Why America Must Fight Corporate Greed

In the midst of America's economic recovery from the COVID-19 pandemic, our nation struggled with disruptions and bottlenecks in various supply chains to a degree not seen in most of our lifetimes. Construction materials, computer chips, automotive parts, a variety of foodstuffs and more all were either in short supply, having difficulty getting where they needed to go or both. Cargo ships sat waiting for weeks before docking and unloading in ports such as Long Beach and Los Angeles, a long-problematic short-supply of truck drivers left a lag time in goods being moved and distributed, a general labor-shortage resulted in long restock times and difficulties fulfilling goods and services ordered, and all of this was taking place while demand within the American economy was near all-time highs. As a result, the cost of shipping, trucking, labor and goods in general began to see unusually rapid increases. Shipping costs from Asia to North America increased by nearly 10 times, the cost of computer chips rose by 20% or more, and nearly every industry in the nation was impacted by one, the other or both.

Since then, however, shipping costs have more than halved, from over $20,000 per cargo container to around $9,500 now. Wait times to unload at major West Coast ports like LA have dropped to near pre-pandemic levels, labor market participation has notably increased, and the cost of new computer chips is expected to rise a significantly lower 6% heading into 2023. Yet, annualized inflation is up 6.3% as of September of 2022, far higher than the national average and more than triple the 2% goal the Federal Reserve has set for healthy economic growth. Meanwhile, average wages have lost ground against inflation despite rising in raw dollar value, resulting in a 2.4% inflation-adjusted loss in average buying power over the last year. As the uncontrollable factors impacting inflation ease, another has gained steam and is driving the current record-high trends: corporate greed.

Companies ranging from McDonalds to ExxonMobil and Koch Industries to Tyson Foods are all reporting record high profit margins, for an expected record setting 13% margin for S&P 500 companies (which had never even hit 11% prior to the pandemic). Overall corporate profits soared to a record-setting $2 trillion during the second quarter of 2022, all while average Americans were getting hit hard by the dual impact of higher food and gas prices. At this point into the pandemic recovery, the main drivers of inflation isn't an actual lack of supply or excess demand, it's pure and simple cash-gouging profiteering.

High gasoline prices persist, though they have been dropping, despite higher-than-average supply within the market. Speculators insist there are large risks in the market justifying these prices due to the 'fragility' of our economic recovery and instability caused by the Russian invasion of Ukraine, yet it doesn't change the fact that oil extraction and refining has not seen any sort of actual increase in price. Additionally, America received a negligible amount of its oil supply from Russia before its invasion, and there's still the aforementioned kicker that oil and gasoline supply is higher than normal within the market. While large oil companies around the world lie to us, they're raking in record profits for doing the same or less work than normal. This inflation is no longer due merely to a mismatch of supply and demand, this is a result of too few companies controlling an entire market and deciding to capitalize on the opportunity provided by global crises.

Current food price increases are also impacted by similar factors. During the pandemic, there were mandatory shutdowns of a handful of facilities which had verified infection outbreaks, yet these shutdowns were short-lived and few and far between due to food producers being rightfully considered essential businesses. Most of these businesses, such as Tyson chicken processing plants, employ overworked and underpaid workers to push the absolute limits of human ability to produce mass-market-ready chicken products, and this fragile system was ripe for disruption when the infections swept through the workforce. This decreased production output combined with increased transportation and distribution costs to result in higher prices for chicken products throughout the nation. While some price increases were to be expected, the lockdowns are no more, production is back at or near pre-pandemic levels and gasoline and distribution costs have declined dramatically. Nonetheless, the cost of chicken has not only failed to come back down, it has continued to increase, resulting in record high profits for the companies controlling the industry.

Unfortunately, this vulnerability to the greedy whims of corporations is something now built into the American economic model. There are only three companies which control nearly all chicken production in the US, five companies control the bulk of foodstuff distribution, four major media companies own the majority of their market, three major telecommunication companies control nearly all cable internet access, and the list goes on. America is a nation of mega-mergers and massive corporations which have slowly and deliberately formed chokeholds on various industries throughout our economy. For decades now, since the current Neoliberal political order took power back in the 70s and 80s, deregulation and lax rules regarding mergers and buyouts have resulted in a few to a handful of companies controlling the majority of market share in industries all over the country. We have slowly but surely become a nation of the corporation and for the corporation, with our jobs automated or offshored away, our politicians bought off with increasing force and consistency, and our economy and livelihoods at the mercy of profit-driven, shortsighted, money-hungry executives and shareholders. Our current inflation is a sadly predictable outcome of an increasingly corrupt system.

