What Will I Do? : Rising Prices Demand Action From The US Government!!
Analysts claim that large corporations are passing on higher-than-necessary price increases to their customers under the guise of inflation, conflict, and supply chain constraints. Latasha Holmes grumbled about the rising cost of toilet paper, beverages, food, and other items she’d just bought outside a Dollar Tree in Detroit. Price increases, she claimed, were forcing her to choose between essentials for herself and her four children.
“I’m undecided about what I’m going to do.” “Prices are rising all over town,” she explained. I’m sorry, but I’m afraid I won’t be able to pay for everything. Dollar Tree, on the other hand, is doing well, whereas Holmes is struggling. Between 2019 and 2021, the company increased its pricing by 25% while profits increased by 269 percent and profit margins widened.
Shareholders also profited. As a result of the price increases, the company also launched a $1 billion stock repurchase programme, which will return cash to investors.
Dollar Tree and other large corporations, according to consumer groups and economists, are juicing profits by passing on higher-than-necessary price spikes to customers like Holmes under the pretence of inflation, war, and supply chain restrictions. They want the federal government to take strong measures to rein in companies.
Prime example of why we #Republicans are going to swoop back in power in big numbers! People are not stupid, they know #BadNewsBiden did this! #DrillBabyDrill ‘What am I going to do?’: soaring prices fuel calls for US government to step in #NewsBreak https://t.co/dN3SSTyBYK
— Billy Long (@auctnr1) May 1, 2022
Among the recommended remedies are price restrictions, improved price-fixing regulations, commodity market intervention, stock buyback regulation, and antitrust enforcement. These plans are slowed down by a powerful business lobby and a Congress that doesn’t seem to be able to pass major legislation.
“There are reasons to have a profit motivation, but there are also reasons to have a governing body that can say, ‘This is actually profiting… when everyone is hurting,'” says the author. Krista Brown, of the American Economic Liberties Project, a policy analyst, explained.
Instead, she indicated that limited and targeted price controls for necessities like bread would work, but that they’d have to be accompanied by a strategy to help firms that have been adversely hit. According to Weber, rising prices for basic staples like bread can place enormous pressure on incomes, causing inflationary vibrations across the economy.
Despite the fact that price controls are divisive and usually perceived as a socialist concept, the last president to use them was Richard Nixon, who used a 90-day wage and price freeze to combat inflation in 1970. There were price controls during and after World War II when supply chain problems and a lack of demand caused prices rising, so they were also put in place.
Critics Biden Administration
However, critics want the Biden administration to address more than just price rises. Others, including Lindsay Owens, executive director of Groundwork Collective, have called for a stock buyback moratorium or new rules. Joe Biden advocates prohibiting executives from selling their stock for three to five years after a buyback programme is established in his 2023 budget.
“Aside from the shareholders, the CEOs are the other huge benefactors of surplus cash going to buybacks,” Owens added. “They announce the buybacks, their stock prices soar, and then they sell their shares, and there are many ways to improve this.”
According to a study published by the Guardian, companies’ repurchase programmes totaled $544 billion in the last 15 months. Consumer advocates argue that the funds could have been re-invested in order to keep prices low or raise worker wages.
Others charged the firm with price fixing and gouging. The American Economic Liberties Project is aiding in the formulation of legislation that will make it simpler for businesses to sue companies for price-fixing by making private corporate talks more accessible. According to Brown, only 3% of price-fixing cases make it to trial.
“Reinvigorating price-fixing regulations and going after price gouging could help a lot in times like this,” she continued, “where a war or COVID are used as excuses for corporations to hike rates just because they can.”
Fixing, according to consumer activists, is especially difficult in businesses that are heavily integrated. People who work at Oxford University say that “decades of under-enforcement of consolidation limits” have helped businesses.
Four companies control the majority of the US cattle industry, four airlines control nearly 80% of domestic passenger traffic, Walmart controls the majority of supermarket sales in most US states, and so on. And it isn’t just corporations that wield too much power. Large investors also have a significant role to play.
According to Schmalz, the Investment Company Act prohibits investment funds from owning more than 10% of a company’s stock. Vanguard owns 10% of all S & P 500 companies, according to Schmalz’s analysis, but it is not breaking the law because the shares are owned by companies within Vanguard’s fund family, not by Vanguard itself. On the other hand, Vanguard continues to exercise more than 10% of its shareholders’ voting rights.