“Food companies say their price increases merely reflect how much their costs have gone up due to “inflationary pressures,” like higher labor costs, transportation delays, and capacity issues, or the higher price of grains and animal feed. Yet inflation in 2022 outpaced the rise in wages in most industries, and the prices of many agricultural commodities have come down.
The eyebrow-raising spikes at the grocery store can only partly be blamed on manufacturers’ higher costs. The inflation narrative offers the perfect jumping-off point for companies to raise prices, and major food manufacturers are taking advantage of the moment to boost their profits.
The proof? Look at just how rich companies have gotten since the start of the pandemic.”
““Corporate profits have hit their highest level ever, and corporate profit margins — how much they’re making on each unit that they’re selling — have hit the highest level in 70 years,” said Chris Becker, senior economist at the Groundwork Collaborative, a progressive economic advocacy organization.”
“Why are corporate profits so high at a time when regular people feel increasingly strapped? Because a small number of players have gobbled up most of the food chain. Cargill and just three other agribusiness companies control about 70 percent of the world’s agriculture market, according to Oxfam. Brands like PepsiCo, Nestle, Mondelez, and Conagra produce and market the vast majority of the offerings found in US grocery stores.
“We look at the supermarket shelf, and we might be buying tea, cereal, whatever it might be, and we think, ‘Oh, I’ve got a real offer of choice here on the product I want to buy,’” Ahmed, of Oxfam, told Vox. “Frankly, it’s an illusion of choice, because so many of those products are actually owned by the same company.”
Grocery retailers, too, have become increasingly consolidated.”
“Evan Wasner, a University of Massachusetts-Amherst economist who authored a recent paper on companies’ price-setting power with economist Isabella Weber, said that companies tend to raise prices when they think they won’t see a huge backlash — like when everyone else is hiking prices, too. “In a sense, economy-wide cost increases act as a kind of coordinating mechanism which allows firms competing with one another for market share to safely raise prices together,” said Wasner.”
“Market dominance makes the supply chain more brittle, too, because it means there are just a few vulnerable points for failure. Last year’s baby formula shortage is an example of how dangerous the results can be. Just two US companies control about 80 percent of the market, which meant that when one manufacturing plant shut down, the entire nation struggled to buy baby formula.
Becker blames the vulnerable state of supply chains in part on market deregulation over the last several decades, which has enabled companies to cut corners. In the 1980s, the growing popularity of “just-in-time” inventory systems, where companies order just the amount of inventory needed right now without a buffer, allowed companies to become more efficient. That has meant lower prices for consumers, usually, and higher profits for companies — until a crisis hits, and suddenly there are shortages and supply bottlenecks.”
“Transcripts of corporations’ recent earnings calls illuminate that they’re well aware of their power right now. Groundwork has been collecting highlights from corporate earnings calls on its website. “They’re saying a lot about cost increases and supply shocks, but they’re also saying it doesn’t matter,” said Becker. “We do have these higher costs that we’re paying, but we have so much pricing power, we’re so capable of passing all these prices on to consumers, that it doesn’t matter.””
“Becker echoed that the current economic orthodoxy on how to fix inflation — to rein in Americans’ ability to spend money by attempting to raise unemployment levels — should be questioned.
“I would say that we have this really toxic narrative out there that the only way we can get inflation under control is to throw a bunch of people out of work,” said Becker. “Larry Summers recently claimed that we would need 10 percent unemployment [for one year], which is about 11 million jobs lost, to get inflation under control.”
“We’re going to try to solve a cost-of-living crisis by making people poor or losing their jobs? I think that’s crazy,” he continued.
What will break the cycle of not just inflation, but of consumers having to pay ever-higher prices for essential goods while the world’s food producers become richer? Experts offered several potential solutions. One is stronger antitrust laws and improved enforcement of preventing and breaking up monopolies. Anti-price gouging laws are another tool in the arsenal. Oxfam, for one, has been a vocal advocate of a windfall profits tax on food corporations. “It’s a tax on those corporations which are raising prices substantially in excess of costs,” Ahmed explained. The fact that it would raise tax revenue is great. But “fundamentally, it reins in companies’ monopoly power and disincentives corporate greed.” Other countries already have similar measures in place. Spain expects to raise about $6.39 billion from its windfall tax on energy companies and banks.
