Great Economy, Poor Perception, Price Gouging, Corporate Pricing Power

Click here for an article by Robert Reich on Substack entitled "The truth about the economy, subtitled "The one remaining problem can’t be dealt with through higher interest rates. It needs vigorous antitrust enforcement."

Reich attacks economic imbalance and advocates stronger anti-trust enforcement. He takes a little slap at Larry Summers, the prominent economist who masquerades as a Democrat, and as an example of corporate power and price gouging, says of Pepsi:

Consider Pepsi. In 2021, PepsiCo, which makes all sorts of drinks and snacks, announced it was forced to raise prices due to “higher costs.” Forced? Really? The company reported $11 billion in profit that year. 

In 2023, PepsiCo’s chief financial officer said that even though inflation was dropping, its prices would not. Pepsi hiked its prices by double digits and announced plans to keep them high in 2024.

If Pepsi had lots of competitors, consumers would just buy something cheaper. But PepsiCo’s only major soda competitor is Coca-Cola, which — surprise, surprise — announced similar price hikes at about the same time as Pepsi and also kept its prices high in 2023.

With just one or a few competitors, it’s easy for giant corporations to coordinate price increases and prevent price cuts, to keep their profits up while shafting consumers.

The CEO of Coca-Cola claimed that the company had “earned the right” to push price hikes because its sodas are popular. Popular? The only thing that’s popular these days seems to be corporate price gouging. 

Pepsi and Coca-Cola dominate the soft drink market. They own most of the brands that appear to be competitors.

 Of course, it's not just Pepsi. He continues:

This corporate pricing power isn’t happening just with Coke and Pepsi. Take meat products. At the end of 2023, Americans were paying at least 30 percent more for beef, pork, and poultry products than they were in 2020. 

Why? Just four companies now control processing of 80 percent of beef, nearly 70 percent of pork, and almost 60 percent of poultry. So of course it’s easy for them to coordinate price increases and prevent price cuts.

In 75 percent of U.S. industries, fewer companies now control more of their markets than they did 20 years ago.

He criticizes Trump and his lapdogs who lie about the strength of the economy, and describes anti-trust actions the Biden administration is taking.