No, “greedy corporations” don’t cause inflation
So, if you’ve kept up with the news, you know that some politicians are blaming “greedy” corporations for high inflation. The idea is that greedy corporations are just hiking prices to gouge customers. I want to explain why this idea doesn’t make much sense as an explanation for the high prices we are experiencing.
If price-gouging/corporate greed were the real culprit, then why are there high prices now? Why not 2019? Why not 2018? Why did we see prices falling in some areas of the economy before 2021 if companies are so “greedy”? So on the face of it, it doesn’t make sense to blame greedy corporations; it’s nonsense. It’s not even an explanation at all because it sheds exactly zero light on the situation.
A fallback position is to say that greedy corporations are using the inflation crisis as an excuse to raise prices. But this is an admission that corporations aren’t the main reason why we have inflation! I can’t say there aren’t some companies doing that, but that’s different from saying it’s a broad problem. And again, why are companies raising prices now? Greedy companies couldn’t find another excuse besides inflation?
Concerning illegal monopolies, that’s a question for the Department of Justice and FTC, and it’s not for politicians to use as populist talking points. And monopolies are always a long-term issue, but they aren’t the cause of the short-term inflation that we are seeing. The inflation we are seeing is broad-based, not just in particular industries, so once again, we have an explanation that doesn’t make any sense at all.
