Consolidated mega-corporations are responsible for record inflation despite their attempts to disguise increases as an inevitable side effect of pandemic realities and administration responses. As the economy attempts to shake off the lingering impacts of COVID-19 and Americans struggle to stretch their dollars, many have blamed supply chain disruptions and an overzealous stimulus package for the drastic price hikes. However, in an October 2021 report for Consortium News, author Kenny Stancil suggests that corporations are engaging in pandemic profiteering while attempting to hide behind causes that are themselves a result of consolidated markets.
Stancil reported on new research by the Groundwork Collaborative that suggested price gouging was rampant in the consolidated market of America’s food industry. In a paradigmatic case, the beef industry is simultaneously among the most consolidated and the most impacted by inflation. The study found that with only four conglomerates controlling 80 percent of the market, the cost of beef had risen a startling 12 percent over the previous year. The egg industry also saw a dramatic increase in prices that sparked investigations and lawsuits across the country.
Record profits during the pandemic for food producers and grocers raised questions as to why these corporations continued to drain consumers and take advantage of employees. Kroger cited rising inflation as the reason for higher prices in their stores and cut worker pay by eight percent. Yet, Kroger’s CEO publicly gloated that “a little bit of inflation is always good for business,” a motto that many corporations seemed to adopt while making attempts to conceal high-profit margins amid pandemic inflation.
Reporting by Brett Wilkins of Common Dreams in November 2021 covered a study that went a step further. Researchers with Food and Water Watch found that the inflation being used to mask price-gouging was itself a result of industry consolidation. Research Director Amanda Starbuck concluded that the consolidated system creates an illusion of choice with an abundance of products, all owned by a handful of companies. However, the ease and abundance produced by this model come at a cost. Starbuck explains that consolidated markets lack “resilience to shocks like the pandemic” and that diversified regional food systems are not only more sustainable but more stable.
Rakeem Mabud, chief economist at the Groundwork Collaborative, and David Dayen offered further analysis on pandemic inflation in The American Prospect, revealing that one of the most common inflation scapegoats is a price paid for consolidation. The authors expose how supply chains designed “for maximum profit rather than reliably getting things to people” created a system of “disinvestment in national production, reliance on exploited labor, and corporate extraction that has weakened our responsiveness to crises” which ensured that “the problems that arose in the pandemic folded in on themselves.” With just three global alliances of ocean shippers responsible for 80 percent of all cargo, the world was left teetering on “a knife-edge system” and yet these corporations were able to shift both the blame and the burden. These shippers raked in “nearly $80 billion in the first three quarters of 2021, twice as much as in the entire ten-year period from 2010 to 2020” by increasing their rates as much as tenfold. In the end, corporate margins hit their highest level in 70 years and consumers paid the price for consolidation.
Inflation has been widely covered but the picture painted by corporate media is incomplete. Few sources mention consolidation in their reporting and fewer still take it seriously. After the Biden administration identified consolidation in the meat industry as a cause of price increases in September 2021 the media largely dismissed these claims. Many seemed to view the administration’s concerns as a largely political move to pull attention away from critiques of Biden’s stimulus program. One New York Times article from January 2022 called it an act of “political necessity” and reasoned that “consolidation has been high for years, but inflation has been low for decades.” Another blamed “broken supply chains and high demand for goods from consumers still flush with government-provided cash,” before going on to tout opinions from corporate interests like the president of the Meat Institute and executive vice president of the U.S Chamber of Commerce.
Sources:
Brett Wilkins, “New Report on ‘Grocery Cartels’ Details Exploitive Retailer Monopolies,” Common Dreams, November 15, 2021.
David Dayen and Rakeen Mabud, “How We Broke the Supply Chain,” The American Prospect, January 31, 2022.
Kenny Stancil, “Study: Mega-Corporations Driving US Food Prices,” Consortium News, October 21, 2021.
Student Researcher: Mack Parlatore (North Central College)
Faculty Evaluator: Steve Macek (North Central College)
The post Corporate Consolidation Causing Record Inflation appeared first on Project Censored.
This content originally appeared on Project Censored and was authored by Vins.
Vins | Radio Free (2022-04-12T20:53:01+00:00) Corporate Consolidation Causing Record Inflation. Retrieved from https://www.radiofree.org/2022/04/12/corporate-consolidation-causing-record-inflation/
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