Katie Porter - What Is Causing Inflation?

[Oleg]

 

[Jarhyn]

What is causing this inflation is clearly global, and the thing that makes such global inflation happen is an increasing cost of energy.

This is one of the reasons utilities are strictly regulated in the west, but that matters little when the regulations against gouging are incapable of touching various bad actors, or when a resource goes "out of play" due to its unacceptable destructive secondary effects.

It is not something Biden could possibly be causing. It is rather something RUSSIA is causing.

 

[ZiprHead]

For Oleg:

My wife collects gemstones. One of her favorites is chrome diopside. However, the few mines in the world mining chrome diopside are getting played out and the stones are getting harder to find. So the remaining stones that are found and and those already on the market have increased in price tremendously. Inflation due to scarcity. No government policies involved at all.

Not all inflation is caused by governments creating money. It's that simple.

Oh, and Milton Friedman is an asshole.

 

[Cheerful Charlie]

Google for David Hope and Julian Limberg.
The Consequences of Major Tax Cuts For the Rich, pdf.

Looking at the economics of big tax cuts for the rich in 18 nations. That is Supply Side Economics, trickle down. Neoliberalism. Does that create prosperity for all?

No.

in the Globe and Mail Economy Lab
Milton Friedman was famous for his one-liners. One of his most repeated lines was: "I am in favor of cutting taxes under any circumstances and for any excuse, for any reason, whenever it's possible."

 

[Ford]

Big business was not necessarily less greedy but it was less concentrated. In many sectors, there are significantly fewer domestic competitors and less competition tends to give business more freedom with pricing. I suspect the effects of supply chain problems along with expansionary policy were exacerbated by less domestic competition in the US markets.

Are there really significantly fewer competitors now than say 10 years ago? If so, in what sectors? We certainly have a lot of grocery store companies, chains (Publix, Kroger, Walmart are very active here, and there are smaller chains like Piggly Wiggly and H-Mart) as well as independent large (Your DeKalb Farmers' Market in Decatur for example) and small grocery stores (e.g. David's Produce on LaVista for vegetables or Spotted Trotter on Moreland for meat or Kathleen's Catch on Clairmont (and two other locations) for fish). And yet, groceries exhibit a great deal of inflation. There are also a number of car companies, domestic as well as foreign, but cars have become expensive as fuck. So we know that lack of competition can't be the only, or even dominant reason for the level of inflation we are seeing. Fiscal and monetary policies, as well as shocks like COVID and Russia's invasion of Ukraine, remain the primary drivers of inflation as far as I can see.

And in sectors with little competition, proper government policy would be to reduce any artificial barriers to entry for competitors. Note that often, barriers to entry are not artificial. It takes a lot of capital to create a car company (which is why Tesla was such a big deal), or to build a refinery. But government could make it easier by removing onerous regulation that make things more difficult than necessary. What does Katie Porter suggest we do to address competition?

This ditectly addresses your questions.


And by the way...

The Kroger Co. Family of Stores includes:

• Baker’s
• City Market
• Dillons
• Food 4 Less
• Foods Co
• Fred Meyer
• Fry’s
• Gerbes
• Jay C Food Store
• King Soopers
• Kroger
• Mariano’s
• Metro Market
• Pay-Less Super Markets
• Pick’n Save
• QFC
• Ralphs
• Ruler
• Smith’s Food and Drug

Fun fact: One of my "pandemic" jobs was working for this fine company (heavy sarcasm) at a Fry's store in Tempe, Arizona. After decades in a cushy, well paying job, it was an eye opening experience. I understand why younger people are finding socialism appealing. I was lucky in that I had a house and money in savings. Kroger does not pay you enough to live. They even had a "maximum wage" for cashiers. If you asked one what they thought of a $15 minimum wage they'd probably say "I won't hold my breath." One particular bit of shitfuckery they did was to keep you from qualifying as full time so you could get benefits. You had to work 40 hours a week for a certain number of subsequent weeks, and then you'd be considered full time. Magically, the last week your hours would be cut, and you'd have to start all over again. And of course, your schedule changed weekly, and you'd find out what days you were working late Saturday or early Sunday, so good luck trying to square that with that second job you need to survive.

