Image credit: QuoteInspector.com
The latest inflation report was released today, and the spiraling crisis shows no sign of letting up. The rate of inflation was effectively unchanged at 8.2 percent, compared to 8.3 percent registered last month. And an alternative reading of “core” inflation that reflects prices of a more limited set of commodities showed even worse news — at 6.6 percent this measure is the worst it has been since 1982.
Inflation hits the working class the hardest. Not only do workers living paycheck to paycheck lack the financial cushion to cope, prices are rising especially quickly for essential goods that already were putting the greatest strain on people’s budgets. Skyrocketing housing costs made the greatest contribution to last month’s overall inflation. Health care and transportation prices also increased at a disproportionately high rate last month.
While elite economists try to make the question appear as complex as possible, inflation is ultimately caused by decisions made by capitalists. Under this system, each private enterprise can set prices however it wants, and lately have been raising them to obscene levels in the quest for greater and greater profits.
The immediate solution is straightforward: This practice should be banned. We need a nationwide price freeze in which hiking the cost of key goods is prohibited by the government. This absolutely could happen — in fact even arch-reactionary Richard Nixon imposed a price freeze by executive order in 1971. But so far Biden has refused to even consider such a measure that is so desperately needed by the working class.
Inflation is driven by corporate greed. Studies from the Economic Policy Institute have shown that for every $1 of inflation, 54 cents has gone to corporate profits, but only 8 cents has gone to increased wages. And indeed, corporations have been registering enormous profits during this period of huge hardship for workers.
Tyson Foods, one of the biggest agribusiness corporations that supplies grocery stores across the country, saw their profits soar by 74% to hit $829 million. Mid-America Apartment Communities, the largest owner of apartments in the United States that holds over 100,000 units across the country, saw their revenue spike 13.3% to $495 million. Exxon Mobil, which plays a huge role in the U.S. oil and gas sector and is one of the largest corporations on the planet, experienced one of the most impressive windfalls of all — a 281% increase in profits. Exxon reported making $17.85 billion in profits in the second quarter of this year, compared with $4.69 billion in the corresponding quarter of last year.
At the very minimum, a windfall tax on corporate profits is necessary to allow society to recuperate these ill-gotten gains. This tax should be in excess of the value of the increased profits these corporations enjoyed so that it acts as a deterrent against future price gouging. And on a more fundamental level, the inflation crisis also points to the need for a new type of economy in which a tiny handful of millionaires and billionaires do not get to make the decisions that determine whether or not the rest of us can live with dignity.
Outrageously, the Federal Reserve is following a completely different course, taking no action at all against the price gougers, but instead intentionally causing a recession. If workers have less money to spend because they lose their jobs or have their wages cut, the twisted logic goes, then overall demand in the economy will decline and along with its prices. This is the reason that the Fed has been relentlessly raising interest rates, one of the most potent tools it has to slow down economic growth.
The Federal Reserve was created by Wall Street bankers and is designed to serve their interests. The people have no democratic control whatsoever over this institution that is attempting — and failing! — to get inflation under control by driving the economy off a cliff. This state of affairs cannot continue.