Opinion: Amid GOP drama, Democrats need to flip the script on inflation

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In the midst of all the drama and scandal caused by Republican deceit today, from Kevin McCarthy’s alliance with and empowerment of fascist and white supremacist factions in the House of Representatives to the blatant deception of President-elect George Santos of American voters (and his and the GOP’s shoulder-shrugging), the main political issue of inflation often gets lost in the mix – perhaps intentionally.

I refer to “inflation” as a political, rather than simply an economic issue, because calling it an economic issue perpetuates the illusion that somehow the rising prices of key commodities are simply the result of impersonal economic laws, such as supply and demand, rather than a result of unchecked or unregulated power bestowed upon corporations by the political powers.

And I put “inflation” in quotes because it’s actually a misnomer and obscures what’s really going on, which is driving up prices, especially when it comes to gas and housing prices. And when we use the term “inflation” instead of “price squeeze” or “profit-seeking,” that urges the ring road wonks to turn to their outdated solutions to try to rein in out-of-control prices, which usually means that American workers must be attacked. and make their lives worse, which misunderstands the real causes of the skyrocketing cost of living for Americans.

For example, Federal Reserve Chairman Jerome Powell has defaulted on the tired and largely unexamined strategy of raising interest rates to slow the economy. Raising interest rates leads to higher prices, which slows demand, which leads to companies needing fewer workers to make and transport their products, which increases unemployment and thus puts downward pressure on wages.

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The solution to “inflation”, or rather, price gouging, is to punish workers. I think that despite the mantra we hear so often, we are not all in the same boat.

As Sylvan Lane succinctly explained in The hill:

Simply put, the Fed knows that its past and future rate hikes will lead to higher unemployment and will not stop fighting inflation as a result.

But higher unemployment isn’t just a side effect of the Fed’s plans: it’s a goal.

Powell and many other economists believe that the US labor market is too strong for inflation to fall. The combination of super-low unemployment and record high job vacancies has led to rapid wage growth, they claim, forcing companies to raise prices to accommodate higher labor costs.

But we must unravel the falsehoods informing this hackneyed and misleading, if not downright deceptive, narrative that is, in fact, perpetrating a hoax on the American people.

Let’s first look at the skyrocketing profits oil companies and business owners have made recently.

And let’s not forget that if these companies simply passed their rising costs on to consumers, their profits would stay the same, not increase.

Take three of the largest oil companies and look at their Q3 annualized earnings growth for 2022. Exxon’s earnings grew from $19.7 billion in Q3 2021 to $24.4 billion in Q3 2022, Chevron’s from $6.1 billion to $11.2 billion and Shell’s from $4.13 billion to $9.45 billion.

And when it comes to price inflation in the rental sector, Irina Ivanova reported for TBEN News:

The largest publicly traded real estate groups in the U.S. saw their combined revenues jump more than 50% last year to nearly $5 billion, the watchdog group Accountable.US found in a new analysis. During that time, their top executives saw increases of more than 20%, the group calculated.

Again, to underline the obvious, these increases in profits and executive compensation would not materialize if these companies simply passed on their own cost increases to consumers.

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Understanding these dynamics is essential to finding an appropriate and humane solution and meeting the needs of Americans.

Seeing rising costs as a result of price gouging, as opposed to ‘inflation’, which suggests that prices rise because companies’ costs rise and are simply passed on, logically means that making workers’ lives worse through rising unemployment is neither an effective nor humane solution to the problem of rising costs.

And we need to ask one more important question: Why, instead of finding a political means to curb corporate profit-seeking and to limit? Why is it acceptable to cut wages but not limit profits? Why don’t employees get the same treatment and care as companies, who will arguably feel the pain much less or not at all?

We need to flip the script so that the first instinct of expert economists is not to attack workers, where the pain will be felt the most, but to impose restrictions on companies, which should have some responsibility to act as good citizens and neighbors act.

Irina Tsukerman, a geopolitical analyst and member of the American Bar Association’s Oil and Gas Committee, invokes the traditional script when explaining why oil companies committed a “murder.” She says, “They are free enterprise and like any other product in the US, they are not controlled by the government, nor can the government regulate prices.” And she invokes the typical supply-and-demand story, explaining that “when demand rises, so do prices, because consumers are willing to pay more for the same product.”

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Again, we need to interrogate this harmful language. Consumers are not so much “willing” to pay as they are forced Pay. They have to drive to work to earn a living. They have to pick up their children and so on.

When it comes to housing, people need a place to live. It’s not about it willing; it is a matter of must or being homeless. According to the Government Accountability Office, every $100 rent increase results in a nine percent increase in homelessness.

President Biden last year suggested the need to address price gouging and profiteering through legislation.

Our political leaders need to address and name price gouging again, call “inflation” what it is to inform and educate the American voter and make them think about our national values, hopefully turn them into genuine concerns about the needs of Americans.

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