Sky-High Corporate Profits Constitute Half — HALF — of Sky-High Inflation: Message THAT, Dems!
Second in a special series, Midterm Alerts
If you always suspected that corporate greed, while rewarding those in corporate suites, is bad for all the rest of us, Congresswoman Katie Porter just provided proof.
She also provided a wowser “closing argument” for Democrats — about the killer issue of inflation — in this midterm election.
Specifically, Porter demonstrated the link between corporate greed — that is, record-high profits — and the inflation that’s slamming everybody with sky-high prices at the grocery store and gas pump. This proof comes just in time — when Republicans, making inflation and crime their chief campaign issues, are pulling ahead in polls and expect to win big.
Employing again her famous charts and acting as translator of jargon — here, economics— into plain English, the California Democrat, a former consumer advocate and law professor, served up a real public service. In a House hearing last Wednesday, Porter translated the testimony of the director of Macroeconomic Analysis at the Roosevelt Institute, Mike Konczal. To be clear, Konczal was a friendly witness: The Roosevelt Institute describes itself as “drawing on the legacy of Franklin and Eleanor” and working “to make our economy and democracy work for the many, not the few.” A prime focus of the institute is “corporate and public power.” Still, translation was needed.
In a short video now gone viral, Porter holds a blow-up of a chart prepared by the Economic Policy Institute and starts by asking the explicit question:
Porter: According to this chart, what is the main driver of inflation during the pandemic?
Konczal: It would be corporate profits.
Porter: And what is that percentage?
Konczal: It is 54%….
Porter (translating): So, over half of the increased prices people are paying are coming from increases in corporate profits.
Konczal: Yes. The unit price —
Porter: And how does that compare historically to other periods of inflation?
Konczal: It is significantly higher in this recovery.
After some further clarifying of the rate of increase of this corporate profit, historically and today, Porter returns to her chart:
Porter (translating): And so, I want everyone in America to understand this chart. What is a “unit labor cost”?
Konczal: Wages and associated costs —
Porter (translating): So, we can just say: wages. And what is a “non-labor input cost”?
Konczal: A variety of things, including maintenance and investments —
Porter (translating): O.K., so I have to buy the stuff to make the widgets — I have to have a factory, I have to keep the lights on, I have to hire someone to make the widgets.
Then, pointing to the chart’s top line — corporate profits — Porter concludes, still translating: “And this is what I add on top.” That line — corporate profits, added “on top” — extends way off to the right of the chart. Bingo, Q.E.D., the Congresswoman makes her point: “Bigger corporate profits account for over half of the higher prices people are paying” (the video’s title).
The C-Span version gives more detail (or to quote Mrs. Malaprop, more “perpendiculars”). Preceding this exchange, Porter notes how corporations have been hiking profit margins for years now; following the exchange, she notes the monopolistic growth of corporations and, given this growing monopolization, corporations’ subsequent abuse of power. Altogether, a dynamite proof — speaking directly to Republicans’ winning argument for the midterms.
Yet why have Democrats not picked up this argument-exploding nugget and run with it?
Maybe because the media did not pick up on Porter’s hearing, apart from Salon and Daily Kos. In an article titled “Rep. Katie Porter Destroys Inflation Myth. Watch Her Prove Corporate Greed’s Driving Inflation,” Daily Kos opens by ripping mainstream media for “dereliction of duty” for failing to give “proper context to our current inflation.”
Robert Reich, among a few voices, does give context. Reich, Secretary of Labor in the Clinton administration, writing in The Guardian, notes that corporate costs have risen along with all other costs — but not commensurate with corporate profit. (All emphases here are mine.) Defending the Biden administration against GOP blaming, Reich says that sky-high inflation is “worldwide” and “propelled by continuing global supply shocks” (Putin’s war in Ukraine, China’s COVID lockdowns), meaning: shortages in food and energy — exactly what voters are angrily fixing on now. Reich then gets local: “Inflation in the United States is also being caused by corporations raising their prices faster than their costs to fatten their profit margins.” Finally, along with Ms. Porter, Reich cites monopoly power: “Corporations have been more willing to exercise monopoly power over the past year because inflation has given them cover to do so.”
Bottom line, there is a term for such unconscionable behavior: It’s called “profiteering.” Which the dictionary defines as: “making a profit at other people’s suffering.”
Another commentator giving context is New York Times columnist Paul Krugman. A Nobel prize-winning economist, he knows about corporate profits. But the title of a recent column — “Will Gas Prices Doom Democracy?” — invokes the deeper context: saving American Democracy from the GOP’s anti-democratic election-denying slates.
Still, Democrats can win the nearer contest, too, on inflation — if they make the wowser argument about corporate profits. Campaign ads can be assembled and aired lightning-fast. With just under two weeks until Election Day, can Dems message this winning closing argument: that record corporate profits account for half — HALF — of the steep hike in the prices voters are paying for groceries and gas?
Reich’s column is titled “Democrats Need to Address Economic Fears Now — or Risk Losing Their Majorities.” He surmises the reason that Democrats have not made this argument, about corporate greed, is because their own corporate donors don’t want to take blame for the pain of record inflation. Not good enough, Dems. What avail such politesse if you lose your platform, your majority, your power?
For my previous midterm alert, “Deny the Election-Deniers Any Victory — and Stop Our Anti-Democratic Slide,” see here.