In 1637, John Winthrop (January 12, 1588 – March 26, 1649) was an English Puritan lawyer and a leading figure of the Massachusetts Bay Colony, the second major settlement in New England following Plymouth Colony. Winthrop led the first large wave of colonists from England in 1630 and served as Governor for 12 of the colony’s first 20 years. His writings and vision of the colony as a Puritan “city upon a hill” dominated New England colonial development.
Among his policies were The Rules for Trading:
1. A man may not sell above the current price, i.e. such a price as is usual in the time and place, and as another who knows the worth of the commodity would give for it, if he had occasion to use it; and that called current money which every man will take. [Supply and Demand]
2. When a man loses his commodity for want of skill, etc. he must look at it as his own fault or “cross”, and therefore must not lay it on another.
3. When a man loses by casualty of the sea, or, etc. it is a loss cast upon himself by Providence, and he may not ease himself of it by casting it upon another, for so a man should seem to provide against all providences, etc. that he should never lose; but where there is a scarcity of the commodity, there men may raise their price for now it is a hand of God upon the commodity, and not the person.
4. A man may not ask for more for his commodity than his selling price, as Ephraim to Abraham, the land is worth this much.”
– Life Among the Puritans, Annals of America, Vol. 1. p. 138
Since then, Corporate America CEOs have mutated Supply and Demand’s “fair and equitable” profit into charging the maximum of what the “market” (consumer) can bear – right up to the breaking point.
Both the establishment of the Interstate Commerce Commission in 1887 in response to corrupt practices of the Railroad monopoly and the passage of the Sherman Anti-Trust Act in 1890 in response to Standard Oil’s corrupt monopolistic practices, were soon watered down by bribed politicians in Congress relegating these intended regulatory agencies into simple offices for archiving information on the targeted industries. (see: The Truth About the Trusts: A Description and Analysis of the American Trust [Monopoly] Movement by John Moody, 1904; 978 pgs.)
The same way the Congressional remedies for the 2008 Mortgage Crisis regulations to prevent another economic meltdown were actually rescinded by Congress two years later.
Congress is as complicit in the Affordability Crisis today as it was during the heyday of monolithic, Fabian Socialistic monopolies of the Rockefellers, Gettys and Rothschilds of the early 20th century. (see: Corporate Cannibals and Political Piranhas page this blog site)
“Corporate price gouging, often termed “greedflation,” involves firms raising prices beyond cost increases to boost profits, especially in sectors with high market concentration like groceries.
Data shows corporate profits contributed significantly to post-pandemic inflation, with over 50% of price increases attributed to fatter margins. While some argue this is normal market behavior during recovery, others, including policymakers, point to record, sustained profit margins as evidence of exploitation, driving calls for federal bans and stricter antitrust enforcement.” – Wikipedia AI
The following is an article from OtherWords, a free editorial service published by the Institute for Policy Studies (otherwords@ips-dc.org).
“It’s NOT ‘Inflation’ – We’re Just Getting Ripped Off. Here’s Proof: Corporate profits accounted for more than half of recent price increases. To stamp out inflation once and for all, we need to crack down on price gouging.” by Lindsay Owens and Elizabeth Pancotti; January 31, 2024:
“Many Americans are experiencing the sticker shock they first faced two years ago when inflation hit its peak. But if inflation is down now, why are families still feeling the pinch?
The answer lies in Corporate Profits – and we have the data to prove it.
Our new report for the Groundwork Collaborative finds that Corporate Profits accounted for more than half – 53 percent – of inflation from April to September 2023.
That’s an astronomical percentage!
Corporate profits drove just 11 percent of price growth in the four decades prior to the pandemic.
Businesses have been quick to blame rising costs on supply chain shocks from the pandemic and the war in Ukraine. But two years later, our economy has mostly returned to normal.
In some cases, Corporate costs to make things and stock shelves have actually decreased!
Let’s demonstrate with one glaring example: diapers.
The hyper-consolidated diaper industry is dominated by just two companies. Proctor & Gamble and Kimberly-Clark, which own well-known diaper brands like Pampers, Huggies, and Luvs. The cost of wood-pulp, a key ingredient for making diapers absorbent, did spike during the pandemic, increasing by more than 50 percent between 2020 and 2021. [Sounds like grounds for an investigation by the Federal Trade Commission for price collusion – an Unfair Trade Practice?]
But last year it declined by 25 percent. Did that drop in costs lead Proctor & Gamble and Kimberly-Clark to lower their prices? Far from it.
Diaper prices have increased to nearly $22 on average [2024 prices].
These Corporate giants have no plans to bring prices down anytime soon. In fact, their own executives are openly bragging about how they’re going to “expand margins” on earnings calls.
Proctor & Gamble predicted $800 million in windfall profits as input costs decline. [CEO Jon Moeller total fiscal 2024-2025 compensation $21.9 million]
Kimberly-Clark’s CEO, Michael D. Hsu, (total 2024 compensation $16.4 million) said the company has “a lot of opportunity” to expand margins over time. [i.e. increase prices to the consumer despite costs reducing thereby multiplying profit even more]
It’s not just diapers. While many Corporations were quick to pass along rising costs, they’ve been in no hurry to pass along their savings. A recent survey from the Richmond Fed and Duke University revealed that 60 percent of companies plan to hike prices this year by more than they did before the pandemic – even though their costs have moderated.
Corporations across industries from housing to groceries and even used cars are juicing their profit margins even as the cost of doing business goes down.
And they’re not hiding the ball.
Since the summer of 2021, Groundwork began listening in on hundreds of corporate earnings calls where we heard CEO after CEO boasting about their ability to raise prices on consumers.
Now we hear something slightly different: CEOs crowing about keeping their prices high while their costs go down.
PepsiCo raised its prices on snacks and beverages by roughly 15 percent twice in the last year while bragging to shareholders that their profit margins will grow as costs come down. Tyson’s earnings report flaunted how their higher prices have “more than offset” their higher costs. The CEO of Hershey [CEO Michele G. Buck, 2024 total compensation $11,910,926.00] said last quarter that pricing gains more than offset inflation and higher costs.
So what can we do about it?
CALL YOUR CONGRESSIONAL REPRESENTATIVES!
DEMAND TRUMP ESTABLISH A CORPORATE PRICE-GOUGING CZAR!
The Biden administration has taken important steps to rein in Corporate profiteering and address the longstanding affordability crisis, from eliminating junk fees to strengthening global supple chains and cracking down on Corporate “concentration” [Corporations monopolizing industries].
We’ve come a long way in bringing inflation down since its peak in 2022. But stamping out inflation once and for all will require a concerted effort to rein in Corporate profiteering.”
“Although there’s no magic number, a good profit margin will typically fall between 5% and 10%. Below we’ve compiled the net profit margins for common business sectors:
Average profit margins by industry:
- Advertising: 3.30%
- Apparel: 5.87%
- Auto and Truck: 3.04%
- Auto Parts: 3.05%
- Beverage (Alcohol): 7.94%
- Beverage (Soft): 18.50%
- Broker and Investment Banking: 17.62%
- Building Materials: 4.30%
- Business and Consumer Services: 3.83%
- Computer Services: 4.34%
- Drugs (Pharmaceuticals): 18.38%
– Source: Brex.com
How about it President Trump? Will you do to price gouging Corporate CEOs what you tried to do with the Fraud, Waste and Abuse in the federal government?
Will you appoint a Corporate Price Gouging Czar?
See also:
Memo to Brian Kilmead: Show Me Proof of Corporate Price Gouging this site dated 2024/06/06.
The Great Deformation: The Corruption of Capitalism in America by David A. Stockman, 2013
