Wednesday’s financial headlines brought shudders to those who remember the bad old days of inflation. Consumer prices rose 7% last year, the largest spike since 1982, when Ronald Reagan was president.
Rents, new and used cars, dairy products, beef, poultry, fish — just about everything on the average person’s grocery and monthly bill list is going up in price.
Of course the higher prices for everything have become political talking points for both sides, with Republicans blaming President Joe Biden for pushing trillions of dollars into the economy, which has spurred spending — and thus demands for more goods. As everyone knows, the law of supply and demand then takes hold. Unfortunately, demand in many cases has outstripped supply. Recent stories about empty store shelves testify to that problem.
The reason supply can’t keep up with demand is also in the news, as so-called “supply chain” problems continue to hamper the transportation of products from places like China to places like the United States. Everyone knows about the back-up of ships off the coast of California. But less talked about is the shortage of truck drivers in the United States, in part due to the pandemic, leading to back-ups of products in warehouses across the country.
There is more on the pandemic. In China, the government has been shutting down production of goods in places where COVID and its offspring omicron continue to infect people. That stops production at the source.
Democrats say high prices will subside once the country gets a handle on the pandemic and once things get “back to normal.” But many economists say that when prices go up, they stay up. Democrats, including Massachusetts Sen. Elizabeth Warren, claim that corporations are increasing prices because they hold monopolies in their respective markets.
During Tuesday’s Senate confirmation hearing of Federal Reserve Chairman Jerome Powell, lawmakers asked questions about inflation and the job market. Warren in particular honed in on the largest corporations in the country, saying that two out of three of them reported record earnings during the pandemic. So, she asked, are they “passing along increased costs and at the same time charging more on top of that to fatten their profit margins?”
Powell’s answer was ambiguous, as he sort of disagreed and sort of agreed, noting that “it could also just be though that demand is incredibly strong and that they’re raising prices because they can.”
For Warren, that was enough — and she repeated his phrase back to him during the next question: “Well, that’s the point. They’re raising prices because they can, and they’re not being competed down.”
For consumers, it has to be a nightmare knowing — if they know — that most of the products on grocery store shelves are put there by just three or four companies, even though the products themselves have different labels and prices. It’s almost a shell game for families trying to keep their grocery bills down as they look for coupons, two-for-one deals, one-off sales, discounts and specials.
Some people are going old school — canning or jarring their summer vegetables as a hedge against higher prices. Hunters are filling freezers with deer meat. Backyard chicken coops are more popular than ever.
It’s time to put the brakes on rampant monopolization of food producers. People talk about breaking up Microsoft, but maybe it’s time to break up Nestle or General Mills.
That’s not likely to happen anytime soon, due to the difficult relationships between corporations, lobbyists and lawmakers. So it might be good to heed the lyrics of 1970s folk singer John Prine, who wrote: “Blow up your TV, throw away your paper; Go to the country, build you a home; Plant a little garden, eat a lot of peaches; Try and find Jesus (or any other deity) on your own.”