Around a year ago (long after I'd left) I was talking to someone I'd worked with, and she noted that the store was down 60 employees. They just couldn't keep people due to folks collectively realizing that they didn't have to accept shit wages anymore. To this day there's signs plastered on every wall and door saying "we're hiring!!!"

Folks, if you shop at one of the above-listed stores, be kind to the employees. They are getting royally fucked.

 

[laughing dog]

Big business was not necessarily less greedy but it was less concentrated. In many sectors, there are significantly fewer domestic competitors and less competition tends to give business more freedom with pricing. I suspect the effects of supply chain problems along with expansionary policy were exacerbated by less domestic competition in the US markets.

Are there really significantly fewer competitors now than say 10 years ago? If so, in what sectors? We certainly have a lot of grocery store companies, chains (Publix, Kroger, Walmart are very active here, and there are smaller chains like Piggly Wiggly and H-Mart) as well as independent large (Your DeKalb Farmers' Market in Decatur for example) and small grocery stores (e.g. David's Produce on LaVista for vegetables or Spotted Trotter on Moreland for meat or Kathleen's Catch on Clairmont (and two other locations) for fish). And yet, groceries exhibit a great deal of inflation.

Food prices are susceptible to a number of inflationary pressures from a variety of sources - fuel, labor, nutrients, etcc… Exacerbating those is the increasing concentration at the wholesale level. There are fewer meat packet and processors, along with fewer producers of processed foods.

Increasing concentration is due to a variety of factors, one of which is less vigilant anti- trust enforcement.

 

[TV and credit cards]

Big business was not necessarily less greedy but it was less concentrated. In many sectors, there are significantly fewer domestic competitors and less competition tends to give business more freedom with pricing. I suspect the effects of supply chain problems along with expansionary policy were exacerbated by less domestic competition in the US markets.

Are there really significantly fewer competitors now than say 10 years ago? If so, in what sectors? We certainly have a lot of grocery store companies, chains (Publix, Kroger, Walmart are very active here, and there are smaller chains like Piggly Wiggly and H-Mart) as well as independent large (Your DeKalb Farmers' Market in Decatur for example) and small grocery stores (e.g. David's Produce on LaVista for vegetables or Spotted Trotter on Moreland for meat or Kathleen's Catch on Clairmont (and two other locations) for fish). And yet, groceries exhibit a great deal of inflation. There are also a number of car companies, domestic as well as foreign, but cars have become expensive as fuck. So we know that lack of competition can't be the only, or even dominant reason for the level of inflation we are seeing. Fiscal and monetary policies, as well as shocks like COVID and Russia's invasion of Ukraine, remain the primary drivers of inflation as far as I can see.

And in sectors with little competition, proper government policy would be to reduce any artificial barriers to entry for competitors. Note that often, barriers to entry are not artificial. It takes a lot of capital to create a car company (which is why Tesla was such a big deal), or to build a refinery. But government could make it easier by removing onerous regulation that make things more difficult than necessary. What does Katie Porter suggest we do to address competition?

This ditectly addresses your questions.


And by the way...

The Kroger Co. Family of Stores includes:

• Baker’s
• City Market
• Dillons
• Food 4 Less
• Foods Co
• Fred Meyer
• Fry’s
• Gerbes
• Jay C Food Store
• King Soopers
• Kroger
• Mariano’s
• Metro Market
• Pay-Less Super Markets
• Pick’n Save
• QFC
• Ralphs
• Ruler
• Smith’s Food and Drug

And they’re fixing to gobble up Albertson’s.

 

[Harry Bosch]

Russia cutoff Europe from oil and natural gas. US retaliated by embargoing Russian products, monetary access, oil, and gas in defense of both Ukraine and European Union. As a result shortages increased to levels above what they were during Covid crisis.

That certainly plays a role. As does COVID spending, some of which was unnecessary or kept on for too long. As did the monetary policies of very low interest rates for most of the time since 2008 recession.
The thing is, after all this COVID spending Biden administration wanted to spend additional $3.5T in profligate spending as well as $400G on student loan forgiveness (those who took out their loans before 2010 need not apply btw.) That too is inflationary, and given the spending necessitated by COVID it was irresponsible to push it.

