Re: WSJ Says Corporate Profiteering Is Good, Actually (fwd)

[robert <http://dummy.us.eu.org/robert>]

Doesn't Dollars and Sense constantly cite these sorts of opinion pieces
from WSJ about the "greed is good" theme?  I think if normal people read
the Wall Street Journal, they would quickly realize that they are being
taken for a ride by the "dominators" a.k.a. the rich and powerful.

I wonder if most people consider "the elite" to be "the rich and
powerful"?  Wonder what your cousin Robert would think?

 > From: Noelle <noelle>
 > Date: Thu, 1 Jun 2023 12:27:48 -0700 (PDT)
 >
 >  > From: FAIR<http://www.fair.org/~fair>
 >  > Date: Thu,  1 Jun 2023 19:08:39 +0000
 >  > 
 >  > https://us20.campaign-archive.com/?e=6ed8ef48d7&u=e6457f9552de19bc603e65b9c&id=dc1cc9f399
 >  > 
 >  > FAIR
 >  > View article on FAIR's website (
 >  > https://fair.org/home/wsj-says-corporate-profiteering-is-good-actually/)
 >  > WSJ Says Corporate Profiteering Is Good, Actually Conor Smyth (
 >  > https://fair.org/home/wsj-says-corporate-profiteering-is-good-actually/)
 >  > 
 >  > Greed is good, actually. At least that’s the journalistic line the Wall 
 >  > Street Journal has decided to take, with a recent headline (5/25/23 (
 >  > https://www.wsj.com/articles/greedflation-is-realand-probably-good-for-the-economy-6c475b8e
 >  > ) ) reading, “‘Greedflation’ Is Real—and Probably Good 
 >  > for the Economy.”
 >  > 
 >  > To refresh your memory, “greedflation (
 >  > https://www.theguardian.com/business/2023/mar/02/ecb-looking-out-for-price-gouging-greedflation-price-rises-eurozone-inflation-profit-margins
 >  > ) ” is the 
 >  > idea that corporate profiteering has contributed to inflation—a thesis 
 >  > that was, up until recently, generally downplayed or outright ridiculed by 
 >  > the media (New York Times, 1/3/22 (
 >  > https://www.nytimes.com/2022/01/03/business/economy/inflation-democrats-corporations.html
 >  > ) , 6/11/22 (
 >  > https://www.nytimes.com/article/inflation-us-prices.html) ; Bloomberg, 
 >  > 5/19/22 (
 >  > https://www.bloomberg.com/news/articles/2022-05-19/-greedflation-pits-democrats-against-like-minded-economists
 >  > ) , Washington Post, 5/12/22 (
 >  > https://www.washingtonpost.com/opinions/2022/05/12/democratic-conspiracy-theory-on-inflation-makes-things-worse/
 >  > ) ). As Axios (5/18/23 (
 >  > https://www.axios.com/2023/05/18/once-a-fringe-theory-greedflation-gets-its-due
 >  > ) ) summarized earlier this month, however:
 >  > 
 >  > Once dismissed as a fringe theory, the idea that corporate thirst for 
 >  > profits drives up inflation, aka "greedflation," is now being taken more 
 >  > seriously by economists, policymakers and the business press.
 >  > 
 >  > The change in tenor was captured by Intercept reporter Ken Klippenstein on 
 >  > Twitter (5/26/23 (
 >  > https://twitter.com/kenklippenstein/status/1662095626757177345) ):
 >  > 
 >  > Twitter: The idea that corporate profits contribute to inflation went from 
 >  > conspiracy theory to real and probably good
 >  > 
 >  > As recently as February, the Wall Street Journal (2/14/23 (
 >  > https://www.wsj.com/livecoverage/cpi-report-today-january-2023-inflation/card/to-save-money-maybe-you-should-skip-breakfast-fSd6mz0miaAPhUFb2jgy?page=1
 >  > ) )
 >  >  had completely ignored the role of corporate profiteering in a piece on 
 >  > rising prices for breakfast staples, blaming supply shocks instead. Writing 
 >  > for FAIR (2/21/23 (
 >  > https://fair.org/home/distortion-of-breakfast-price-hikes-leaves-wsj-with-egg-on-face/
 >  > ) ), Luca GoldMansour pointed out that the piece completely ignored 
 >  > strong evidence of price gouging by egg producers.
 >  > 
 >  > Now, in a piece by columnist Jon Sindreu, the Journal is changing its tune 
 >  > by recognizing the importance of profiteering. But instead of criticizing 
 >  > the practice, it’s celebrating it.
 >  > 
 >  > ** 'A bit of corporate greed'
 >  > ------------------------------------------------------------
 >  > WSJ: Growth in US unit prices during selected periods, by contribution
 >  > 
 >  > The Journal (5/25/23 (
 >  > https://www.wsj.com/articles/greedflation-is-realand-probably-good-for-the-economy-6c475b8e
 >  > ) ) provided a useful graph showing that corporate profits 
 >  > have contributed far more to price increases than in the past. Businesses 
 >  > have enjoyed (
 >  > https://www.bloomberg.com/news/articles/2023-03-09/how-excuseflation-is-keeping-prices-and-corporate-profits-high
 >  > ) historically high profit margins over 
 >  > the last several years, as supply shocks have provided them with ready 
 >  > excuses to hike up prices with little resistance from consumers.
