Well, well, well,
look at the Wall Street Journal waking up to the notion that corporate greed exists.
In a new piece addressing the horrific inflationary pressures cash strapped
Americans have been struggling with,
writer Paul Hannon addresses the reality of price gouging.
He writes Inflation has proved more stubborn than central banks bargained for
when prices started surging two years ago.
Now some economists think they know why businesses are using
a rare opportunity to boost their profit margins.
Now they know why, now you think this is new?
Now this is apparently a new concept for corporate media and legacy outlets.
Hannah even says there are signs that companies are doing
more than covering their costs.
According to economists at the ECB, businesses have been padding
their profits that they said was a bigger factor in fueling inflation
during the second half of last year than rising wages were.
I mean, all it takes is a quick listen to corporate earnings calls.
The admissions by corporate executives are pretty candid because they have to be
frank with their shareholders.
They have to explain how they plan to provide a higher return on investment.
After all, that's their fiduciary responsibility.
Now Jan Philipp Jenisch, who is the chief executive of construction
materials maker Holcim, said on a recent earnings call, quote we
are in that inflationary environment already for almost two years now.
We have done the pricing in a very proactive way so
that our results aren't suffering.
On the contrary, they are improving the margins.
That's a fancy way of saying we're price gouging the customers and
we are increasing our profits by doing so.
In fact, other companies have made similar admissions and they're even more frank.
Last month, Procter and Gamble said it had boosted its profit margins in
the first three months of the year, thanks in large part to higher prices.
Food industry oligopolies also play a role.
While Hannan writes that much of the surge in food prices stems from higher
energy costs thanks to the war in Ukraine.
He also concedes that corporations are exploiting the lack of competition
to price gouge and pad their pockets.
But economists at insurance company Allianz,
I love the name of that company, I just love saying it,
have calculated that about 10% of the rise reflects the search for higher profits.
They suggest that is possible because key parts of food supply
chain are dominated by a small number of firms.
Now companies also believe that they can get away with the price gouging,
probably because they already have.
They've blamed higher prices on a whole host of other things like supply
chain shortages or bottlenecks.
Paul Donovan, chief economist at USB Global Wealth Management, confirmed this.
He says, quote they are confident that they can convince consumers that it isn't
their fault, meaning the company's fault, and it won't damage their brand.
But the media's role in covering up these corporate scams is also a problem,
that's how they get away with it.
Until this piece was published,
the Wall Street Journal aided the effort to obscure what's really going on.
Here are just a few examples, Fiscal Stimulus is
turning into a fiscal drag in a big headwind for growth.
Drop in federal relief could help cure or curb, I should say inflation,
while elevated savings should blunt impact on consumers.
That was published February of 2022.
And this was a way of essentially telling everyone the government needs
to stop financially assisting Americans during the pandemic because we
believe that's causing the inflation, complete and utter nonsense.
Another Wall Street Journal headline reads,
stimulus might cause higher inflation, but for how long?
Combination of another round of COVID-19 relief and
easing of pandemic's grip could push prices higher, that was published in 2021.
Okay, one more though, just one more, third COVID-19 stimulus
package could jolt US growth, revive inflation in 2021.
So look, when it comes to the Wall Street Journal finally publishing
a reality based piece on this topic,
I guess we should celebrate because it's better late than never.
But for a while now, we've just been hearing over and
over again that it's our fault.
It's the workers fault, their wages, their wages are too high even though our wages
haven't kept up with inflation since the 1970s.
We've heard economists and people like Larry Summers urge the Biden
administration to cut Americans off from the financial assistance that they so
desperately needed and probably continue to need during a pandemic.
And let's also be honest after the pandemic,
when inflation hurt ordinary workers the most, I mean,
the fact that the Wall Street Journal is also reporting this
as if it's a brand new finding is pretty infuriating.
But it is known as the paper with the super conservative editorial board.
And I would venture to say that some of the editors are probably leaning toward
the right as well.
God forbid workers make a little bit more money.
God forbid, the taxes we pay should go back to us, the American people, when
we are dealing with financial uncertainty and a terrible economic situation.
I mean, shouldn't we know better that money is supposed to be funneled to
defense contractors, to private companies in the form of government contracts?
God forbid that money goes to us, it's just so sick.
But hey, they at least saw the light in this one piece, and
I guess they deserve a little bit of credit for that.