At this point, there are both short and longer term options to slow the current inflation rates and ensure such companies do not have the ability to manipulate the market like this again. First off, the Federal Reserve should stop rapidly raising interest rates, disproportionately hurting those already suffering under greed-driven inflation, and begin decreasing rates to more traditional levels. Instituting a windfall-tax as several European nations are implementing or discussing, which taxes above-average profits resulting from economic instability, would help dampen further interest in exorbitant price increases. Enacting profit-margin caps on volatile necessities, such as foodstuffs, gasoline, energy rates, rent and so on would help even more than windfall taxes to smooth-out and manage short and long-term increases in prices for things most people must pay for. In the longer term, America must remake itself, stopping the continued mergers of large companies, trust-busting and breaking up concentrated industries, enacting legislation which stops the 'sandboxing' of various industries and makes it easier for newcoming competitors to enter tough markets, and enforce a maximum ratio of income between executives and the average workers, just to start.

To inject some true stability into the American economy, we could even implement a universal housing guarantee, partially nationalize food and medication production and distribution to stabilize prices and supply, require greater stocks of products in various markets to prevent sudden supply shocks, mandate energy and utility companies operate as nonprofits to shield them from shareholder greed, renovate America's grid system and energy supply sources to make our country oil-independent as soon as possible, implement universal sectoral bargaining for workers across the nation to allow for labor representation in all industries, enact tax benefits for businesses on-shoring and keeping jobs in America while raising taxes on those who move jobs out-of-country, create or encourage the operation of explicitly American shipping companies with profit margin caps on services, continue working towards expanding domestic production of low and high-end computer chips, increase infrastructure investments to create more bandwidth for transportation of goods via rail, air and roads throughout the nation, enact and enforce anti-profiteering legislation and more. In short, a proper free market requires strong oversight, which our government is intended to provide. We must insist our government steps in and represents us again, taking back our economy and prosperity in the process.

While some or all of the above policies and plans would help gird us against sudden inflation increases and supply shocks, the reality is we're facing an entrenched foe with a whole lot of money, influence and power. Any political or economic change in this nation, particularly that which unabashedly benefits the People at large, is incredibly difficult to implement at this point in our history, yet reality doesn't need to be this way. We can and are beginning to turn the needle back to the proverbial left, towards pro-public policies and pro-average American families and workers. It's been nearly half a century since our federal government was largely run by those wanting to build up the institutions and infrastructure which underpin our nation, yet we can enter such a political reality again. This change begins with us, as always. It's up to each of us to educate ourselves and others, volunteer for organizations and campaigns which advocate for true change, and stay in the fight until the change we demand arrives. Together, we will usher in a better and brighter future.

References:

1) https://www.tomshardware.com/news/tsmc-to-hike-chip-prices-in-2023

2) https://www.freightos.com/freight-resources/container-shipping-cost-calculator-free-tool/#:~:text=While%20in%20September%202021%2C%20it,United%20States%20was%20around%20%242%2C500

3) https://www.cbpp.org/research/economy/tracking-the-recovery-from-the-pandemic-recession

4) https://www.forbes.com/advisor/investing/why-is-inflation-rising-right-now/

5) https://www.bloomberg.com/news/articles/2022-08-25/us-corporate-profits-soar-taking-margins-to-widest-since-1950

6) https://www.marketwatch.com/story/corporate-profit-is-at-a-level-well-beyond-what-we-have-ever-seen-and-its-expected-to-keep-growing-11649802739

7) https://truthout.org/articles/corporate-profits-surge-to-an-all-time-high-of-2-trillion/

8) https://aflcio.org/issues/corporate-greed

9) https://www.foodandwaterwatch.org/2022/09/19/corporate-greed-global-crisis/

10) https://robertreich.org/post/679072770118877184

11) https://accountable.us/watchdog-will-corporate-greed-get-all-due-credit-for-higher-prices/

12) https://www.americanprogressaction.org/article/americans-see-through-corporate-greed/