Sugar Hill Creamery in Harlem will charge you more for hand-made icecream because everything, according to Petrushka Bazin Larsen (owner), costs her more. She told David Pogue that everything is increasing, including dairy, cream and milk, as well as our cups. It costs me more to bring the cups here than it does for them. Are you sure? Freight charges are outrageous!"
Your costs are rising regardless of what industry you are in. Rocket Vodka vodka company run by Dariusz Paczuski, has seen its glass costs rise from 17% to 25% depending on the size of the bottles.
Kimman's Co.'s gift shop Caroline Morris said that vendors who might have spent $3,000 to ship a container were now paying $30,000 for the same item.
Al Underwood stated that tariffs had impacted his Franklin Eyewear supply store a few years back: "It is 10%."
What's the deal? Prices are a function supply and demand, as you may be familiar. Higher demand means higher prices, as demonstrated by "Sunday Morning", the David Pogue Thespian Ensemble last year.
Larry Summers, a Harvard professor and Treasury Secretary under the Clinton administration, predicted this year's inflation more than he did a year ago. He told Pogue that "We put too much demand into our economy last year" and that it was going to cause it overheat.
Summers stated that the combination of the Federal Reserve maintaining zero interest rates and pumping trillions, trillions, and trillions of dollars of stimulus money was inevitably going to drive the car too fast, and cause it not to follow the road.
In a strange coincidence, then, the supply also fell. Summers stated that the big price increases are more due to shortages.
Both supply and demand are out of balance. Recently, however, we have been hearing of a third factor: Companies exploiting the situation.
"There is a third set that people use to argue that certain firms can somewhat opportunistically increase prices in the midst all this chaos," stated Mike Konczal from the Roosevelt Institute.
It is a concept called "Greedflation."
Konczal analyzed corporate profit margins over the course of time in a new study.
He told Pogue that their large profit margin had increased from 5% in the last few decades to nearly 10% in the past 2 years. "So, there has been a huge jump in corporate profits essentially during and after the pandemic."
"Sunday Morning" has not been able to reach any of these record-breaking companies to talk to us about this story. "I'm shocked! I'm shocked!" Robert Reich, a Berkeley professor who served as Labor Secretary under the Clinton administration, laughed it off.
Pogue asked: "What would they have to say about raising prices unnecessarily at a time we can't afford?"
Reich responded, "Well, they would say that our obligation is to shareholders'"
Meat prices increased by double digits.Tyson's CEO says they're asking customers to "pay for inflation."Meanwhile, Tyson's posted $1 billion in profits last quarter -- a 48% increase from the first quarter of 2021.Don't be fooled. This is all about corporate greed. It is always.
Everyone agrees that corporations have pushed up prices to the limit. However, not everyone agrees with this.
Reich stated, "I wouldn’t call it greedflation. I mean that companies respond to the market's incentives and must maximize shareholder returns. That's it."
Pogue stated, "Wow, it seemed like you felt that these corporate leaders were being exploitative and unfair?"
Reich stated, "I don’t use the term unfair." It's not about morality. Corporations are not individuals. They will maximize their share prices. That's what they do. The result was extraordinary price inflation.
Larry Summers says it best: "Resorts of Miami charge more in winter than in summer and have higher markups." This doesn't necessarily mean that they are overcharging. This means that there is sometimes more demand than supply. This is why I believe that the idea of price gouging when prices are raised to meet strong demand is false.
"You make it sound as if capitalism is functioning like it should: supply and demand decide prices." asked Pogue.
"Yeah," Summers said. "Look, we have the market economy. We haven't found any alternatives that are better."
However, that doesn't make us helpless. If you charge too high, your customers will be taken by competitors.
Our market isn’t perfect. Reich stated, "Since 1980s, two thirds of American industries are more concentrated." We are experiencing more monopolization, greater market power and more control by large companies in setting prices.
Pogue stated, "But I believed there were antitrust laws." "I thought that the government was supposed to protect us against that?"
Reich responded, "Well, that would be so." "But antitrust law has been very out of fashion since the 1980s."
How can we stop this inflation from getting out of control? Reich stated that the government could and should do more. "The combination of the threat of antitrust enforcement and a windfall profits taxes, that's it, is almost enough.
Summers said. Summers stated, "I believe the executive branch can make a difference by reducing tariffs. By finding out how to purchase things more cheaply, and by increasing the supply for commodities that are in limited supply, I think the Congress can also make a contribution."
There are some good news. Shipping prices and gas prices have both started to fall in recent months.
Analyst Mike Konczal, however, has some good news for the economy. He said that "the economy's still very powerful." "Spending remains very strong. The rate of job growth is still increasing. It's 3.5% unemployment, as you know. This is the most stable labor market in 60-70 years.
We just need to stop the inflation. Petrushka Bazin Larsen is an entrepreneur in ice cream. "It's a little more difficult to do business. She said. "But it is possible. And that at the end, whatever it may be, we will be stronger because it was possible."
Gabriel Falcon produced the story. Joseph Frandino, Editor.