Economy Good Under Biden

There are plenty of social media meme’s being published right now asserting that things were better 4 years ago while Trump was in office. The reality is that while prices were lower for many things, that isn’t the whole picture. In fact some of the distortion comes from the collapse of the economy during the pandemic which caused many prices to go down due to lack of demand.

The United States added 303,000 jobs in March, the 39th straight month of growth. The unemployment rate fell to 3.8 percent. There are 2.6 million more Americans employed today than there were at the previous peak in February 2020, just before the pandemic set in.

Another economic indicator is GDP. To be fair, rather than compare numbers from 2020 when the pandemic depressed everything let’s use 2019 instead. The fourth quarter of 2019 gross domestic product (GDP) was $21.9 trillion, in the fourth quarter of 2023 it was $27.96 trillion or an increase of more than 27%.

Mortgage rates which seem high are below rates from 1980 to 2010. We’re just spoiled by the rates since the sub-prime mortgage crisis that wrecked banks from 2008 to 2010. I well remember as I re-financed my mortgage in 2010 and shortened the term from 30 years to 15 years while only paying an extra $100 a month.

On April 1 of 2024 the national average for a gallon of gas was just under $3.64 and no one likes that. We must remember the price of anything is a result of the tension between supply and demand. The U.S. is both the number one producer and consumer of oil. Unlike most nations we produce more than we use. The price of gasoline is up because demand around the world is up and some of our oil is being sold to other countries. After adjusting for inflation gas was almost $4 a gallon back in 2007. Don’t let anyone tell you that the high price of gas is Joe Biden’s fault.

For those invested in the stock market, the Dow Jones Industrial Average and the Standard and Poor’s 500 indexes are both now at historic highs due to record profits. As a reminder those profits are a significant cause of the inflation mentioned earlier. Let’s call it greed-flation.

If you’re going to complain about the high price of groceries and gas you should also complain about the fact that minimum wage is still $7.25 an hour and many better paying jobs haven’t seen pay increases even as businesses see record profits. While it’s true that over the last 12 months wages have risen nearly 2% more than inflation each month, over the previous 2 years inflation was higher than wage increases so we have some catching up to do. Now remember who controls the state government in Texas, its Republicans, and they have zero interest in raising minimum wage regardless of how high prices rise. Republicans also control the House in our federal legislature and those folks also refuse to raise the minimum wage.

If you want to place blame for high prices, put that blame where it belongs, greedy businesses raising prices to increase profits while not raising wages to keep up and Republican politicians who think the same minimum wage from 2009 is appropriate today even though total inflation since then has been over 43%.

You have an opportunity to fix the imbalance between corporate profits and wages by electing Democrats to all levels of government this November.

Published in the Seguin Gazette - April 10, 2024

Inflation as a Political Weapon

 Inflation has emerged as a significant issue affecting not only the economy but also current political landscape especially the presidential election. One of the main factors contributing to this inflation is corporate greed, which has far-reaching implications on political dynamics and policy responses.

Corporate greed, profit-maximizing behavior at the expense of societal well-being and ethical considerations, should be a key point in your political discussions regarding inflation. Corporate actions, including price gouging, market manipulation, and prioritizing shareholder returns over long-term economic stability, have fueled rising prices in food, fuel, building materials, and many other sectors of the economy.

The intersection of corporate greed and inflation has significant implications for current politics, influencing public perceptions, policy priorities, and political discourse. Inflation caused by corporate greed affects politics in numerous ways.

As consumers face higher prices for essential goods and services, there is growing public anger and dissatisfaction with political leaders perceived as failing to address the root causes of inflation. This discontent fuels anti-establishment sentiments and has led to increased distrust in government policies.

Inflation caused by corporate greed has become a political weapon, with Republicans pointing fingers at Democrats for failing to rein in price increases, thus capitalizing on public frustration by blaming President Biden for economic mismanagement. Of course, those same Republicans do all they can to prevent Biden policies from increasing competition or at least maintaining the competition that currently exists by preventing inappropriate mergers.

Inflation caused by corporate greed can also have implications for international relations and trade dynamics. Rising prices may lead to trade disputes, currency fluctuations, and tensions between countries over economic policies aimed at addressing inflationary pressures.

