getting screwed.

  9. Anthony K Wikrent

    An important part of any solution is going to be changing the philosophies of both business and government, by reviving civic republicanism. The swelling public anger over CEO pay, stock buybacks, and now price hikes, are, in my view, residual from the founding philosophy of civic republicanism. There are letters written by members of the Constitutional Convention in which they discuss their alarm over signs that people were abandoning the principles of the Revolution, and engaging in ever more selfish behavior that was damaging society. During the war, there were many cases where serious punishments were imposed on people engaged in hoarding and price gouging. The terms “forestalling” and “engrossing” were used in that era to signify those crimes.

    The fight between Hamilton and Burr over Burr’s Manhattan water company–which Burr was actually setting up to be a bank, the forerunner of Citicorp–is one story from this era, albeit after the Constitution was adopted. As Treasury Secretary, Hamilton himself was bedeviled by charges of aiding and abetting bond speculators and “stock jobbers.”

    Especially interesting are the annual reports from New England railroad companies in the 1840s and 1850s, in which company officers were keen to reassure stockholders and the general public that the companies were not making excessive profits. This reflected the civic republican principle of being a good and faithful steward of the resources the community entrusted to them.

    1. N

      The religion of neoliberalism in the US has wiped out any idea of civic responsibility. Everything goes to the shareholder now because Free Market says so.

  10. spud

    i wish the author and the economist would come right out and say what the problem really is, instead of pretending we can do something about it under the free trade regime straight jacket we are under.

    try to fix finance, taxes, regulations, privatization, jim crow laws, health care, safety net etc., most likely not, because free trade opened the world up to a world wide oligarchy. there will be no reform that he advocates for because these were unleashed on americans from 1993 on wards.

    this will never make it past the moderators, so again i have no link because it gets canned every time i try, like most of what i post, it gets canned.

    “One of the impediments to getting this legislation passed is expected to come from lobbyists and trade groups representing multi-national corporations in the U.S. that don’t want to see any restrictions placed on their ability to improve their bottom line from outsourcing – regardless of its impact on American workers or national security. (There’s a good reason these corporations are called “multi-national.”)Other witnesses testifying at the hearing included:ITI’s members include some of the largest multi-national technology companies in the world, including Apple, Amazon, Google and Microsoft. Testimony from ITI’s Robert Strayer at yesterday’s hearing attempted to straddle the fence between sounding supportive of U.S. national security while cautioning curbs on technology companies’ ability to make profits in foreign countries.”

    “a few years back i said the gilets jaunes protests in the past would have done in a free trade stooge like Macron, but the left has really no idea what they are up against.”

    “the french companies that are at the heart of this, are not really french at all. because of free trade, they are multi-national, and try touching them under free trade.”

    “we can never go forward as long as the past is ignored, or worse yet, the squishy limp left thinks that the past policies are to be ignored or even embraced. Macron types fear the free trade WEF and fascist groups like that, far far more than the squishy limp left.”

  11. Tim

    The whole of Corporate America is turning into Disney Corp/Disneyland. They are ok with demand/revenue volume when they know they are on the verge of being constrained by supply, so the natural thing to do is squeeze for profits until it makes a significant impact on demand. Much easier to for an executive to solve internally than solve supply constraint issues right?

    So while I have empathy for why corporations are doing what they are doing to maximize earnings, and could consider it acceptable for discretionary things, but for needs? That’s hard to just accept. Say hello to the Capitalism end game.

  12. dean 1000

    I like the idea of price controls especially on necessities like housing. Where price controls don’t work government should do what it has done previously. Build affordable housing to compete with the price gougers.
    The root of the housing problem is that houses, unlike cars, appreciate in value as they age. Municipalities can reverse this by requiring that houses and apartments, and the land they sit on, decline in value as the utility value of the house decreases. Houses should decrease in price as they age. If Developers and real estate companies must pay property taxes on the houses in their inventories prices will decline. Maybe not as fast as the market wants but prices will decline. The people who want to buy a house are the sine qua non of the housing market.
    I saw more than a few New houses stand empty 2-3 years after the housing bubble burst. Why? Someone was holding out for what purports to be “the” market price. It was not the market price since no one in the market for a new house bought it. Is your muni government in bed with realtors and developers? Who’s on top?

    1. Anthony G Stegman

      Rather than price controls there should be profit controls. Some profit is better than no profit, so threats by business to cease investing due to lower profits will ring hollow. What else are they going to do? There’s too much bluffing going on. We, society, need to call the bluffers.

  13. anarchaeopteryx

    I haven’t commented in a while but we are seeing this debate happening in Canada right now. Just yesterday our largest (and extremely profitable) grocery/pharmacy chain Loblaws (owned by the Weston family) sent out an email graciously promising to freeze prices on their house brand (No Name) despite “increases in supply chain costs”. Look it up, it is entertainingly condescending. There have been tv spots as well, and in premium ad slots like the season opening Toronto Raptors game last night. This was promptly ridiculed across the internet as everyone knows they are making record profits while making no effort to properly staff or stock their stores. This is the exact same chain that was part of a collusion lawsuit a few years ago – all the major grocery chains were price fixing bread for years. Their punishment was to offer small gift cards to potential customers, which nobody I know ever actually got.

    Over the summer another major Canadian almost-monopoly brand Rogers had a nation-wide outage lasting over 24 hours that took down internet, phones, ATMs, and point of sale machines. If you didn’t have cash on hand you were totally screwed. The outage lasted long enough to irritate people whose opinions matter so they were called up before parliament to make their excuses.

    Don’t even get me started on investment-based housing firms buying up a huge amount of rental properties in Canada in the past 3-4 years and doing their very best to evict anyone paying less than what they consider an acceptable profit margin.

    Unfortunately, all this public conversation about monopolies and inflation is happening while voter engagement is incredibly low. Nobody on the street believes that there’s any difference been parties or candidates any more and it’s obvious all these colluding businesses basically run the country.

  14. Jason

    Singer was using a lot of 2021 data. We’re in 2022 now.

    Also he fails to look outside the United States. The whole world is in inflation so how can you only look to US corporate profiteering as the main cause?

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