The Problem is Lack of Competition

The glass half empty media’s economic headlines are overwhelmingly focused on inflation. But if you look deeper you’ll see there’s plenty of good news. Retail sales rose in October for the third straight month. October job growth was strong and Goldman Sachs is predicting a significant drop in the unemployment rate over the next year. Child poverty dropped by 29% in one month thanks to expanded child tax credit. Thanks to the Biden administration average food stamp benefits increased by more than 25%. Medium and long term interest rates for car and home loans are still rock bottom.

Sure, inflation is real at 6.2% in October. Regardless of that, “It’s safe to say the bottom 40 percent of Americans are definitely better off in the past year from a combination of rising wages and government aid, even with inflation,” University of Massachusetts economist Arindrajit Dube told The Washington Post. Even after you factor in inflation disposable income has been about 9.5 percent higher in 2021 than it was before the coronavirus pandemic according to Julia Coronado, president and founder of MacroPolicy Perspectives.

All this good news and Republicans with the help of the media choose to focus on inflation without bothering to discuss the causes. Why is that? Because they can rile up the public with fear which allows them to obscure things like the fact that the federal minimum wage, which affects millions of Americans, has been $7.25 an hour for over a decade even though we’ve seen significant inflation over that period.

Republican politicians complain of rising fossil fuel prices but don’t say anything about the possible benefits of investment in green energy, or they sound off on rising food prices but fail to mention that climate change is fueling droughts and/or floods that hit farming areas has made food more expensive.

A major reason for price rises is supply bottlenecks as the chair of the Federal Reserve, Jerome Powell, has pointed out. But there’s a deeper structural reason for inflation which is growing worse: the economic concentration of the American economy in the hands of a relative few corporate giants with the power to raise prices. When markets are competitive, companies keep their prices down in order to prevent competitors from grabbing away customers. But they’re raising prices while raking in record profits. The fact that corporate giants like Pepsico announced it was increasing prices, blaming “higher costs for some ingredients, freight and labor” then recorded $3bn in operating profits through September shows that they didn’t have to raise prices. Their supposed competitor Coca-Cola also raised prices at the same time, increasing its profit margins to 28.9%. Such behavior speaks to potential collusion because it doesn’t happen in a truly competitive market.

There’s a similar pattern in energy prices. If energy markets were competitive, once it became clear that demand was growing, producers would have quickly increased production to create more supply. But they didn’t. Industry experts say oil and gas companies saw more profit in letting prices go higher before producing more supply. They can get away with this because big oil and gas producers don’t operate in a competitive market. They can manipulate supply by coordinating among themselves.

Since the 1980s, when the US government all but abandoned antitrust enforcement, two-thirds of all American industries have become more concentrated. Only aggressive use of antitrust law can correct this structural problem. Don’t expect Senators John Cornyn and Ted Cruz to support that approach, it wouldn’ t sit well with their corporate campaign donors.

Published in the Seguin Gazette - November 24, 2021

Biden's Agenda Move Forward

Last week Congress passed the Infrastructure Investment and Jobs Act, H.R. 3684, which President Biden signed Monday. While Biden’s predecessor repeatedly proclaimed infrastructure week in an effort to gain public support not once in four years was an infrastructure bill ever voted on, let alone passed. Biden signed an infrastructure bill into law before he’s been in office 10 months. It goes to show you what competent leadership can accomplish.

The Infrastructure Investment and Jobs Act includes provisions related to federal-aid highway, transit, highway safety, motor carrier, research, hazardous materials, and rail programs of the Department of Transportation (DOT). Several other provisions of the bill address climate change, including strategies to reduce the climate change impacts of the surface transportation system and a vulnerability assessment to identify opportunities to enhance the resilience of the surface transportation system and ensure the efficient use of federal resources. H.R. 3684 revises Buy America procurement requirements for highways, mass transit, and rail and establishes a rebuild rural bridges program to improve the safety and state of good repair of bridges in rural communities like Seguin.

Passing the Infrastructure Investment and Jobs Act is a big deal, it moves the nation forward by providing the transportation infrastructure that we’ll need for the next few decades while at the same time providing good paying jobs that will raise wages and the standard of living for everyone, but it isn’t enough. Next up is the Build Back Better Act, H.R. 5376, which will soon be up for a vote in the U.S. House. The bill includes a lot of good things for you and your family as well as the country as a whole.

