The Daily Item
September 11, 2024
Republicans are blaming the Biden-Harris administration for the increase in inflation and high prices for housing, food, and fuel being faced by Americans, but that is just not so. It is important to recognize that the government has little control over prices and to understand who and what is really to blame.
Wall Street investors have bought hundreds of thousands of homes and rental properties. In the first quarter of 2024, the six largest corporate landlords amassed more than $300 million in profits by converting single-family homes to rentals and by increasing rents. These six corporations are being investigated by the Department of Justice for using a software product called RealPage, which allows them to illegally coordinate (collude) and fix rental prices for more than 16 million homes and apartments across the entire United States. The DOJ and eight states have also filed a lawsuit against RealPage.
Food prices are high, partially because of increased production and transportation costs, but more so due to a lack of significant competition. Currently, four meat-packing companies control 85% of beef, 70% of pork, and 54% of chicken production in the country. Similar to the housing industry, these corporations use a program called Agri Stats to automatically coordinate their price increases and are currently facing antitrust charges by the Federal Trade Commission.
Additionally, three companies dominate 70% of U.S. grocery sales. The FTC is fighting to block the merger of Albertsons and Kroger, the two largest supermarket chains in the country. Over the past year, Albertsons’ profit margin tripled, meaning that its price increases have greatly exceeded its operating costs. The merger would result in one overly large corporation with little or no incentive to reduce prices.
Finally, the petroleum industry is costing American families an estimated $2,000 more per year in excessive fuel costs. In 2022, the five largest oil companies recorded more than $200 billion in profits, double their 2021 profits. At the same time, rather than cut prices, these companies have paid out more than $100 billion in stock buybacks and shareholder dividends.
As with the housing and food industries, the FTC has found evidence that the CEO of Pioneer Natural Resources attempted to conspire with OPEC to keep oil production low and further boost industry profits. It is estimated that this illegal crude oil price fixing caused over one-quarter of the past increase in inflation.
The rate of inflation has actually come down, but major corporations have not seen fit to reduce prices because that would also diminish their profits. Through the DOJ and FTC, the Biden-Harris administration is working to rein in this excessive profiteering and provide significant relief for American consumers.
David B. Kyle
New Columbia