It's Not Inflation, It's Greed
The GOP has been working hard lately to promote the idea that the inflation we're seeing around the country — and most especially the high gas prices we are seeing around the country — are the fault of Joe Biden and also greedy workers who think they deserve to make enough money to live.
This is a message that resonates with Americans because they largely believe capitalism is basically good and fair and the best way to ensure that everyone is getting exactly what they deserve. Sure, maybe the rich sometimes get a little more than they deserve, but that just ensures that others will be motivated to work hard! But ultimately it's fair, unlike socialism where people get things like health care whether they deserve them or not. It would never occur to most people to think "Oh, wait, these companies are actually taking advantage of a crisis and doing some opportunistic price gouging," because in a free market, no one ever charges more than the fair market price for things.
Except that is exactly what they are doing. A report released this week by government watchdog Accountable.US analyzed the earnings data of the top three corporations in several major categories and found that the amount they raised prices did not simply cover an increase in operating costs due to outside factors, but rather led to generating profits for their shareholders. Big profits. Combined, these companies put $151 billion in increased profits into their own pockets and the pockets of shareholders.
“Across nearly every single industry that is measured for price changes, we’re seeing highly profitable corporations demand more money for consumer staples that families depend on without a good reason why,” Accountable.US president Kyle Herrig said in a statement. “These companies would have consumers believe they marked up prices just to keep up with outside costs, but the tens of billions in extra profits and generous giveaways to investors last year show otherwise. It simply doesn’t add up. Despite what they claim, these highly profitable businesses do have a choice, and they’re choosing to fatten their bottom line rather than keep consumer prices stable."
READ MORE: Don't You Dare Link Inflation To Corporate Profits, Or Instagram'll Get Ya
While customers were scrounging to pay for food and groceries — and accepting this as "inflation" due to a pandemic and increased operating costs — corporations and shareholders were making piles of cash:
As grocery prices increased 6.5%, the country's largest grocery chains — Walmart, Kroger, and Costco — benefited from price increases while seeing their fiscal year net incomes increase by a total of $238 million while increasing stock buybacks and dividends by over $12 billion. [...]
As prices increased 6%, two of the biggest U.S. food chains — McDonald's and YUM! Brands — saw profits increase by over $3.4 billion in FY 2021 while boosting shareholder handouts by over $1.48 billion. Meanwhile, Starbucks, the second-biggest restaurant chain, saw its FY 2021 profits increase by nearly $3.2 billion.
This was also the case for the clothing industry.
While apparel prices climbed 5.8%, the biggest clothing companies — TJX, Nike, and Gap — saw profits climb by over $4.5 billion while boosting shareholder handouts by over $5 billion in 2021.
I will say that it has not seemed to me that Marshalls and TJ Maxx have increased their prices, but also I am extremely good at shopping at Marshalls and TJ Maxx. It was disappointing to read TJX CEO Ernie Herrman straight up say that other retailers increasing their prices due to "inflation" provided an opportunity for them to do so as well, increasing their own net profits.
Yes, first of all, what's happened around us, as you can see, even in some of the media that outwardly reported many of the retailers adjusting their prices across the board. I won't name them, but you probably read about certain retailers taking blanket approaches to raising their retails. So ironically, like anything in this business, I'm looking at this inflationary price increase as a major opportunity for us at TJX to get even more aggressive about adjusting our retails than we've been.
Well that certainly diminishes some of the joy I have felt over the gold panther necklace I recently bought for $19 at TJ Maxx. I cognitively know they're not better than other corporations, but I sure would like for them to be.
Far more important than that, however, is the way Big Oil has screwed us over.
As gasoline prices increased 49.6% in 2021, the three biggest U.S. oil companies — ExxonMobil, Chevron, and Marathon Petroleum — benefited from higher prices, seeing previously negative profits jump nearly $87.5 billion while boosting shareholder handouts by over $4.5 billion in FY 2021.
These are stats from 2021, but this is what's going on now as well. These oil companies are jacking up their prices and pretending as if their hands are being forced by the conflict with Russia. As President Joe Biden said in February, they are exploiting this crisis in order to generate profits for themselves.
Pres. Biden on U.S. gas prices: \u2018American oil and gas companies should not \u2026 exploit this moment to hike their prices to raise profits\u2019pic.twitter.com/2VJp3S9WwO— NowThis (@NowThis) 1645729101
It works out great for them, because people will blame Biden for this and not them — and let's be real, of course they don't want a Democrat in the White House, because they don't want anyone chipping away at their profits by investing in green energy that would limit their ability to price gouge in situations like this one. They want to frack like there is no tomorrow — and they already are. Domestic oil production is actually up from where it was during Trump's first two years in office and on par with the last two years.
These corporations are looking at a world in crisis and saying to themselves "How much can we get away with here?" and that's messed up. They are exploiting not only these crises but also people's faith in them and in the American economic system. It may very well work out for them, because it is a lot easier for people to blame the government than to blame corporate greed. That being said, let's hope that the initiatives Biden is taking to curb corporate profit — fairly aggressive antitrust measures — will be effective and keep these companies from gouging us any further.
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Robyn Pennacchia is a brilliant, fabulously talented and visually stunning angel of a human being, who shrugged off what she is pretty sure would have been a Tony Award-winning career in musical theater in order to write about stuff on the internet. Follow her on Twitter at @RobynElyse