The Financial Times Actually Reported on Corporate Price Gouging — I Stand Corrected

I can’t believe they wrote about this key inflationary factor but then still mixed in horrible economic myths

I recently wrote a piece about the staggering lack of coverage on the corporate price gouging issue. Profit margins in many industries are at all-time highs which is directly contributing to the inflation disaster we’re experiencing, and yet, most of the media ignores that aspect, distracts the public, and points the finger at the typical scapegoats of government spending and the peasants having too much money from higher wages.

It’s a bullsh*t and oversimplified narrative. But that is how the media always discusses economics. They downplay or ignore the handouts, excesses, and criminality at the top while overemphasizing crimes of poverty and any government spending that directly helps citizens.

It is a form of class war and deliberate obfuscation, leading intelligent kind-hearted people, in any economic atmosphere, to blame the poor and believe the only options we have are to slash wages for workers — not CEO salaries, cut food programs for poor children, and get the evil government’s ‘budget in order.’

When in reality, a lot of the problems we face are from monopolization, greed, and unfettered finance capitalism.

To curb inflation, the Econ-101 solution of strangling the poor to reduce demand technically works. It is literally and directly taking food from children’s mouths and would lead to working Americans buying fewer mittens, groceries, and used cars.

After many many many months of desperation and reduced demand, profits would shrink, which would then lead corporations to bring prices down to meet the poverty level of the general populace. That is the solution the Larry Summers of the world prescribe. Crank up unemployment, starve the children, and eventually, companies will bring profit margins down.

They’re calling for the implementation of mass suffering on the working people of America and the world.

By spreading these lies, the media is manipulating people into believing that is the only way forward.

But there are other policy routes.

So, I wrote a piece about how little mainstream media coverage was talking about corporate greed. As usual, I mainly saw a select few politicians like the boy Bernie Sanders out there yelling about price gouging while Biden couldn’t even commit to a windfall tax.

Then I saw this piece in the Financial Times by the Chief Economist at UBS Global Wealth Management entitled, ‘Fed should make clear that rising profit margins are spurring inflation.’

I couldn’t believe it. A mainstream economist at a major financial institution injecting some truth into the discourse? What a freaking miracle.

He did, of course, sprinkle in a litany of bullsh*t mainstream economic assumptions.

But still, if the Financial Times is talking about profit margins being out of control, they have to be mayhem.

It’s a bullsh*t and oversimplified narrative. But that is how the media always discusses economics. They downplay or ignore the handouts, excesses, and criminality at the top while overemphasizing crimes of poverty and any government spending that directly helps citizens.

The subtitle of this piece should be the opening line of every news segment on inflation: ‘Companies have taken advantage of circumstances to lift prices.’ If Paul Donovan from UBS Global Wealth Management is saying it, Andersen Cooper and Chuck Todd should be repeating it daily.

Truly, that should be the lead-in every time.

“Welcome to Andersen Cooper 360, tonight’s segment is on how out-of-control profit margins are driving the current inflation crisis. What can the Biden Administration do to rein in these corporate excesses?”

That would give the American people a much better picture of what is happening.

In the article, Donovan goes on to discuss Jerome Powell’s policy solution of raising interest rates, writing the US Federal Reserve chair’s “public remarks offer little insight into how he expects higher rates to tame inflation. The omission matters as the current policy tightening will have an impact through an unusual route. That is because today’s price inflation is more a product of profits than wages.”

He makes the misleading assumption throughout that inflation is usually a “labor-cost problem,” stating that was the cause of the inflation experienced in the 1970s. It’s a common oversimplification and too many intelligent people leave out the formation of OPEC and the resulting energy crisis that kicked off the wage-price spiral.

Whether talking about the 70s or today, the framing is the same. Economists, columnists, and talking heads love to scapegoat labor unions and decent wages while leaving out all other factors.

Mr. Paul Donovan does that for historic inflation but makes the important note that, recently, wages haven’t moved much, not nearly as much as our current inflation rates.

He says that profit margins are way up, noting how, in the restaurant and hotel industries, “The rise in wage costs adjusted for productivity since the end of 2019 is somewhere between 5 and 6 percent. Restaurant and hotel prices have risen 16 percent.” It should also be noted, that wage costs are one factor in the overall cost, meaning a 5% increase doesn’t automatically mean prices have to increase by 5%. They can be offset through efficiency or cutting costs elsewhere, but again, we’re always taught an oversimplified and purposefully misleading narrative.

But today, any increase in costs have been passed onto customers — and then some.

That is the story of our current inflation.

Whether talking about the 70s or today, the framing is the same. Economists, columnists, and talking heads love to scapegoat labor unions and decent wages while leaving out all other factors.

Companies are taking advantage of the fear of inflation to charge more than they ever have, and they then brag about it on earnings calls while mainstream media pretends it is about wages and government spending.

Donovan also says a factor is that consumers have continued to consume, simply having fewer savings and taking on more debt, which companies see as a green light to continue cranking prices up. If people are still buying at inflated margins, why not bop them up a bit more?

They’re all exploiting the incessant inflation coverage as cover to make more money. Again, even the chief economist at UBS Global Wealth Management is calling it out and saying the chair of the Federal Reserve should be doing the same.

He also makes the comment that “the power of storytelling” and the “soundbite economics of the Twitter era” are contributing factors, which I believe they certainly are.

We need to tell a better story about inflation — always.

Like all economic myths we’re fed with religious-like indoctrination, our current fairy tale is wrong, wages are not the sole critical driver of inflation. Neither is the blanket term ‘government spending.’

Smashing wages and cutting school lunch programs for kids isn’t the ‘tough policy choice we have to make for the health of the economy and our democracy.’

Energy prices are through the roof due to sanctions.

Supply chains are a hot mess.

And corporations are charging more than they ever have.

Any policy to curb inflation must consider and mitigate those factors.

The Chief Economist at UBS Global Wealth Management is saying it.

It’s about time the rest of the media fed the public a new story.