Sigh. Fine. Let’s talk about inflation. Everyone else is!
Inflation is the highest it’s been in four decades. Which you know if you’ve paid attention to the news or had the misfortune of listening to a conservative Boomer dad complain recently. If you’ve casually absorbed information from these sources in recent weeks, then you’ve probably also heard that a) there’s no end in sight, b) this is all the government’s fault, and c) nothing can be done to stop the vicious shadowy hand of inflation!
In the words of noted jelly bean lover Ronald Reagan, “Inflation is as violent as a mugger, as frightening as an armed robber and as deadly as a hit man.” (Join our Patreon to make our weekly newsletter Giraffes That Look Like Ronald Reagan a reality.)
Scary stuff, right? Won’t somebody please think of the [checks notes] price per barrel of crude oil????
In all seriousness, I have to work hard to make jokes about inflation. Because it has real negative effects on real people who could really use a fucking break right about now. Somebody choosing between buying overpriced milk for their kids or overpriced gas for their commute to work probably doesn’t give a shit about what’s to blame for high inflation. They just want it to stop.
Which is why today I’m going to toss out all the usual inflation red herrings—the political convenience of using inflation to shit on the current administration, for example—and distractions. And then I’m going to talk about the real struggle.
… the CLASS STRUGGLE, of course!
What even is inflation?
It has recently come to my attention (very much against my will) that “inflation”… is a sexual fetish. So let me be abundantly clear: NO NOT THAT KIND OF INFLATION.
Anyway, let’s unpack the economic meaning of “inflation.” Put simply, it’s what happens when your money has less purchasing power despite goods and services costing more. Under normal circumstances, it’s a planned economic process that occurs slowly over time. It’s why your grandpappy talks about when the newspaper cost a nickel and yet your subscription to The New York Times online is $4.25 a week. If you want to know more about why inflation is normal and necessary, we explain that in this article.
But sometimes inflation speeds up to a rapid rate—hyperinflation. That’s when it becomes super noticeable to the average person. It makes it feel like life is exponentially more expensive than it was a few weeks or months ago… because it is.
Does the thought of hyperinflation have you panicking? Local carpenter and crunchy bikevangelist Mr. Money Mustache takes an optimistic view of inflation: that it’s temporary, that over time the waves reduce to mere ripples, and in the long run we’ll all be just fine. And we don’t think he’s wrong! When hyperinflation is caused by disruptions in the normal cycle of supply and demand, it’s nothing to worry about. We all just need to batten the hatches and get through the storm, as painful as it might temporarily be. In your face, Reagan!
Unfortunately, there’s something else going on right now. We’re not merely experiencing your grandma’s inflation. We’re also dealing with something far more sinister.
It’s the pandemic right? It’s always the goddamn pandemic.
Our global reaction to the pandemic fucked with national economies in lots of exciting ways, including supply chain disruptions, shortages of various goods and materials, mass lay-offs, labor shortages (all those lazy, entitled dead people aren’t doing their fair share), and certain industries becoming obsolete while others experienced massive booms.
Efforts to fight the negative economic effects of the pandemic have also probably contributed to inflation. Remember those government stimulus checks? A moratorium on evictions? Student loans going into forbearance? If you need your memory refreshed, check out our coverage of coronavirus and America’s nasty little problems:
- Coronavirus Reveals America’s Pre-existing Conditions, Part 1: Healthcare, Housing, and Labor Rights
- Coronavirus Reveals America’s Pre-existing Conditions, Part 2: Racial and Gender Inequality
- Love in the Time of Coronavirus: How To Protect Your Community and Your Soul From COVID-19
All of this—the pandemic, the reaction to it, and the efforts to save us from economic disaster—contributed to our current bout of hyperinflation. I won’t argue with that.
But I am going to argue.
Can’t help it. It’s my nature! And right now I want to argue with the idea that the pandemic is the only cause of today’s inflation.
Price-gouging: It’s easier than you think!
Imagine for a moment that you are a maker of thneeds, which are made from the silken threads of the truffula tree.
Everyone needs a thneed, so business is booming. You report modest profits to your investors, and your customers are happy with their reasonably priced thneeds (which everyone, everyone needs).
Then, from out of the blue, there’s a truffula tree blight. This causes a global shortage of truffula. As truffula is the main ingredient in thneeds, this means it’s going to be harder and more expensive for you and your competitors to get the raw materials for thneeds.
So you raise the price of thneeds to recoup the extra cost due to truffula scarcity. Your competitors in the thneeds market do the same.
