A new report says that it is rocketing corporate profits that are driving the cost of living crisis.
WHILE THE Reserve Bank has engineered a recession to curb economic demand and suppress wage levels and placed the burden of the current economic crisis squarely on the shoulders of those least able to carry the burden, it continues to disregard the significant role that corporate profiteering is playing in the rising cost of living. It's the elephant in the room that our market-loyal economists and politicians continue to ignore.
According to a new report from First Union, the Council of Trade Unions and Action Station, soaring corporate profits are driving ever more people into economic hardship. The report, by First Union researcher Edward Miller, says that steeply rising profits have contributed to over half of the domestic inflation in New Zealand during the cost-of-living crisis.
Director of Action Station Kassie Hartendorp says that the corporate sector has used the cost of living crisis as a convenient cover to price gouge. She says that the inflationary pressures we are experiencing today are largely the result of corporate greed rather than excessive government or consumer spending.
'Over the past year, inflation has been the grand excuse for anyone to wield at their disposal. It provides cover for business owners to push up prices while withholding wage rises. It has been sharpened as a weapon for political gain by parties wanting to shrink government and the public sector. All of this has distracted us from the big businesses driving inflation.'
While its unlikely to be a term that corporate media will ever adopt, it would be appropriate to say that most of us are mired in economic hard times because of what the report defines as 'profit-led inflation'. Companies are telling us that they only 'reluctantly' raise their prices and that the price increases are 'fair'. In reality they are disguising profit margin expansion.
Large corporations are using their market power artificially to inflate prices, with the inflationary climate acting as a convenient excuse. After all, the consumer doesn’t know how much of the increase in the price of their loaf of bread is due to rising grain prices and how much is supermarket price gouging. Given that we are trapped in the pincer movement of two greedy supermarket chains, we have no reason to believe that they are doing us any favours.
The report notes that Stats NZ’s annual enterprise survey showed that businesses’ surplus before income tax – one measure of their operating profits – rose by $45 billion during the 2021 and 2022 financial years combined, while wages and salaries increased by only $16b over the same period.
Inflation is a question of class politics -which class gains at whose expense - rather than technical monetary policies. Among our present set of market-friendly parliamentary parties there is no political will to tilt the balance back in favour of the working class. While some might point to the Green Party's campaign for a wealth tax as a step in the right direction, the Green Party is irrevocably compromised by its continuing deference to the Labour Party. Whoever wins the general election in October the result will be the same, the status quo will prevail.