With a Monday theme of “Make America Wealthy Once Again,” the economy remains a top issue at the RNC, and inflation a top economic issue. Joe Biden, trapped in socialist orthodoxy, insists corporate greed is greatly to blame for inflation. Research from Federal Reserve officials, and, more importantly, practical corporate initiatives, put the kibosh on that.
Many companies announced price cuts long before Biden’s continued anti-business demagoguery during his “big boy” press conference. The price cuts (examples are presented below) are reflective of market dynamics, not central planning. They are partly why inflation, at least at the consumer level, dropped very slightly last month.
Lacking the mental acuity to appreciate nuance, Biden doesn’t comprehend the inherent contradictions in his messy message — i.e., he insists that inflation is gradually being tamed even while accusing corporations of being irredeemably greedy. In his version of “truthiness,” inflation is subdued despite (imagined) price-gouging.
Greed has a negative connotation, but self-interest can stimulate a free-market system. Indeed, it can even facilitate robust activity benefitting producers and consumers. For sure, companies will try to pass along increased expenses by raising prices (markups), but when their sales decline, they are pressured into lowering prices. Something that’s been happening a lot, lately.
They are pressured not by overbearing government bureaucrats, but by market-driven dynamics which ultimately affect their bottom line. Considered in that context, corporate “greed” is axiomatic, an inherent feature resulting from the collective wisdom and decisions of innumerable market participants. Eventually, corporate pricing power becomes inelastic in a vibrant marketplace where “greedy” producers and “greedy” consumers counter-balance one another.
Such minimal greed (if that’s not an oxymoron) may even facilitate market efficiencies. The character Gordon Gekko, in the movie Wall Street, may have taken it to the extreme, but in channeling the real-life arbitrageur Ivan Boesky, he was insinuating that “greed is good.” Of course, his greed was extreme, and we know what happens to pigs. Nevertheless, it’s crucial to make the distinction between corporate greed and the price-gouging allegations that Biden shamelessly levels at companies. They are providing needed jobs, goods, services, and yes, tax revenue; they are just trying to survive, if not thrive.
he said during a speech in South Carolina that, “still too many corporations in America (are) ripping people off. Price gouging, junk fees, greedflation, shrinkflation.”
To the extent he can comprehend what he’s saying, Biden seems to delight in deflecting blame for his inflation. Yet this extensive research casts serious doubt on his “greedflation” allegations.
Research from an august body (supposedly) like a Federal Reserve Bank, which is directly related to its mission, can deserve attention. In this case it is bolstered by recent corporate practices that also undermine the all-too-convenient notion of corporate greed. To wit, here are some examples of price cuts instituted by some of our most wonderful and recognizable brands:
- Praise the Lord — Doritos and Cheetos are getting cheaper. Time to get greedy.
- Target cut prices on 5000 items, including milk, meat, bread, soda, fresh fruit and vegetables, snacks, yogurt, peanut butter, coffee, paper towels, and pet food. Not much corporate greed there, and certainly no price-gouging, considering their narrow profit margins.
- Costco, long attractive to cost-conscious consumers, is cutting prices. I’ll take my greed there, though hoarding is out.
- McDonalds offered a $5 combo meal. How can this be greedy: they barely eke out a 1% to 5% profit margin on them? The socialists probably think that’s 1% too high.
- Walgreens, Amazon, and Walmart have all announced steep price cuts. The latter two behemoths can sustain that a while, but Walgreens is reeling. They just announced underwhelming quarterly results, along with numerous store closures. Not much greed there, and definitely no price-gouging. (Walgreens stock has plummeted about 56% this year).
Given our exorbitant debt levels, money supply, and insatiable and unstainable government budgets, inflation may again spike. However, so-called Greedflation may play a minor role, if at all.
Markups fluctuate (imagine that), but as none other than the Federal Reserve Bank of San Francisco notes in their May 13, 2024 Economic Letter, “aggregate markups — the more relevant measure for overall inflation — have stayed essentially flat since the start of the recovery. As such, rising markups have not been a main driver of the recent surge and subsequent decline in inflation during the current recovery.” That utterly eviscerates Biden’s claims — and they’re from San Francisco.
Biden wants voters to judge him on what he has done. On the issue at hand, that presents a choice: either he’s a blithering idiot who doesn’t understand basic economics, or he’s a lying panderer who refuses to take responsibility for ill-considered policies founded in Modern Monetary Theory. Maybe both, but mostly the former, for I doubt he understands the latter. Either way, the judgement is: go away! The only job you’ve got to finish is moving from the White House to the Madhouse. Let America “greedily” flourish in greatness again. Make America Wealthy Once Again.
Image: J.S. Pughe
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