By so doing American consumers blamed party in power rather than bad actor Russia. Fairweather patriot Republicans are now profiting from our courageous actions by blaming government rather than Russia for inflation.

Russia should be blamed for their actions in Ukraine. And yes, the invasion did exacerbate matters. That does not mean that fiscal policies of US (and other western governments) are blameless for the inflation they are experiencing.

Wod. Republicans will probably gain because they are fair weather patriots profiting from strong government responses to bad actor.

Republicans will probably gain because president's party usually loses in the midterms, esp. if the president has low approval ratings.

Most economists that I've read believe that the extra Biden spending is contributing about 2 to 3% of the inflation hitting us today. No bueno. However, what bothers me is that dems are taking all the blame. There is an incredible amount of stimulus in the economy that republicans started: massive tax cuts, PPP, massive government spending under Trump, and etc. I for one am willing to give both sides a pass because covid caused massive uncertainties; and at the least, the spending stopped deflation dead in its tracks. Inflation is far better than deflation. Yea, inflation is causing stress. But at least we all have jobs. In deflationary times, products may be 2% cheaper, but no one has a job.

 

[lpetrich]

We have some previous threads on this bout of inflation.

• It looks like inflation is here | Internet Infidels Discussion Board
• What’s Causing the Weird Inflation? | Internet Infidels Discussion Board
• Inflation | Internet Infidels Discussion Board
• Opinion: The experts are finally grasping the real reason for inflation. Now, it’s time to act. | Internet Infidels Discussion Board

 

[lpetrich]

One of Katie Porter's friends in Congress:
Rep. AOC Exposes Price Gouging underlying 'Inflation' - YouTube in a Congressional hearing on April 6

AOC first mentioned people being squeezed by lower wages and higher prices. Then got into corporate consolidation.

Like four meat-processing companies accounting for 53% of all US meat processing. Cargill, JBS, Cargill, Tyson, Smithfield.

The four largest retailers have 35% of the market share. WalMart and Amazon are 2/3 of this or 1/4 of the total (WM 14%, Am 10%).

She then discussed the effects of oligopoly on markets: a big departure from the ideal of perfect competition.

Then about the effect of WalMart Supercenters on employment. One can find that out by comparing where they are approved to where they are not approved. Wages go down by 5.2%, employment by 2.9%, and participation by 1.4%.

Lack of competition is costly to workers, reducing their wages by 15% - 25%.

She sums up by noting that oligopoly of product making raises prices and oligopsony of employment lowers wages, squeezing many Americans in both directions.

She then notes that many of these industries do not exactly have optional participation: food, energy, transport, communication, retail.

Then an odd result: no correlation of wage inflation and price inflation by industry. One of the witnesses then noted that some industries, like pharmaceutical ones, car-rental ones, and large online companies like Google and Facebook for their advertising, don't take labor costs into account in their pricing.

AOC then mentioned 80% of soybean processes and 73% of beef processors being only four companies.

Then antitrust and labor unions. It's more difficult to organize labor unions in large companies like Amazon and Starbucks because of their union busting, and penalties are not strong enough. Mergers are an anti-union technique.

 

[lpetrich]

May be the OP's one again:

Katie Porter Lists Steps She Thinks America Should Take To Reduce Inflation - YouTube from March 30

She calls increasing interest rates and lowering wages "misguided" and says that what people need is lower costs, not lower wages.

She suggests ways of increasing supply like more green energy, increasing domestic manufacturing, let Medicare negotiate drug prices, and stop Big-Oil price gouging.

'This is a market that really needs regulation': Rep. Katie Porter | ABCNL - YouTube
Oil companies are announcing record profits -- and financing their profits with price increases.

Rep. KP mentioned "monopolies", or more precisely, oligopolies, in foodstuffs like bread and pasta.

 

[ZiprHead]

 

[ZiprHead]

Did anybody hear an actual answer there?

 

[Loren Pechtel]

Did anybody hear an actual answer there?

Elect Republicans. They're always the answer!

 

[ZiprHead]

 

[Derec]

Oil price per barrel are currently $86, while gas prices are close to $4 a gallon. In 2010, oil was slightly over $85 a barrel, while gas was under $3.
While price per barrel remains the same, Oil companies have jacked up prices over 30%
It’s not Biden, it’s the Oil companies.

