Biden must start tackling big business if he wants to win again | Robert Reich

AAs America approaches the midterm elections, you need an economic message that celebrates your accomplishments to date – creating jobs and raising wages – but also targets major abuses of economic power. that remain in the system, fueling inflation and widening inequalities.

You should put these 10 indisputable facts center stage:

1. Corporate profits are down 70 years high. Yet companies are raising their prices.

2. They don’t raise prices due to increased costs of supplies and components and labor – which are real but expected when an economy suddenly goes from a pandemic-induced freeze due to meeting growing consumer demand emerging from the pandemic. Companies making record profits in a healthy and competitive economy would absorb these costs.

3. Instead, they pass these costs on to consumers in the form of higher prices. In many cases, they increase prices more than these cost increases, using inflation hedging to further increase their profit margins.

4. They do it because they face little or no competition. If markets were competitive, firms would keep prices low to prevent competitors from grabbing customers. As the White House National Economic Council said in December report“Companies that face significant competition cannot [maintain high profit margins and pass on higher costs to consumers]because they would lose business to a competitor who did not increase their margins.

5. Since the 1980s, two-thirds of all American industries have become more concentrated. This concentration gives companies the power to raise prices, because it allows them to informally coordinate price increases with the handful of other companies in their same industry – without risking losing customers, who do not have no other choice.

6. Companies are using these near-record profits to drive up stock prices by buying back a record amount of their own shares. (Buybacks reduce a company’s number of outstanding shares, increasing its earnings per share.) Share buybacks hit a new record high last year. So far this year, they are on track to surpass that record. In the first two months of 2022, S&P 500 companies disclosed authorizations to repurchase $238 billion in stock – a record paceaccording to Goldman Sachs, which expects $1 billion redemptions this year – an all-time high.

Chevron engaged in $1.4 billion in share buybacks and spent $500 million more on shareholder dividends than in 2020. This year, the oil giants plan to buy back at least $22 billion moreover.

7. Most American workers have barely had a raise in 40 years (adjusted for inflation). Although companies have recently granted wage increases in response to the post-pandemic surge in demand, these wage increases have been almost completely eroded by price increases.

Companies hand out wage increases to attract or retain workers with one hand, then eliminate those wage increases by raising prices with the other. When companies are making near-record profits, we would expect them to pay the highest wages out of their profits rather than passing them on to consumers at higher prices. But they are not. The labor market is not “unhealthily” tight, as Jerome Powell asserts; companies are unhealthily fat. The workers do not have too much power; companies do.

8. As a result of all this, income and wealth are redistributed upwards from average workers (many of whom live paycheck to paycheck) to CEOs and shareholders, including the most rich in America. The billionaires have become $1.7 billion richer during the pandemic. CEO compensation (based largely on stock value) now hits record high ratio of 350 to 1 compared to the median salary.

9. Wealthy Americas are now paying a lower tax rate than the working class. Some pay no tax.

10. Big business has accumulated substantial political power, with which it has staved off falling drug prices, prevented a rise in corporate taxes, and amassed unprecedented corporate welfare.

In short, although the US economy is recovering well from the recession, the growing imbalance of economic power is bad for most Americans and for the economy as a whole. It must be solved by (a) stricter enforcement of antitrust laws, (b) a temporary tax on windfall profits, (c) higher taxes for the wealthy and corporations, (d) a ban on buyouts. corporations, (e) stronger unions, and (f) campaign finance reform to get big money out of politics.

You have a crucial opportunity to reframe the national conversation as it should be – around these escalating abuses of economic power by big business and the super-rich. Republicans have left themselves vulnerable because they have no answer to this. They believe their “culture wars” will divert public attention from what is going on.

This is not and should not be a partisan issue. Average working Americans — many of whom voted for Trump in 2016 and 2020 — are getting screwed.

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