IdeaLog

How to talk about inflation

Posted on May 18, 2022

Progressives are getting hammered on inflation, according to pundits and polls. Ninety-four percent of Americans are concerned about inflation, and voters currently trust Republicans more than Democrats to tackle the issue. How do you handle it?

First, start in agreement. For too long, progressives have been ignoring inflation or minimizing its impact. That’s awful messaging. One way or another, Americans are reminded of inflation every day. Prices for gasoline and meat and dairy are outrageous. You’ve got to start by empathizing with that.

Second, reframe “inflation” as “rising prices.” Average Americans haven’t the slightest idea how “inflation” works, which makes it easy for conservatives to lie. Say that the big corporations are “raising the prices we pay” for everyday products and services, like groceries, gasoline, Internet service and rent. And make sure you include yourself – it’s the prices “we” or “you and I” or “all of us” pay.

Third, blame giant rich corporations. The Economic Policy Institute studied the data and found that 54 percent of inflation has been caused by excessive corporate profits, 8 percent by increased labor costs, and 38 percent by increased non-labor costs (including supply chain problems). So sure, COVID and Ukraine and macroeconomic factors have had an impact, but most of the price increases were caused by profiteering.

To be specific, in 2021, corporations increased their profits more than any other year in recorded history. Among 100 top U.S. corporations, profits increased by an average of 50 percent. If it wasn’t for the windfall profits taken by rich corporations, the 6.7 percent inflation rate in 2021 would have been cut in half to a nearly-normal rate.

Here are a few examples. In 2021:

• Chevron, the oil company, increased profits by 144 percent.
• Amazon, the online retailer, increased profits by 333 percent.
• Albertsons, the supermarket company, increased profits by 671 percent.
• For the past year, the S&P 500 companies, on average, have been taking far more in profits than they have in years.

(For additional specifics, see this New York Times report.) In short, the higher prices that all of us are paying are mostly enriching the rich. Those of you in bluer communities might call this “greed-flation.”

As you know, telling the truth about an issue isn’t always persuasive because people tend to hold onto their beliefs whether true or not. But in this case, Americans already believe that the rich are taking unfair advantage of all of us. Only 29 percent believe that “large corporations have no choice but to raise prices in response to rising costs.” In contrast, 63 percent, including 76 percent of Democrats, 62 percent of Independents and 51 percent of Republicans, believe that “large corporations are taking advantage of the pandemic to raise prices unfairly on consumers and increase profits.” Agree with them!

Finally, call for policies that fight rising prices or provide other direct financial benefits to average residents. As a state or local policymaker, you cannot be expected to solve the problem of rising prices, but you need to show that you’ll do all you can to fight for the economic wellbeing of residents.

Among PLI model bills, you might consider: the Prescription Drug Affordability Act, the Fair Estate Tax Act linked to a tax cut like the Property Tax Circuit Breaker Act, the Protection from Price Gouging During Emergencies Act, the Protection Against Unlawful Evictions Act, the Fair Minimum Wage Act, or the Living Wage Act. Nationally, progressives could support a windfall profits tax.

Mark Pinsley, who is the Controller of Lehigh County, Pennsylvania and running for State Senate this year, offered a few ideas for this column. They include:

• Make your tax system more progressive. This is most straightforward with an income tax, where rates on the lower-earners would be cut a bit and rates on the highest-earners would be increased to at least cover the loss in revenue. Something like this could also be applied to real property taxes, personal property taxes, inheritance taxes, or a variety of government fees and license expenses. (Sales taxes are trickier because sellers could increase prices by the same amount as any sales tax decrease.)
• Move subsidies from the rich to average people. Nearly all states and most localities provide subsidies to very profitable businesses. The simplest thing would be to take away some or all of the subsidies going to fossil fuel corporations and use that money to increase a state tax credit or deduction. (Again, applying it directly by lowering the gas tax may result in sellers increasing prices by the same amount. Better to provide a financial benefit elsewhere.)
• Push prices down by empowering local small businesses to compete with the big corporations. In our market system, prices are supposed to be held down by competition, but big companies are almost universally increasing profits instead. State or local governments could, for example, provide small business grants to help them compete online. Or government health insurance plans could give preferential treatment to mom-and-pop pharmacies, which has been proven to lower costs.

Look on the bright side. This is a great opportunity to reframe the overall 2022 debate away from culture war nonsense and toward the kind of kitchen-table economic issues which favor progressives. So, when voters complain about inflation, say something like this:

The prices we’re paying are outrageous. I just paid $52 for a fill-up. The oil companies say they’re raising prices because they have to, but the fact is, they’re taking advantage of the pandemic and the war in Ukraine to get unprecedented profits out of our pockets. I will fight for the economic interests of people like you. I would, for example, (quickly list one or more policies).

And you could add:

Even if you think there is little that (state/local) action can solve, you’ve got to know that my opponent isn’t going to side with you over the rich. His party is controlled by the rich. They haven’t even proposed to do anything for you. That’s the real difference in this election. I am on your side.