The Witness Chronicles, May 28, 2024
Price gouging is behind perceptions about inflation
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Let’s Talk About Gas and Food Prices
We apparently don’t understand the difference between inflation and price gouging
Despite the economy being in roaring good shape, polls show most Americans think it’s in the toilet. This is a huge problem for the Biden campaign and it’s not an easy one to solve from a communications perspective.
People don’t really pay attention to good news on the economy because most of us only see two things, gas prices and food prices, and they both piss us off. The problem with talking about this as an inflation issue is that the prices of these two commodities have little to do with inflation.
First the reality a lot of us don’t want to hear or don’t care about. Inflation is going down, really. And you can’t blame it on Biden or even Trump, as much as I’d like to. We just had a worldwide calamity, Covid-19, a deadly plague that virtually shut down everything for over a year.
When I say everything, I mean most of the things we buy. Cars, appliances, toys, furniture, industrial equipment, you name it. And that stuff isn’t made here for the most part. It has to be put on boats, shipped, unloaded, and trucked around a huge country, it’s the supply chain. All that slowed to a near halt due to the pandemic and prices soared. That’s inflation, but it is once in a lifetime inflation.
Btw, it had nothing to do with anything Joe Biden did or didn’t do.
And it took years to bring it back to something like normal. For a long time people weren’t spending because they couldn’t. The stuff either wasn’t there or it was sky high.
At the same time Biden poured huge amounts of cash into our pockets to help everyone get through Covid, and the epidemic gradually faded or at least got under control. So, savings soared but we couldn't spend.
Two of the things that soared in price were food and gas, or energy costs. These things are tightly locked into global markets, and ingredients and oil became scarce, or so we are told. But like everything else, that loosened up.
Then something very interesting happened, something every American should be outraged about. The prices of everything started to fall back, except gas and food. And there is one simple explanation.
It’s called price gouging and it takes place when a company or business sector takes advantage of a perception to keep prices high even after their costs fall. Despite what Trump will tell you about drill, drill, drill, we have no problem with oil supply here.
In fact, Biden went against his liberal wing and encouraged more domestic production. We now produce more oil than ever in history and even have become a major exporter. There is no shortage, except the artificial one created by the fossil fuel industry.
The collusion was global in scale and still is.
Food followed the same path and because food production needs oil it was a vicious cycle, a cycle entirely created by greed, i.e. profiteering.
The major oil companies have experienced record profits for years now by withholding supplies to create an artificial shortage long after the problem was solved. If you’re an executive with a huge bonus tied to profits, why not?
In food, all down the line from producers to grocery store chains, the same thing happened. They like the new high prices and assumed people would just get used to them, so they could make more money. So even though cost went down, prices didn’t.
Normally a capitalist economy should balance this out via competition, i.e. price wars. But it is not. In the oil business it is direct collusion between companies; in food it is less obvious.
We are all paying for their increased profits and their collusion to keep things as they are. Normally Congress would step in and stop this but they are in on it, because both business sectors basically own politicians through donations.
This is corruption at the highest level. But it stops at Biden. He has nothing to gain from going along with this and everything to lose. And the Republicans understand that incumbents are judged on the economy, which for most Americans means gas and food prices. So there is zero motivation in Congress to do their job on this.
The economy is fine. Joblessness is the lowest it has been since the sixties. Markets are up, so is income. Interest rates are taking longer but they will go down.
But gas and food are hanging tight, sucking profits as long as the gravy train keeps rolling. And Joe Biden is paying the price.
It took me 750 words to explain that and I’m a pretty good explainer. And I bet I lost a lot of readers along the way. You can see why this is a communications problem for Joe. It’s not simple except to say, we are getting screwed so a bunch of huge companies can rake in money.
And as long as that is still going Republicans will change nothing. Remember that when Trump claims he will fix the economy.
Why would he? He doesn’t care about the cost of food or gas or the hit to your wallet. After all he just offered to sell the EPA to big oil for pennies on the dollar.
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