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Targeting Inflation's Beneficiaries [1]
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Date: 2022-09-26
Stomping a "winner"
Targeting Inflation’s Beneficiaries
Is this normal, that we have low unemployment, but high inflation robbing the workers, or anyone who doesn’t own a corporation, while enriching those who do?
I recently saw a news blurb about another billionaire doubling his wealth since the pandemic!
The Fed is heroically raising interest rates, supposedly to stop inflation, but that’ll kill the economy as a price, and still could continue to inflate—if we have not a free market, but an oligopoly market, which I think we do.
Oligopoly is when huge business entities control the markets of their products, or services. It is because there are only a few of these powerful entities, producing/selling X, usually corporations.
So, the question is, are raising interest rates going to stop this price gouging that is inflating the wealth of the few wealthiest, who own substantial parts of large oligopolistic corporations?
If they can continue to raise prices, since their only competitors will do the same, they can do so without losing sales, thereby enjoying high, maybe even record profits.
Seems to me, raising interest rates is a very blunt bludgeon. To be enough to halt inflation, it will have to cause a depression. Interest rates are targeted at investment, paid for with debt, so, investment will fall, laying off workers and even corporations.
But why not target the owners of oligopolistic industries and businesses?
They’re ‘enjoying’ record profits, making the owners prodigiously wealthy. They’re not becoming so wealthy because they are particularly hard-working, or even smart. It’s luck.
The targets for bringing down inflation are the corporations and other businesses receiving high profits, when most people are having a hard time of it from inflation.
Two kinds of taxes would hit the targets: a corporate excess profits tax, high enough to make these high profits no longer possible. All businesses would be subject to the tax, but only taxed if their profit margin was significantly higher than it had been for a specified period.
The second tax would be on wealth, minimum eligibility would be, perhaps, assets of at least $500 million, or incomes over a million? Yearly gains would be heavily taxed, so that raising your firm’s prices could hurt.
Anyone who even has an ambition to make ‘a billion’, would be unhappy with these proposals.
And willing to spend millions, billions to prevent it from becoming policy, anywhere.
I hope they (the billionaire class) don’t continue to prevail, but their money, now put to use politically, thanks to Citizens United, may drown any other interests, or direction.
Another direction?
If the two taxes I proposed were enacted, government would have to decide what to do with this windfall. And remember, only the very, very rich pays for this.
How about programs to redistribute income, aid to people, families, who can’t make it on their own, better healthcare for all, even mortgage support.
Would the two taxes bring down inflation? In effect, they would be taxing inflation, so price makers might even lower prices, not raise them, to avoid the effects of the tax.
A rational anti-inflation policy could also include a hearty dose of anti-monopoly enforcement. That would also be anti-inflationary.
What is really at stake here, is whether the oligopolies and their leaders will mine everyone else’s wealth, and power, or whether a real market could raise all boats, and all votes.
The wealthy do far too well defending their prerogatives, and exploiting everyone else.
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