Thread by @doctorow

Giving workers modest sums to prevent them from starving during the lockdowns enraged #inflation hawks, who insist that improvements to workers' material lives will transform America into an amateur Weimar revival, with wheelbarrows of useless bank-notes. 1/

If you'd like an essay-formatted version of this thread to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:

pluralistic.net/2023/03/11/pri… 2/

"Democrats" like Larry Summers - a Clintonite ghoul who is on record as saying that women are biologically incapable of doing science - insisted that preserving workers' living standards was a terrible mistake. 3/

For Summers, making workers off only prolonging the inevitable day when they would be shoveled into the furnace that keeps #TheEconomy running. 4/

And indeed, the lockdowns *were* followed by a series of price rises. Some of these were obviously the result of capacity problems:

pluralistic.net/2022/06/01/fac…

Cars got more expensive because panicked car executives canceled their microchip orders. 5/

That's a problem, because they redesigned our cars to be mobile surveillance platforms stuffed full of anti-repair digital locks, which means that cars need dozens of chips just to function:

pluralistic.net/2020/09/03/rip… 6/

As a result, fully assembled, chipless cars piled up in warehouses around the world, inert and immobile, awaiting the breath of life to be kindled by semiconductors. 7/

At one point, car makers even bought up *washing machines* to shell them for the chips inside, discarding the husk of the machine:

autoevolution.com/news/desperate… 8/

With fewer cars being made, and some cars being scrapped or retired, there was more demand than supply, and car prices rose, temporarily. This is obviously a *capacity* problem, not a *demand* problem. Working people don't cause capacity problems. 9/

*Bosses do*: by selling off buffer stocks, eliminating redundancies and safety margins, and chasing lax labor and environmental regulations to the corners of the world, stretching out #SupplyChains across vast distances. 10/

But not all the price rises were temporary, nor could they all be attributed to #SupplyShocks. 11/

Reporters who tuned into earnings calls from large, monopolistic companies like #ColgatePalmolive, #Unilever and #ProcterAndGamble were amazed to hear CEOs and CFOs boasting about how they were able to use the *excuse* of inflation to raise prices:

pluralistic.net/2021/11/20/qui… 12/

Talk about saying the quiet part out loud! Here's the eminently guillotineable Colgate CEO #NoelWallace: "What we are very good at is pricing." 13/

Or the tumbril-ready #Kroger CEO #GaryMillerchip: "We’ve been very comfortable with our ability to pass on the increases that we’ve seen at this point, and we would expect that to continue to be the case." 14/

Despite the CEOs literally *boasting in public* about how they were able to raise prices far in excess of any increase in their costs and rake in windfall profits, neoclassic economists clung to doctrine. 15/

They kept pushing their perfectly spherical cows of uniform density around on their frictionless planes, insisting that the models predicted that this was impossible, therefore it wasn't happening. 16/

Specifically, establishment economists claimed that since market concentration hadn't increased significantly over two years, that the inflation seen over that point couldn't be blamed on monopolies. 17/

But as @HalSinger wrote, that's not how monopolies raise prices: they wait for *excuses* to price-gouge, and then they use their market power to make us all poorer:

pluralistic.net/2022/02/02/its…

*Two thirds* of US companies grew margins over the pandemic's first two years. 18/

Prices didn't go up because poor people spent CARES Act money. Inflation wasn't down to supply-shocks. I accuse monopolies, in the economy, with the profiteering:

wsj.com/articles/infla… 19/

There is no evidence of a #WagePriceSpiral. Wage growth peaked in June at 4.8% and by October it had declined to 4.2%, making real wages 2.3% lower than they were in Oct 2021. 20/

As @JosephEStiglitz and @Regmi_Ira wrote for the @rooseveltinst last December, "Weak unions, globalization, and changes in the structure of the economy" mean that workers generally can't demand inflation-tracking wage increases:

rooseveltinstitute.org/wp-content/upl… 21/

Stiglitz and Ira lay out five causes of inflation: energy and food spikes, changes in what we want, supply interruptions, higher rents - and price-gouging (notably, none of these can be fixed by jacking up the interest rate at the central bank). 22/

As the Stiglitz/Ira list of five causes shows, it's not *just* price-fixing that causes prices to go up - but every one of these causes feeds into price-fixing, thanks to a phenomenon called #excuseflation. 23/

This is unpacked by @tracyalloway and @TheStalwart in the latest #OddLots podcast:

bloomberg.com/news/articles/… 24/

In the accompanying @business article, Alloway and Weisenthal run down examples in which executives boast of how real crises - war, climate events, Suez Canal blockages, bird flu - provide ready-made excuses for raising prices and keeping them high:

bloomberg.com/news/articles/… 25/

Take #KenJarosch of #Chicago's @JaroschBakery, who told investors, "Whether it’s rye flour, or bird flu that impacts eggs, when it makes national news…it’s an opportunity to increase prices without getting a whole bunch of complaining from customers"

bloomberg.com/news/articles/… 26/

The analyst @SamuelRines describes this as a "#PriceOverVolume" (#POV) strategy: companies know that if they raise prices, they'll sell fewer goods, because many working people won't be able to afford their products. 27/

But - thanks to inequality - these merchants can make up the losses by extracting much larger sums from the professional and managerial class. 28/

Rines singles out several large American companies as hotspots of POV: #Pepsi, #HomeDepot, and even discounters like #Walmart and #DollarTree. POV makes everyone worse off. 29/

Low-income people are priced out of the market, and high-income people are ripped off. Only the shareholders benefit.

Take Pepsi: after the Russian invasion of Ukraine, Pepsi pulled out of Russia. 30/

But its profits remained steady, because Pepsi was able to raise its prices in the rest of the world - blaming the war, of course. Rines calls this PPP: #PepsiPricingPower. 31/

The pitchfork-friendly Pepsi CEO #RamonLaguarta describes this as "trying to create brands that can stand for higher value to consumers and consumers are willing to pay more for our brands."

investors.pepsico.com/docs/default-s… 32/

(Why don't customers switch to Coke? It turns out that duopolies like Pepsi-Coke are able to tacitly collude on pricing, and Coke is *also* raking in massive profits.) 33/

#UMassAmherst economists @IsabellaMWeber and Evan Wasner call this #SellersInflation, where "overlapping emergencies" allow companies to raise prices far in excess of their cost increases, and then keep them high even when the emergencies end:

scholarworks.umass.edu/econ_workingpa… 34/

Take @wingstop, whose chicken prices have shot up by 125% in a year, with "zero pushback from the consumer." Wholesale chicken prices are down 50%, but Wingstop's prices are still high, and its stock is up 250% from its Covid crisis low. 35/

The power of excuseflation is that it allows apologists to, well, make excuses. When egg prices shot up in January, Big Egg was able to blame it all on bird-flu. 36/

There really *was* a bird-flu problem, but there's just one company selling all the eggs: Cal-Maine, who increased its margins by *110%* in a single year. Wholesale prices stabilized, but prices kept going up, and CALM's share price climbed by 47%:

pluralistic.net/2023/01/23/can… 37/

CALM owns nearly every egg brand you've ever heard of: Farmhouse Eggs, Sunups, Sunny Meadow, Egg-Land’s Best and Land O’ Lakes eggs and more. 38/

When all those brands' prices shot up - conventional eggs hit $2.88/doz in Jan, a 100% increase over Jan 2022 - that was just one company raising prices.

If the price spikes were caused solely by bird flu, then you'd expect margins to *fall*, not rise. 39/

But bird-flu was the *excuse* for #eggflation, not the cause. 40/