Friday, July 29, 2022
A Journal of Analysis and News
Robert Reich: Debunking 4 Myths About Inflation – OpEd
By Robert Reich
The truth about inflation is getting covered up by countless myths spewed by corporations and their political lackeys.
Here are the facts:
Fact #1: Inflation is not being driven by wage increases.
Although wages have been rising, they’ve been rising more SLOWLY than prices. Hourly wages grew by 5 percent in the past year — but prices rose 8.6 percent. This means, when you adjust for inflation, workers actually got a 3.5 percent pay cut over the past year.
Fact #2: Corporate profits are one of the main drivers of inflation.
Corporations are raising prices above what’s needed to cover their higher costs. These mark-ups have soared. Corporations are getting away with this price gouging because they face little to no competition. And they’re using the specter of inflation as a cover.
Last year, corporations raked in their highest profits in 70 years. One recent study found that over half the increase in prices we’ve been experiencing can be attributed to fatter corporate profits.
Fact #3: Federal assistance to people during the pandemic did not overheat the economy.
Most families — who haven’t had a real wage increase in years — used the assistance to pay down debt or save for the future. The assistance was barely enough to keep working families afloat.
Fact #4: Inflation is not the result of President Biden’s or Democrats’ policies.
Republicans want to blame them for rising prices. But Democrats have tried advancing bills to bring down prices and address corporate price gouging, yet Republicans and a handful of corporate Democrats refuse to pass them.
So don’t fall for the corporate myths about inflation.
Higher prices are not being driven by wage increases. They were not driven by federal assistance to people during the pandemic. And Democrats aren’t to blame.
Inflation is being driven in large part by record corporate profits. The best way to fight it is to remove corporate incentives to raise prices through a windfall profits tax. And reduce monopoly power through tougher antitrust enforcement.
Know the truth.
Robert B. Reich is Chancellor’s Professor of Public Policy at the University of California at Berkeley and Senior Fellow at the Blum Center for Developing Economies, and writes at robertreich.substack.com. Reich served as Secretary of Labor in the Clinton administration, for which Time Magazine named him one of the ten most effective cabinet secretaries of the twentieth century. He has written fifteen books, including the best sellers “Aftershock”, “The Work of Nations,” and”Beyond Outrage,” and, his most recent, “The Common Good,” which is available in bookstores now. He is also a founding editor of the American Prospect magazine, chairman of Common Cause, a member of the American Academy of Arts and Sciences, and co-creator of the award-winning documentary, “Inequality For All.” He’s co-creator of the Netflix original documentary “Saving Capitalism,” which is streaming now.