Inflation: Real reasons or corporate greed?

President Biden faces mounting criticism for inflation’s rise to its highest level since 1982. Unfortunately, the White House’s latest response is to blame greedy businesses. But the media isn’t buying that excuse. So who is right?

Poll after poll shows Americans are upset about rising prices, but few people are curtailing their spending — so far. There are some indications that savings will dwindle this year because of inflation, but what exactly is causing the high prices?

1ne: Labor Shortages — Manufacturing has weathered the most significant surge in workers quitting — a nearly 60 percent jump compared with pre-pandemic. No other industry has seen an increase like that. Numerous factory workers say staffing is so low right now that they are being forced to work six days a week. But something deeper is driving the spike, too. The reality is the sector no longer provides the good-paying jobs it once did.From 1976 to 2006, average hourly pay for a rank-and-file factory worker was substantially higher than the average across all industries for nonsupervisory workers. Now manufacturing pay is below average.

2wo-Supply Issues — Some supply issues, like microchips for cars, are still in very short supply. President Biden has done a great job of getting ships into port, but countries outside the US are dealing with COVID issues.

3hree- Profiteering? — President Biden’s push to blame some corporations for high prices has divided the White House’s allies, with liberal economists both inside and outside the administration split over whether monopoly power accounts for the spike in inflation facing the nation. However, my cynicism kicks in when I read that many companies are going to declare record profits. Maybe they have read that consumers are flush with cash and want that money to reward shareholders and CEOs?

An estimated 89% of auto shoppers pay more than sticker price or within 5% of it. Dealers’ cash registers are full of money and have no idea that eventually, the power will shift back to consumers and that $65,000 Kia won’t hold its value.

A great example of profiteering is the airlines that received over $50 billion to help them weather the COVID pandemic. And what did they do with that money? Reduced flight crews to passengers to improve earnings. The CEO of American Airlines even bragged about how he successfully reduced labor costs.

Inflation is going to be with us for a while. Eventually, people will go back to jobs they are staying away from now, and prices will stabilize, but when consumers read that brands/companies are declaring record profits, all hell will break loose.

Originally published at https://commonsenseandpolitics.com on January 10, 2022.