The role of the Federal Reserve in managing inflation is under scrutiny, with debates over the appropriate balance between central bank independence and political oversight. Questions arise about whether the Federal Reserve has the tools and autonomy to effectively combat inflation.

Inflation caused by corporate greed is likely to feature prominently in this election cycle, with Republicans blaming Biden for mismanagement while Biden reminds voters what he has already done and offers further proposals to hold corporations accountable. Campaign promises related to job creation, affordability, and reining in corporate power will be key points in the drive to attract voters to each party.

Inflation driven by corporate greed is shaping current political landscapes, sparking debates, policy reforms, and public scrutiny of government responses. The intersection of economic forces and political dynamics underscores the complexity of addressing inflationary pressures while promoting sustainable economic development and social equity. It is incumbent on President Biden that he makes the case for including robust antitrust enforcement, consumer protection measures, responsible corporate governance, and policies that prioritize sustainable economic growth over short-term profit maximization. By addressing corporate greed, Biden and Democrats can mitigate inflationary risks and promote a fair and balanced economic environment for all Americans. We who understand the issues have a key role in spreading the word and explaining to our family and friends so that enough voters understand the problem and the solutions proposed.

Published in the Seguin Gazette - March 20, 2024

Abbott Caused Inflation

Our dear governor, Greg Abbott, likes to claim the superiority of his administration and policies in hosting the supposed economic success of Texas. In reality Texas has some of the most economically disadvantaged citizens in the country and higher wealth disparity between its citizens than 37 other states. Texas, unlike California – the state conservatives love to bash, doesn’t even make the top 25 in gross domestic product per resident.

Most recently conservatives have been bashing President Joe Biden on his handling of the economy and the “security” of the southern border. Abbott and his fellow liars claim that the current state of inflation is somehow Biden’s fault, especially high gas prices and that Biden has an open door policy on the Mexican border.

Let’s be clear, no president controls gas prices to any great degree. Oil and gasoline are international commodities and their prices fluctuate based on projected availability of that commodity. The notion that “energy independence” and higher production in the U.S. would somehow insulate us from price fluctuations is beyond ludicrous. Russia’s invasion of Ukraine along the subsequent embargo of its oil shipments has made oil more scarce on the world market and countries that previously purchased Russian oil now must buy it from somewhere else and even if it isn’t U.S. oil directly oil produced here still ends up covering the gap created and therefore is priced accordingly. Any action that Biden might take to increase oil production in the U.S. would take years to percolate through the system as there are thousands of acres of federal land that have been leased to oil companies for years but never drilled on.

Gov. Abbott’s calamitous political stunt targeting international trade cost Texas more than $4 billion in damages, the economic consulting firm The Perryman Group. The consultants estimate that Abbott’s now-rescinded policy which required commercial vehicles to undergo additional inspections after passing through federal border check points but didn’t actually do much checking “will cost the equivalent of 77,000 job years for the country and 36,300 for Texas’ economy,” according to The Dallas Morning News.

In the city of Pharr, one of the busiest land crossings in the country, Abbott’s political stunt cost the area roughly $200 million every single day in losses. The Perryman Group estimates that Abbott caused the nation roughly $9 billion in lost gross domestic product.

“The biggest losses were to the manufacturing sector, which took about 50% of the hit, followed by retail trade, wholesale trade and financial activities,” The Dallas Morning News reported. “Manufacturing and retail made up the bulk of the job losses.”

When Mexican President Andres Manuel López Obrador called Abbott’s border shenanigans “a very despicable way to act”, Abbott responded by threatening to reinstate his unpopular policy, claiming he has “the capability at any time” to resume his unnecessary secondary inspections.

Even Agriculture Commissioner Sid Miller, a real right-wing nut-job, complained to NPR that "You're already seeing things like bananas, avocados, lemons and limes" go up in price because of this stunt.

The next time your conservative neighbors try to bash Joe Biden on the economy, remind them that it was Greg Abbott alone who cost the state billions of dollars and caused higher inflation on grocery store shelves all to look good to Trump voters when he makes a run for the presidency in 2024.

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