H.R. 5376 will fund purchases and incentives for electric vehicles and zero-emission, heavy-duty vehicles. This is an important step in both reducing the damage from climate change and developing energy independence. There is also funding for wildfire prevention, drought relief, conservation efforts, and climate change research; all of which affect Texas greatly. The bill also provides funding transit services and clean energy projects in low-income communities, some of which Seguin would likely qualify for.

The Build Back Better Act also includes funding for up to six semesters of free community college so that our young people who aren’t interested in university degrees have a chance to develop skills that lead to good paying jobs in construction, healthcare, and a wide range of fields. For families with very young children the bill will provide funding for universal preschool. The bill will also provide funding for free child care for children under the age of six making it easier for parents to work full time jobs that pay a living wage. An important provision here in Texas is funding health benefits for eligible individuals who reside in states that have not expanded Medicaid. There’s plenty more in the bill like expanding Medicare to cover dental, vision and hearing along with require that Medicare negotiate prices on prescription drugs which is currently prohibited.

We all know that cities are perpetually underfunded so that important infrastructure, like the water lines in Flint Michigan where so many suffered lead poisoning, are unsafe and unhealthy relics nearly a century old.  If passed, H.R. 5376 will provide for safe drinking water so that water lines can be upgraded using safe materials so that you and I won’t have to worry about lead or other contaminants in our drinking water.

If you want to improve the economy and health in our community do your part by calling our congressman, Vicente González at 202-225-2531, and urge him to vote for H.R. 5376.

Published in the Seguin Gazette - November 17, 2021

Republican Leadership Absent on Holocaust

A couple of weeks ago a bunch of Holocaust denying anti-Jewish demonstrators made appearances in San Antonio and Austin. While organizers and most of the participants were from out of state they found a lot of support from local white nationalists and neo-Nazis. Their goal was to sow hate in our communities and fear among our friends and neighbors, they succeeded. The fact that Holocaust denial is as willfully ignorant as belief that the earth is flat or that the sun revolves around the earth. Unlike flat-earthers, Holocaust deniers often use violent rhetoric and occasionally act on that rhetoric. There was a spate of anti-Jewish vandalism that coincided with the demonstrations all of which served to cause fear in our communities.

Mayors and city council members in both San Antonio and Austin denounced the hateful messages and so did Democratic leaders like Texas Democratic Party Chair Gilberto Hinojosa but we didn’t hear a word from Republican leaders like Gov. Greg Abbott or Lt. Gov. Dan Patrick. Republican Party leaders have accommodated white nationalists repeatedly since the previous president began his campaign. The similarities to Europe in the 1930’s; when nationalists like Benito Mussolini and Adolf Hitler used antisemitism to take control of their countries.

To be clear Gov. Abbott, by all appearances, believes the horrible historical truth about the Holocaust. Earlier this year he signed a new law creating the Texas Holocaust, Genocide and Antisemitism Advisory Commission, responsible for producing studies of antisemitism in Texas and working with schools to fight against it. That doesn’t seem to mean that he is above the use of antisemitism for political gain by his tacit acceptance of those who espouse it within his party and political supporters.

The behavior of Gov. Abbott and others like him is actually more damaging to society than leaders who actually are anti-Semitic or racist and clearly state that they are because the public is led to believe that the leader is righteous while that leader uses dog whistles appealing to David Duke and Ku Klux Klan members and other white nationalists. Today’s right-wing politico must be more guarded in their language but still willing to at least look with other way when supporters of a less savory type act out.

Texas Republicans passed legislation earlier this year that prohibits public schools from teaching about the long lasting effects of slavery and racism and how even government regulations and procedures have perpetuated injury to the descendants of slaves up to the present, more than 150 years later. That legislation led to teachers at a training session in north Texas being instructed to provide books with the opposing view should they have books on the Holocaust in their classroom library. Whether or not that’s what the legislators who wrote the bill intended that’s what at least some public school officials interpreted it to mean.

How can we grow and prosper as a nation in a peaceful and respectful manner when our political leaders are more than willing to use our baser instincts to divide us so they can retain power?

Published in the Seguin Gazette - October 10, 2021