 >  > 
 >  > In the column, which was published in the paper’s "Heard on the Street" 
 >  > section, Sindreu argues:
 >  > 
 >  > A bit of corporate greed may be helping the fight against recession (
 >  > https://www.wsj.com/articles/godot-recession-federal-reserve-powell-d50ba71f?mod=article_inline
 >  > ) .... Yes, inflation may be higher as a result of 
 >  > corporations flexing their pricing muscle. But it is probably also the 
 >  > reason why the recession everyone expects always seems to be six months 
 >  > away.
 >  > 
 >  > All this amounts to is a sleight of hand. As Sindreu admits towards the end 
 >  > of the piece, what’s actually saved the economy from a downturn is not 
 >  > corporate profits, but “the surprisingly strong spending patterns seen 
 >  > during and since the pandemic.” People keep spending money; the economy 
 >  > keeps chugging along.
 >  > 
 >  > You might say that exceptionally high corporate profits are a reflection of 
 >  > this strong spending—in which case spending would still be the reason why 
 >  > we have avoided a recession, and high profits would just be an outcome of 
 >  > that spending—but even that is misleading.
 >  > 
 >  > As Sindreu notes, “Companies, which in normal times are wary of angering 
 >  > customers with big price changes, seem to have seized on the excuse of 
 >  > generalized inflation to shield their margins.” Basically, in an 
 >  > environment where inflation is rising, and where outlets like the Journal (
 >  > 2/14/23 (
 >  > https://www.wsj.com/livecoverage/cpi-report-today-january-2023-inflation/card/to-save-money-maybe-you-should-skip-breakfast-fSd6mz0miaAPhUFb2jgy?page=1
 >  > ) )
 >  >  are portraying price increases as simply the result of “a perfect storm”
 >  >  of issues wreaking havoc on supply, companies suddenly have more wiggle 
 >  > room to raise prices without pushback from consumers. The result has been a 
 >  > more substantial surge in profit margins than we would have seen had 
 >  > companies not had ready excuses for their price hikes (Bloomberg, 3/9/23 (
 >  > https://www.bloomberg.com/news/articles/2023-03-09/how-excuseflation-is-keepi
 >  > ng-prices-and-corporate-profits-high) ).
 >  > 
 >  > Thus, rather than simply being an indicator of a strong economy, the high 
 >  > profit margins we have seen throughout the pandemic years have reflected 
 >  > companies’ success in capitalizing on well-publicized supply shocks to 
 >  > redistribute consumers’ income to themselves—aided and abetted by a 
 >  > media eager to insist that no such thing was happening.
 >  > 
 >  > ** Extorting billions
 >  > ------------------------------------------------------------
 >  > Bloomberg: How ‘Excuseflation’ Is Keeping Prices — and Corporate 
 >  > Profits — High
 >  > 
 >  > A business owner tells Bloomberg (3/9/23 (
 >  > https://www.bloomberg.com/news/articles/2023-03-09/how-excuseflation-is-keeping-prices-and-corporate-profits-high#xj4y7vzkg
 >  > ) ) that any national news 
 >  > event can be "an opportunity to increase the prices without getting a whole 
 >  > bunch of complaining from the customers.”
 >  > 
 >  > This point is made firmly by the advocacy group Farm Action in its January 
 >  > 2023 letter (
 >  > https://farmaction.us/wp-content/uploads/2023/01/Farm-Action-Letter-to-FTC-Chair-Lina-Khan.pdf
 >  > ) to the Federal Trade Commission on price-gouging by egg 
 >  > producers. After examining the evidence that supply issues could not explain 
 >  > the more than doubling of egg prices between 2021 and 2022—crucially, the 
 >  > fact that “the industry’s quarterly egg production experienced no 
 >  > substantial decline in 2022 compared to 2021”—the group’s letter 
 >  > concludes:
 >  > 
 >  > In the end, what Cal-Maine Foods and the other large egg producers did last 
 >  > year—and seem to be intent on doing again this year—is extort billions 
 >  > of dollars from the pockets of ordinary Americans through what amounts to a 
 >  > tax on a staple we all need: eggs.
 >  > 
 >  > And this sort of profiteering is not limited to the egg business; other 
 >  > industries have adopted the strategy of jacking up prices and seeing what 
 >  > the consumer will accept. Take Wingstop, which has continued pushing up 
 >  > prices for wings even as the price of wholesale wings has declined. As 
 >  > Bloomberg (3/9/23 (
 >  > https://www.bloomberg.com/news/articles/2023-03-09/how-excuseflation-is-keeping-prices-and-corporate-profits-high
 >  > ) ) notes, “The chain’s profit 
 >  > margins are up, and its stock has soared almost 250% from the low it hit 
 >  > during the depths of the Covid-sparked market rout in early 2020.”
 >  > 
 >  > That is greedy. It’s hard to see how it’s good for the economy.