But then you realize… if the average thneed consumer doesn’t actually know how much it costs to make a thneed during a healthy truffula harvest… then how will they know how much it costs to make thneeds in a truffula blight? Instead of raising thneed prices commensurate with truffula tree inflation, you can actually raise prices even more. Instead of keeping profits steady… you could rake in a killing. Who’s to stop you? Your competitors? They’ll catch on and do the same.
So while bemoaning the inflation caused by the great truffula tree blight of 2022, you quietly raise the prices of thneeds to not only keep up with inflation, but to beat it tenfold.
This is called price-gouging. And it makes you a moldy cucumber of a person with few redeeming qualities.
Worse: because the truffula tree blight is decimating rural agrarian economies, leading to mass starvation, famine, violence, and political unrest… it might even count as war profiteering. Which is when someone takes advantage of a dangerous or desperate situation to make astronomical profits.
Record corporate profits hiding inside inflation
Yes I am the Lorax. Yes I speak for the motherfucking trees.
But as you might have guessed by now, when I say “thneeds,” I’m actually talking about everyday goods and services. And when I say “truffula tree blight,” I really mean the COVID-19 pandemic and its resulting economic shitstorm.
Because this is legit happening! Right now! Out in plain view! Large corporations are using inflation as an excuse to not-so-subtly inflate their profits beyond reason. They’re giddily price-gouging their way to record profits built upon worker exploitation and taxpayer sponsored bailouts in the form of (sometimes fraudulently obtained) loans. Which is pretty on brand for them, all things considered.
It’s not only on brand, it’s what they’re incentivized to do. See, corporations have a responsibility to their investors to maximize profits. How can we blame them for doing so at any cost?
The lion, the witch, and the audacity of this bitch
One of my favorite economic sociologists (do… you not have a favorite economic sociologist???) is Lindsay Owens. This human molotov cocktail and former economic advisor to Senator Elizabeth Warren raised the alarm about the role corporate price-gouging plays in inflation with an epic Twitter thread. It starts:
The tl;dr is that in earnings reports, corporate leaders are crowing about how they’re “dipping their balls in gold” while average citizens struggle to pay their inflated prices.
Inflation doesn’t have to be this high. We expect inflation to rise commensurate with the extra expense of producing goods and services during an economic disruption like a pandemic. But instead, these corporations are price-gouging us into higher levels of inflation than necessary.
And as Owens points out, they’re not even trying to hide it: companies are legally required to tell the truth in earnings reports. They’re bragging about the price-gouging in the public record. You just have to know where to look.
SHOW 👏 US 👏 THE 👏 RECEIPTS
My personal favorite economist zaddy (yeah I’ve got one of those too, DON’T KINK SHAME ME), Robert Reich, has been trying to warn us about the disastrous consequences of corporate greed for ages now. But in this particular case, he makes it abundantly clear that this is not a normal instance of inflation.
Reich takes it a step further than Owens by drawing a connection between the current price-gouging schemes and a long pattern of corporate consolidation and price fixing dating back to (you guessed it) the Reagan administration. (Now you know why I’ve been picking on the Gipper for this whole article.) See, we used to enforce antitrust laws to prevent price-fixing and monopolies. Now we barely bother.
Let’s take a look at the receipts:
- The four largest meatpackers reported a 300% profit increase during the pandemic.
- Oil and gas companies reported $174 billion in profits as gas prices increase.
- Gross soda giants Coca Cola and PepsiCo both report increased profits.
- Procter & Gamble report $21 billion in profits on household goods.
- Airlines nearly tripled profits.
- McCormick reported record sales growth of $6.3 billion.
- Known muckraker and liberal propagandist Bitches Get Riches continues to operate at a loss.
All of which is to say, if corporate America were truly suffering from inflation, they’d be reporting average or below-average profits. Instead, they’re reporting record-breaking profits that fly in the face of the inflation narrative.
Corporate greed is driving inflation
I reeled you in with an incendiary headline, just like they taught us in Blogger School. “They’re lying to us about the true causes of inflation.”
So where’s the lie?
To completely bury the lede here (I was last in my graduating class at Blogger School), this is a story about stories. It’s about the production and consumption of a narrative—what we tell ourselves and what we share. And the prevailing stories about inflation aren’t touching the idea of corporate greed with a ten-foot pole.
We need to stop perpetuating the lie. Stop pretending like this recent inflation is so…
Gas is more expensive. Milk is more expensive. Diapers and toilet paper and meat and pantry staples are more expensive. People are hurting. The least we can do is to call out one of the causes of this pain for what it is.