“Corporations are really making profits on the backs of consumers and households,” said Becker. “Let’s tax those windfall profits — and let’s do something with that money.
“There’s nothing that really stops corporations right now from just doing whatever they want.””
“The new study includes Exxon’s graphs, models, projections and publications that show it understood how its business would affect the planet, according to the researchers Geoffrey Supran of the University of Miami, Stefan Rahmstorf of the University of Potsdam and Naomi Oreskes of Harvard University. Oreskes previously co-authored the book “Merchants of Doubt,” which detailed the efforts of a small number of scientific researchers who worked to undermine the public’s acceptance of climate science.
“All told, ExxonMobil was aware of contemporary climate science, contributed to that science, and predicted future global warming correctly,” the researchers wrote. “ExxonMobil accurately foresaw the threat of human-caused global warming, both prior and parallel to orchestrating lobbying and propaganda campaigns to delay climate action.”
Exxon spokesperson Todd Spitler rebutted the claims and said the company supports addressing climate change.”
“Exxon’s models aligned with the best science between 1970 and 1990, the paper found. Exxon projected 0.2 degrees Celsius (0.36 Fahrenheit) of warming every decade with a 0.04-degree C margin of error. That figure is close to the 0.19 degrees C rise and 0.03-degree C margin of error derived from 18 government and academic models.
Under one metric, Exxon proved more precise than famed NASA climate scientist James Hansen, who first brought global warming to Congress’ attention in 1988.
“It has been established that, for many years, Exxon’s public affairs strategy was — as a 1988 internal memo put it — to ‘emphasize the uncertainty in scientific conclusions regarding the potential enhanced greenhouse effect,’” the report said. “However, our analysis shows that in their reports and briefings to management, ExxonMobil’s own scientists did not particularly emphasize uncertainty.””
“Immigrants are 80 percent more likely than native-born Americans to found a firm, according to a study released this May by researchers from the Massachusetts Institute of Technology. But more than that, a report released this week by the National Foundation for American Policy (NFAP) indicates that immigrants are disproportionately responsible for starting high-value companies.
According to the NFAP, a nonprofit that researches trade and immigration, immigrants have started 319 of 582, or 55 percent, of America’s privately-held startups valued at $1 billion or more. Over two-thirds of the 582 companies “were founded or cofounded by immigrants or the children of immigrants,” notes the NFAP. For comparison, approximately 14 percent of America’s population is foreign-born.
Together, the immigrant-founded companies are valued at $1.2 trillion and employ 859 people on average. Elon Musk’s SpaceX has the largest valuation at $125 billion, employing 12,000 workers; Gopuff, a food delivery service valued at $15 billion, has 15,000 employees; Stripe, a payment platform valued at $95 billion, employs 7,000; and Instacart, a grocery delivery service valued at $39 billion, has 3,000 workers.
These findings are notable, the NFAP points out, since “there is generally no reliable way under U.S. immigration law for foreign nationals to start a business and remain in the country after founding a company.” A large share of the immigrant startup founders came to the country as refugees, on family-sponsored green cards, or through employment-based pathways for other companies.
“Our employment-based pathways for immigrant entrepreneurship are so poorly designed, migrant businesses are often associated with non–employment based pathways,” points out Sam Peak, an immigration policy analyst at Americans for Prosperity. Peak notes that refugees “have the highest rates of entrepreneurship of any other immigrant group,” and family-based migration, “especially among siblings, is also strongly tied to new business formation.”
Lawmakers have introduced a number of measures this year meant to bring more entrepreneurial and highly educated immigrants to the United States, but many of these have been included in—and eventually stripped from—larger bills.”