Whoever wrote this simplistic tweet is apparently unaware that the oil price is just one of many costs that go into the price of the gallon of refined gasoline. You have transport costs, refining cost, gas station cost. And all those costs will not going be the same in 2022 as they were in 2010.

 

[Derec]

Unless you are accusing the Alternet of altering the text of the transcript to fit, I think your objection here is silly.

I am not accusing anybody. I am pointing to a blatant double standard when it comes to sources here. If Daily Fail is frowned upon, then so should the likes of DailyKos and Alternet.
And also, why link to an extreme left blog if it's just a "exchange of a US House Committee meeting". Should be easy to find a reputable source to link to then.

This isn't difficult.

Of course it isn't. Few simplistic analyses are.

That raises the question: why have corporations become so greedy all of a sudden, if inflation has all to do with their greed and nothing with monetary and fiscal policies?

Please also note that it is perfectly okay for companies to not INCREASE their profits, and instead have no increases in profits or have mild decreases in profits and still remain profitable.

If you ran a corporation and could increase its profitability, would you not be derelict in your duties if you didn't?

America's status as an economic and intellectual powerhouse comes from the strength of its middle class.

Which is not in dispute here. We can talk about compensation for various jobs and particularly about corporate executives, but this thread is about causes of inflation.
What is in dispute is how some people want to pretend that monetary and fiscal policies have nothing to do with inflation.

What I'm saying is just because the baseline since 1979 has been 11.4% doesn't mean that it is the only healthy number. 0% could be just as good or better if that means that employees are getting a bigger slice of the pie.

0% what? 0% corporate profits?

 

[Derec]

So, Alternet publishes leftish stories? Give yourself a Big Brownie Point for knowing that.

They are extremely biased. Not any better source than Daily Fail and a much worse source than Fox News. And both of those get routinely maligned when somebody links to them. So why should Alternet be given a pass?

More important is: Are their stories — or rather this story in particular — factually correct? If you think not, post some examples of their falsities.

I do not have time to do that, of course. I barely have time to keep up with discussions here. But it is a very biased source nevertheless.

Do not confuse the right with the left

Pox on both their houses! But thanks for admitting that you are fine with left-wing sources but not with right-wing ones. That's the kind of double standard I am talking about.

Find a factual flaw in the story, or retract your nasty non sequitur, please.

I shall not! Even if this particular story is true, it could have been sourced from a reliable source, not an extreme blog.

I guess you couldn't bring yourself to actually read the cites provided. It was because of the various repricings already underway due to Covid disruptions that big corporations had the opportunity for repricings, pretending them due to rising costs but in fact acting on their "fiduciary responsibility" to maximize shareholder value.

So you are still sticking with the fairy tale that inflation had nothing whatsoever to do with monetary and fiscal policies?

Elsewhere in the thread, you seem to deny the enormous monopoly or oligopoly power that many of today's corporations have. That's too HUGE an ignorance to fight in this thread. Start a new thread for that.

I gave examples of solid competition in industries that have seen large price increases, such as grocery stores and auto manufacturers.
I am not denying there is little competition in some industries, but I do not see that as a big driver of present inflation.

 

[Derec]

That seems very much to be an argument from incredulity.

It is not.

 

[Derec]

The Kroger Co. Family of Stores includes:

I have not seen any of the stores listed here. Presumably they are regional store chains, many of them small, and in different regions so they would not be necessarily competing against each other even if they were not all owned by the same corporation.
I know Ralph's is in the West for example. Fry's that we used to have here was an unrelated electronics store, not a grocery store.

As I said, around here we have Publix, Kroger as two major grocery store chains. You also have Walmart selling a lot of groceries, including in their grocery-only neighborhood stores. Then you have smaller chains: Aldi, Lidl, Trader Joe (owned by Aldi, but serve different market segments), Whole Foods, H-Mart, Nam Dae Mun. You have independent stores YDFM and a plethora of smaller, often specialized stores like Spotted Trotter, David's Produce, Kathleen's Catch.

There is no lack in choice when it comes to grocery stores. Even if Kroger owns a lot.