Greedflation
“Stagflation” dominated the late ’70s and led to Ronald Reagan defeating Jimmy Carter in 1980. Americans were up in arms about high gas and food prices. Personal incomes were not keeping up with prices hence the “stag” or “stagnant” adder to “inflation”.
“Inflation” dominates today and may lead to (shudder) Donald Trump defeating Joe Biden in 2024. Americans are up in arms about high gas and food prices. Inflation 2023 needs a cool title like “stagflation”. A recent study may have done just that. It calls the world-wide cost of living increase “greedflation”.
Multinational corporations have increased prices well beyond production costs and reaped record profits. The pandemic was a great excuse to gouge the public and secure those multi-million dollar executive bonuses. Compared to pre-pandemic results, Exxon tripled its profits to $50 billion, Shell more than doubled theirs to $40 billion, food processor Archer-Daniels-Midland also more than doubled profits to nearly $3 billion and good old Kraft-Heinz did best, increasing its profits more than six-fold to $1.5 billion. “Ketchup prices are insane! And it’s all Joe Biden’s fault!”
Adam Smith’s “Invisible Hand” should result in scrappy little firms undercutting prices in these markets. “I’ll fill my tank with Bi-Lo gas and put Dollar Tree brand ketchup on my sandwich until Exxon and Kraft come to their senses!”
The problem is that the big multi-nationals are the sole producers in most markets. Bi-Lo’s gas prices are high as well because they have to buy their unleaded regular from Exxon. Dollar Tree repackages factory reject ketchup from Heinz. You can’t undercut the Big Guys.
The study that coined the term “greedflation” recommended an “excess profits tax” when increased prices allow corporations to more than double their profits from the previous year.
Good luck with that. The multi-million dollar streams of “campaign contributions” currently flowing from Exxon and Heinz directly into the pockets of our elected officials dry up at the very mention of an “excess profits tax”.
Like it or not, “greedflation” is here to stay.
By Ed Dufton