“You don’t have to believe that the market produces perfect outcomes to understand that government can rarely outperform private enterprise. Political decisions aren’t driven by any market signals, profit motive, or consumer preferences. These decisions are inherently political, suffer from a serious knowledge problem and are mostly untied to any accountability regimes when they fail. Government often proves to be biased against large, successful companies that provide new technology that legislators often don’t understand well but consumers love. This is why government so often fails, and this policy is no exception.”
“Mark Cuban’s online pharmacy was founded to sell prescription drugs at the lowest and most transparent prices possible. As Cuban recently told PBS News Weekend, when it comes to medication, “the reality is the only number that matters is cost. What can we as the retailer or the distributor, buy it for and how low can we sell it? So we decided to take the exact opposite approach that politicians have been taking.”
That approach involves selling generic drugs for a 15 percent markup, plus $3 for pharmacy labor and $5 shipping. The result is that Cuban’s company is able to sell generic drugs at significantly lower rates than typical retail prices. For example, a 30-day supply of Amlodipine, a common high blood pressure medication, costs only $3.60 at Cost Plus Drugs, while the typical retail price is $50.10.
Some drugs have even higher savings.”
“Cuban’s company is restricted to unpatented generic drugs. While Cuban can sell these drugs at a massive discount, it is worth noting that research into new drugs, as well as the costs of clinical trials, is funded by the high profit margins derived from patents. While Cost Plus Drugs is a welcome innovation for drugs that are no longer patented, Cuban’s business model likely can’t fund drug innovation.”
“Cuban himself notes that Cost Plus Drugs isn’t the first company to try this approach, but it is the first to succeed”
“Last week, a new study from the Annals of Internal Medicine estimated that if Medicare Part D plans had purchased generic drugs from Cuban’s company, Medicare could have saved $3.6 billion in 2020.”
“Cuban has been vocal on Twitter about the study, asking President Joe Biden and other political leaders to “have your people call my people and let’s get this done.” However, as exciting as reducing Medicare’s budget sounds, progress on the issue seems unlikely. Legislative solutions to the high price of prescription drugs have often been slow-moving and stalled by partisan bickering.”
“Daryl Morey, general manager of the Houston Rockets, tweeted, “Fight for freedom, stand with Hong Kong.”
Good for him. China crushed freedom in Hong Kong.
But China didn’t like hearing an NBA executive say that. Chinese TV stopped broadcasting Rockets games. The NBA then apparently told its players and front offices to shut up. Morey deleted his tweet and instead tweeted that he “did not intend to cause any offense.”
The NBA itself also apologized to China, saying that they were “disappointed” by Morey’s “inappropriate” tweet. Lebron James called Morey “misinformed.” James Harden said, “We love China.”
“China is able to strong-arm these companies…into actually acquiescing with its ideology,” complains Chen.
That ideology is often grotesque. The U.S. and other countries accuse China of committing genocide against a mostly Muslim minority group, the Uyghurs.
China imprisons them in “reeducation camps.” Leaked satellite footage shows blindfolded men, with their hands tied behind their backs, in what looks like a concentration camp.
“They are forced into slave labor,” says Chen.
A few Uyghurs who escaped say they were tortured.
But although the NBA runs ads that say, “Speak for the people who may not be able to be heard,” it clearly does not want its players, coaches, or executives to say anything about Uyghur genocide.”
“Hollywood doesn’t care either. The movie Mulan was filmed in the same region where Uyghurs are tortured. In the credits, Disney gave “special thanks” to government departments in Xinjiang, where the abuse occurs.
Fast and Furious 9 actor John Cena, promoting his movie to people in Taiwan, said, “Taiwan is the first country that can watch F9.”
What was wrong with that?
“He had the audacity to allude to the fact that Taiwan was a country,” says Chen, “rather than a territory owned by China.”
I don’t know what China said to Cena or Universal Pictures, but soon Cena was on Chinese social media, groveling to China, saying “sorry” over and over. “I have made a mistake….I really love and respect the Chinese people….I made a mistake,” he pleaded.
