according to this chart,
what is the biggest driver of inflation during the pandemic?
The blue is the dark blue is the recent period, it would be corporate profits and
what is that percentage?
It is 54% and that number does stay that level of high.
If you update that number to more recent numbers as well.
Congresswoman Katie Porter brought her white board out again to inform
the american people about what's really driving inflation.
Now we've talked about inflation on the show.
I think there are multiple factors but
corporate greed certainly happens to be one of them.
And so why don't we take a look at how the rest of that conversation went and
then we'll break it down.
So over half of the increased prices people are paying
are coming from increases in corporate profits.
Yes. The unit price index is reflected in
corporate profits as opposed to other costs.
And how does that compare to historically to other periods of inflation or
over other periods of economic time as reflected there.
And in other analysis it is significantly higher in this recovery.
11.5%.
And what is it today?
53%.
So I want to make sure everyone in America understands this chart.
What is a unit labor cost, cost, wages and an associated so we can just wages.
What is a non labor input cost a variety of things including maintenance and
investments.
Okay so I have to buy the buy the stuff to make the widget, I have to have a factory,
I have to keep the lights out.
I have to hire someone to make the widget that's
this stuff and this is what I add on on top.
You know, I I love when she brings the white board out because our
education system, I think intentionally doesn't dive into this.
And so a lot of americans graduate high school,
not really understanding how our economy works, how corporations function,
what the fiduciary responsibility is for these corporations and their executives.
But no me, I want you to further break down what what they're talking about here.
Yeah. And first of all,
shout out to the Economic Policy Institute for putting that data together and and,
and and reporter for just being awesome with it.
I really think she needs to take that white board to the Federal Reserve and
have a sit down with jerome Powell who does not understand it refuses to
acknowledge it.
What that's basically saying is the price increases that we've been experiencing
that we are experiencing through companies are a result predominantly, more than
half of those companies expanding their profit margins, not paying their workers.
And and not only is that the result, this result has been particularly obvious and
onerous in the years since the pandemic when all this money was created as well as
we were talking about other segment,
but but these two years have created a situation where companies can use
the fact that there is inflated prices, There are higher food and fuel costs,
there are things that cost more their supply chain disruptions,
there's problems, there's geopolitics, but what they've done is they've sort
of bootstrapped from that they've expanded, they've increased prices by so
much more than they have in the past because they have that cover.
Yes.
Yes, exactly.
I mean, they're exploiting some of the supply chain issues as the reason for
the price increases, as the reason why you're seeing that, you know,
high cost of food and all of that in the market.
And it's it's interesting because while it's true, it's just demonstrably true.
The thing that I worry about is when you look at polls and
we've talked about several polls this week alone in
regard to how voters are feeling as we get closer and closer to the midterms.
Who do voters, including democrats, blame inflation on and
they blame it on biden, right?
It's very simple, it's a very simple way of thinking about what's happening in
the country and by the way across the globe right now.
And it's frustrating because I don't think that the Democratic Party
has done a good job in communicating what's really transpiring here.
They're not really talking about the corporate greed in a repetitive,
I think it needs to be repetitive and robust way.
I'm glad that Katie porter is doing it, obviously, she's a democrat, but
the fact that the biden administration is being blamed for it, you know,
would make you think that they would have some sort of campaign in place to
push back against that narrative.
Yeah, it's really astonishing that they don't because there's two things going on
with the biden administration.
It could have been any administration in power right now.
Okay. They are the ones in power when
this inflation, when this gree inflation from corporations has been running rampant
together for multiple reasons.
They've also been in charge of a bipartisan infrastructure act where they
decided, okay, well, maybe we can actually grow the economy instead of just
simply being sort of victims to this corporate inflation, but
but they're not even talking about the remedy to inflation,
they're not breaking down inflation either.
They're literally like hiding from the situation and and
by effectively, and what biden did that was also not too bright is
he has let the Fed control the narrative on inflation.
Yes, that's such a great point.
And if you listen to jerome Powell, you know, he does these Press conferences and
he addresses it, he blames it squarely on workers.
Yeah, who have, again, I've said this a billion times,
but I'll say it again, who haven't seen their wages increase since the 1970s, so
they're actually the ones suffering the most from inflation.
And he doesn't really draw much attention or
any attention to the corporate greed angle.
I want to share a few other details with you to kind of help understand what these
companies and these corporations are up to.
So, for instance, last summer Kroger Ceo Rodney Mcmullen said
that a little bit of inflation is always good in our business because customers
don't overly react to increases in prices.
Kruger's CFO Gary Miller ship told shareholders in october quote,
we've been very comfortable with our ability to pass on the increases
we've seen at this point and we would expect that to continue to be the case.
The most enraging thing you can listen to is those investor calls.
Yeah, right, well, and let's break those things down, like add them together.
Right. On the one hand,
wages haven't kept up with inflation.
On the other hand, as Katie Porter was saying, and inciting that report in those
stats the last two years have been particularly bad for wages as a percentage
of corporate profits anyway, in that they are not part of that increase.
And then you have the corporate ceo saying, and by the way,
it's okay to charge people more.
So they're charging the people that don't have the wages that have kept up with
the prices more.
So it's like they're they're from two angles hurting most of the country.
It's, it's crazy.
So let's talk about in a perfect world where we actually had politicians
who cared about us and our best interest and wanted to do something about this?
What would be a possible solution?
Right.
I mean, would it be regulation in regard to, you know,
the price gouging that we're seeing?
Is it something else?
I mean, what would you propose be done by leaders in Congress and
maybe even the executive branch in response to this?
Well, it's, it's something they're, they're not going to talk about don't like
to do, but we do need some form of, of a price ratio cap to the level of inflated
prices that's coming from these corporations.
The data is there even if that particular data isn't 100% perfect, the data is
there to indicate where these price increases are coming from, on top of where
the supply chain and other geopolitical disruptions are causing price is to be.
So that information is there.
So if you had a sort of price cap ratio, and
you also have a situation where we need to actually have corporations pay taxes,
we still insist in a world where most people pay most of the taxes that go into
the Treasury, Department of the United States and around the world,
particularly in the United States, then corporations do.
And yet they're getting all this, they're not paying people, their increasing their
prices, they're hurting the rest of the economy and they're not paying for it.
You know, you could, you could enforce, you know, the tax laws to begin with,
even before you make them more fair.
Yeah, definitely.
And I would add to it.
I mean, in terms of asset inflation, I would outlaw stock buybacks.
I mean, what, what do these corporations use their profits for
to generate more profits by buying shares of their own stock, stocks?
And then, you know, that's how exam are also paid.
So all the incentives are there for the executives to take those profits,
buy shares of their own stocks and maximize the profits.
You know, even further.
It's, it's incredible really,
is the system is set up in in this way on purpose.
And it's unfortunate that we don't have, there's maybe like a handful if that,
of politicians who actually care about this, try to draw attention to it.
But when you have a two party system that's kind of melded into one due
to the way campaigns are financed due to the fact that members of Congress
are allowed to invest in individual stocks themselves.
They have a vested interest,
literally to keep this system going to the detriment of everyone else.