To fight inflation, fight monopolies
Cartels raise prices using supply chain and “generous” benefits as cover for price-gouging.
The majority of the public blames inflation on price-gouging. That’s not surprising, because the CEOs of monopolistic companies keep boasting about their record profits even as they raise prices. If a company raises prices and margins, then we don’t have an “inflation” problem, we have a price-fixing problem.
And yet, the majority of economists insist that this is impossible. They hew to the Reagan-era doctrine that says that inflation is always the result of giving poor people too much money, which leads to the “wage-price spiral.” The answer is to hike interest rates, cut “generous” benefits and take away labor rights.
Writing for The American Prospect, Georgetown University economist Hal Singer identifies and dissects the brain-worms that infect neoliberal economists, and the way their dying orthodoxy punishes working people and lets monopolists off the hook.
In particular, he demolishes the argument that since market concentration hasn’t increased much over the past two years (a dubious assertion!), it can’t be to blame for inflation. Singer points out that cartels and monopolists can (and do) use things like supply chain shocks and expanded unemployment benefits as cover for price-gouging.
Price-fixing requires either explicit or tacit collusion, and collusion is easier when industries grow more concentrated. If all the execs that control an industry can fit around a single table, eventually they will sit down at a table and start rigging prices. If an industry is so diverse that the execs who control it barely fit in a large conference center, they won’t be able to agree on the lunch catering, much less a conspiracy to rig prices.
This obvious fact has been systematically denied by orthodox economists since the Reagan era. Frank Easterbrook’s 1984 “Limits of Antitrust” — one of the bibles of the pro-monopoly movement — holds that monopolies are usually efficient, and that the consequences…