Chen calls that pathetic. “I think the Chinese government actually takes a lot of pleasure knowing that they can actually strong-arm individuals and companies into capitulation to its own political ideology.””
“After more than two decades in orbit, NASA is preparing to retire the International Space Station. The habitable satellite only has permission to operate until 2024, and while it’s likely that the space station’s funding could be extended until 2028, NASA plans to decommission the ISS and find a replacement by the end of the decade. Cue Jeff Bezos.
The billionaire’s spaceflight company, Blue Origin, has released its proposal for a new, commercial space station called Orbital Reef. With the help of several other companies, including Sierra Space and Boeing, Blue Origin plans to build a satellite that’s slightly smaller than the ISS and houses up to 10 people. The design includes desk space, computers, laboratories, a garden, and 3D printers. The goal, the company says, is to bring the “mixed use business park” concept into orbit and lease out office space to interested parties, including government agencies, researchers, tourism companies, and even movie production crews.”
“NASA doesn’t mind the corporate takeover of low-Earth orbit. The agency’s first space station, SkyLab, was only in orbit for a few months before NASA let the vehicle descend and decompose into the atmosphere. The space agency has been weighing defunding the ISS, which is full of aging hardware, for several years, and has already set aside up to $400 million to fund new, privately built and operated space stations through its Commercial LEO Destinations program. Eventually, NASA hopes that it can send its astronauts to these stations instead of paying to maintain the ISS. Overall, the plan could save the government more than $1 billion every year.”
“”Having these commercial space stations will be a way of America keeping their foot in low-Earth orbit while focusing more of their resources on moon and Mars exploration.””
“Blue Origin isn’t the only company vying to replace the ISS. About 12 other firms have already sent space station proposals to NASA’s Commercial LEO Destinations program.”
“For NASA, it’s also critical that at least one of these companies succeeds, and the agency told Recode it could fund up to four of the proposals. After all, time is running out on the ISS, where malfunctions and outdated technology and equipment are common.”
“At the core of former President Donald Trump’s aggressive trade policies was a relatively simple—perhaps overly simplified—promise: Tariffs on Chinese-made products would drive manufacturers out of China.
“Many tariffed companies will be leaving China for Vietnam and other such countries in Asia,” Trump claimed in May 2019, about a year after his tariffs were first imposed. “China wants to make a deal so badly. Thousands of companies are leaving because of the Tariffs,” he tweeted a few months later, suggesting that the outflow was already underway. “If you want certainty, bring your plants back to America,” Robert Lighthizer, Trump’s U.S. trade representative, lightly threatened in a New York Times op-ed in May 2020, as the trade war’s second anniversary arrived.
But the tariffs failed to achieve that primary policy aim, according to a new paper published by researchers at the University of Kansas and the University of California, Irvine. Roughly 11 percent of multinational companies exited China in 2019, the first full year in which tariffs were in place—a significant increase from previous years. But the overall number of multinational firms operating in China actually increased during that same year, as foreign investment continued to flow into China even as the trade war ratcheted up costs.
In fact, the number of U.S.-based multinationals in China actually increased from 16,141 in 2017 to 16,536 in 2019. Non-U.S. companies were more likely to exit China during 2019 despite not being subjected to Trump’s tariffs.
“We estimate that less than 1 percent of the increase in U.S. firm exits during this period was due to U.S. tariffs. And U.S. firms were no more likely to divest than firms from Europe or Asia,” researchers Jiakun Jack Zhang and Samantha Vortherms wrote in The Washington Post this week.”
“Trump is no longer running U.S. trade policy, but his failed tariffs on Chinese imports are still in force. Lighthizer’s replacement in the Biden administration, U.S. Trade Representative Katherine Tai, has said the tariffs provide “leverage” over China.
But that perspective is no more grounded in reality than Trump’s promises that his tariffs would cause companies to flee China. American consumers are bearing nearly 93 percent of the costs of the tariffs applied to Chinese goods, according to a recent report from Moody’s Investors Service. How is this giving the White House leverage over China?”