As submitted to the Foster’s Daily Democrat, Concord Monitor, and the Union Leader
Last week, Exxon Mobil and Chevron reported record-smashing quarterly net profits of nearly $20 billion and $11 billion respectively. They didn’t just pass through their own increased expenditures, they added a huge increase on top, just because they could. Adding this news on top of the core Consumer Price Index (CPI) report in September, which grew by 6.6% over the prior 12 months, the inflationary rise has been even higher when accounting for volatile goods like the cost of energy (Washington Post July 26, 2022). While inflation may not be the most important election issue on every voter’s mind, it certainly is top-of-mind for many. With the November general elections almost upon us, and with the usual plethora of political ads, it is clear one side has decided to hammer on inflation as the most important issue. There are likely many who are not sure who to believe and who deserves their vote.
So let us take a look at how we got here. We all know that the current economic situation did not suddenly appear in the last year. A February 2022 blog by The Economic Policy Institute, stated that the COVID-19 pandemic is the primary factor driving excessive inflation through demand and supply-side distortions, i.e., global supply chains snarled due largely to port shutdowns caused by COVID-19 outbreaks. Higher prices for slower shipping because of fractured supply chains or the difficulty of meeting demand have been major drivers as businesses didn’t always have enough stock on hand to meet the demand and couldn’t make or ship goods fast enough to catch up. This has resulted in skyrocketing prices for many of our staples, as well as discretionary spends like airfare and vacations, particularly after covid cases fell and pent-up demand took hold.
Clearly germane to this explanation, Fortune Magazine reported in March of this year that U.S. companies posted their biggest profit growth in decades by jacking up prices, even as Americans struggled with rising consumer prices amid the COVID-19 pandemic. Specifically, U.S. companies’ pre-tax profits surged 25% to $2.81 trillion in 2021 compared to 2020. While the COVID-19 pandemic has exposed the deep systemic inequalities and massive failures in our economic system, the pertinent question for voters who believe that inflation is the number one issue in this election is, who should we hold to account? If the government cannot control how much money companies can make, how can we say that the government is principally responsible for this inflation? Do we just give corporations like Exxon Mobil and Chevron, which increased their prices and profits, a free pass by conveniently ignoring their role in this crisis?
If we want to make things better for all Americans across all socio-economic levels, we must begin by being honest with ourselves and choosing those leaders who will work on substantive solutions. We need leaders who will help our citizens who are being crushed by these prices, rather than blocking all legislative efforts to stop the Consumer Fuel Price Gouging Act bill in the US House, and the Price Gouging Prevention Act in the Senate. If we don’t, the exorbitant profits will continue unabated while we all suffer. If we want to remain in our own tribes, then nothing will change and all of us will be worse off for it. Let’s not fall prey to the rhetoric.
This perspective was echoed today by Jake Johnson, a staff writer for Common Dreams: https://www.commondreams.org/news/2022/11/03/powell-wasnt-asked-single-question-about-corporate-profits-driving-inflation?utm_source=daily_newsletter&utm_medium=Email&utm_campaign=daily_newsletter