 >  > 
 >  > ** 'Investors should push back'
 >  > ------------------------------------------------------------
 >  > 
 >  > Sindreu wants the wealthy to be able to defend themselves against claims 
 >  > that they have been rewarded excessively in the midst of inflation:
 >  > 
 >  > As for the political optics, investors should push back against notions that 
 >  > income distribution is the simple result of a power struggle between capital 
 >  > and labor. Profit margins need two to tango: Corporations have successfully 
 >  > increased prices only because—unlike in the 1970s (
 >  > https://www.wsj.com/articles/no-bad-news-isnt-good-news-for-stocks-11665483587?mod=article_inline
 >  > ) —the rest of the economy has kept spending.
 >  > 
 >  > You see: If companies successfully dupe consumers into accepting price 
 >  > increases above and beyond their cost increases, while media spread word of 
 >  > supply chain issues and downplay the possibility of corporate profiteering, 
 >  > then who’s really at fault? Forget all that talk about class struggle, let 
 >  > me introduce you to victim-blaming.
 >  > 
 >  > ** Profits good, wage growth bad
 >  > ------------------------------------------------------------
 >  > WSJ: Wage Growth Has Slowed, but Still Pressures Services Inflation
 >  > 
 >  > The Wall Street Journal (3/2/23 (
 >  > https://www.wsj.com/livecoverage/cpi-report-today-january-2023-inflation/card/wage-growth-has-slowed-but-still-pressures-services-inflation-2MAnGVwD0HgYN52PB3Ci?mod=Searchresults_pos2&page=1
 >  > ) ) sees wage growth as bad, even though 
 >  > it's much more closely tied to the consumer spending that it says is saving 
 >  > the economy—because the paper sees itself as being on Team Owner and not 
 >  > on Team Worker.
 >  > 
 >  > Notably, the way the Journal has decided to frame profit growth in this 
 >  > piece is completely different from how it and the rest of the media tend to 
 >  > frame wage growth. In the case of profit growth, the Journal tells us it’s 
 >  > actually good, because it’s supposedly helping stave off recession.
 >  > 
 >  > In the case of wage growth, by contrast, the media has consistently told us 
 >  > it’s bad, because it pushes up inflation:
 >  > * "Wages Grow Steadily, Defying Fed’s Hopes as It Fights Inflation" (New 
 >  > York Times, 5/5/23
 >  > * "Cooler Hiring and Milder Pay Gains Could Aid Inflation Fight" (Associated 
 >  > Press, 1/6/23
 >  > * "The Jobs Market Is Still Hot. And That’s a Problem." (Politico, 10/7/22 
 >  > * "The Red-Hot Labor Market Still Isn’t Cooling Off. The Fed Has Its Work 
 >  > Cut Out." (Barron’s, 7/8/22
 >  > * "Worker Pay Is Rising, Complicating the Fed’s Path" (Washington Post, 
 >  > 4/28/23
 >  > * "Wage Growth Has Slowed, but Still Pressures Services Inflation" (Wall 
 >  > Street Journal, 3/2/23
 >  > 
 >  > But profit growth has also pushed up inflation. And while it’s true that 
 >  > wage growth has contributed to inflation (in a very mild way (
 >  > https://www.frbsf.org/economic-research/publications/economic-letter/2023/may/how-much-do-labor-costs-drive-inflation/
 >  > ) ), wage growth has also helped 
 >  > stave off a recession, and has done so in a much more obvious way than 
 >  > profit growth has.
 >  > 
 >  > Strong consumer spending—the very factor that, by the Journal’s own 
 >  > admission, is preventing an economic downturn—has been possible partially 
 >  > due to strong wage growth. Rising wages give people greater purchasing power,
 >  >  which they can then exercise to keep the economy afloat. On the other hand, 
 >  > rising profits, at least in the context of the last couple years, have 
 >  > facilitated a redistribution of income away from consumers, draining them of 
 >  > purchasing power.
 >  > 
 >  > But the Journal says, Never mind that! Profit growth good. Wage growth bad. 
 >  > Why? Because high profit growth helps prevent a recession. (Forget about the 
 >  > fact that it’s also pushing up inflation.) And high wage growth drives up 
 >  > inflation. (Forget about the fact that it’s also helping prevent a 
 >  > recession.) See if you can spot the contradiction.
 >  > 
 >  > Maybe greed is good. Maybe the Journal has things exactly right. Maybe a 
 >  > newspaper owned by Rupert Murdoch isn’t siding with his fellow 
 >  > billionaires over the vast majority (
 >  > https://www.pewresearch.org/politics/2012/09/27/section-4-demographics-and-po
 >  > litical-views-of-news-audiences/) of its readers.
 >  > 
 >  > Or maybe not.
 >  > ------------------------------------------------------------
 >  > 
 >  > ACTION ALERT: You can send a message to the Wall Street Journal at 
 >  > http://www.wsj.com/~wsjcontact (http://www.wsj.com/~wsjcontact) (or via Twitter: @WSJ (
 >  > https://mobile.twitter.com/WSJ) ) Please remember that respectful 
 >  > communication is the most effective. Feel free to leave a copy of your 
 >  > communication in the comments thread.
 >  > ------------------------------------------------------------