177 Comments

I think you need to grab the Biden administration by its ears and make sure they’re hearing this!

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I'm trying, believe me.

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Thank you. I hope you can get over the roar of the polls and the press narratives.

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They are making polls irrelevant. The press narratives are getting old and thin. When nothing changes, people can figure out that something is amiss. There is a reason that many folks do not trust the news media or the polls. And they read about and hear about insider trading and special white collar courts and partisan judges. So much for Justice being blind! or above partisanship. Money is money.

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Laurie, have you seen the reports that the "philantropic" Bill & Melind Gates Foundation allocated $300,000,000 across various media outlets?

Strikes me as rather bizarre and extraordinary that philanthropy money would be donated to profitable corporate media entities?

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I have not, but I am not surprised that they want to use their money to forward their agenda and shape everyone's lives as much as possible.

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I wonder if the world's wealthiest actually DO believe in climate change, and actually have a plan—and their way to face the coming catastrophe is to do what they're doing—hoarding and finding the safest real estate—so the rest of us, as we die off, will simply have to be sacrificed, in order to allow fewer people to live on the planet. That's a Draconian measure conservatives can be famous for, and in our heart of hearts, we all secretly may realize it's the real answer to climate change—drastic and rapid population decline.

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Isn't price fixing illegal? Maybe I have an overactive imagination, but there could be a more sinister motive as well. Corporations generally prefer Republicans in office because they basically allow them to do whatever they want. By drastically raising prices while Democrats are in power, they can turn the population against Democrats and elect Republicans, even without devious election machinations. I have wondered, likewise, whether Russia's Vladimir Putin has tried to influence our politics by manipulating the price of oil.

Your solution seems reasonable, but getting Congress to do anything that involves reducing corporate profits in any way is like pulling teeth. Too many members are bought and paid for by the wealthy.

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Anti-monopoly enforcement went out of style under Reagan and has remained so. With rightwing economists sneering wittily that "all triangles* are small." * A triangle represents losses of the economy as a whole due to monopoly on a demand and marginal cost diagram.

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author

Robert Bork's ideas shaped Reagan's rejection of anti-monopoly (antitrust) enforcement. But Bork was wrong, and the policy people around Biden know that. It's time to revive antitrust.

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Oh yes by all means reinvigorate anti trust efforts! We need new legislation and new enforcement of old laws! It’s going to take a massive effort just to hold on to our democracy! Hearts and minds or psychological warfare! Unfortunately, people on our side will have to give up everything including some lives to turn this thing around!

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I am skeptical that reviving antitrust will work to solve the problem. More and smaller companies filling the same niche will still either collude or respond to each other to raise prices and also maintain profits at a high level. I think stronger legislation will be needed.

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I disagree. "There is no honor among thieves" applies here. If there are enough competitors collusion becomes unmanageable

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I think we are in agreement.

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Carolyn Herz; I agree, there should be an effort to push against the practice of supporting corporate interests while taking money from them and talking about what Republicans are doing (raising prices drastically to make Democrats look bad etc,) that is illegal at least on the books. Just calling it out and confronting their behavior is a start. Just because they have been getting away with it does not mean it should not be spoken out loud. Don't wait for the mainstream media. It is time to name names.

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Proving price fixing basically requires proving collusion, and that is hard to do. But even when there is no collusion, one company may raise its prices when it sees a competing company raise its prices. The government should require some reductions in profits contingent on increases in prices.

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That is exactly how it works. Coke doesn't need to actually collude with Pepsi. It can just raise its own prices and Pepsi will see that signal and raise its own prices. " But the number of competitors has to be fairly small for this to work. And I saw some actual dog whistle press releases lately from CEOs of major corporations along about "robust demand" providing a "favorable climate" for price increases.

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You have painted the picture perfectly. This is exactly what the Republicans are hoping for.

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Laws do not live independent of their enforcement and interpretation.

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Unfortunately, this also applies to the Constitution.

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I wondered that too! Pepsi and Coke can't collude to fix pricing, but they are?!! Claire

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author

We can debate the legal meaning of "collusion" (in a former life I was in charge of policy at the Federal Trade Commission, and did a lot of this). But the fact is that the fewer the number of competitors, the easier it is to coordinate price increases.

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But they might not be colluding. They just might be reacting independently to the actions of the other.

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It's a thing to be argued in court. Does the result equal the intent? Does it matter?

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No, the result does not equal the intent. It could be accomplished with no intent to collude. Yes, intention to collude would need to be argued in court.

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The term "collusion" has no specific legal meaning in criminal law; there's no such criminal charge called "collusion," nor does the term necessarily signal a criminal offense. Federal and state governments have antitrust laws in place to thwart actions that would restrain trade or create an unfair advantage in the marketplace. Antitrust laws often are invoked when large companies merge and squeeze out other, smaller competitors. But since competition generally results in lower prices and thus benefits consumers, large companies may be tempted to collude together instead by agreeing not to go below a certain price point. This illegal activity is called "price-fixing."

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You are right about that...thanks for commenting...

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You are right on the Money (and, Yes pun intended) when you said; "Too many members are bought and paid for by the wealthy." Herein lies the problem, Big Money paid thru Lobbyists and PACs is ruining our Democracy!

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Feb 11, 2023·edited Feb 11, 2023

Therefore windfall profits taxes seem like the simple answer here

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When I heard about this yesterday I shook my head, this move to protect corporate profits by raising interest rates will hurt consumers. Buying a house or car will cost more and qualifying for the loan will become harder, especially with wages still very low. The “Sherman Antitrust Act” law of 1890 was designed to prevent corporate monopolies as we’re seeing today, however they haven’t been enforced as they should have been over the past decades. Now we have a few conglomerates that own almost everything and have free reign to price gouge. Where is the Department of Justice? It’s up to them to enforce these laws!

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Susan, exactly right. Raising interest rates now will harm consumers and workers -- indeed, most people in the economy. It would be one thing if inflation were really a problem, but, as I try to make clear, the problem is economic concentration in the hands of a few very large corporations.

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At least we can riff on the main point when responding to John Barrasso and Mitch McConnell. They're still to blame

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That is what happens when our representatives are on the take, and the Courts too.

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I own a small business - 10 employees - and while I completely agree with you in many many MOST things your write about and have stances on, this one is an exception. PLEASE NOTE: I am a bluer-than-blue democrat, probably flirt close to the line of socialism on some things so keep that in mind.

For LARGE OR MEDIUM SIZED CORPORATIONS, YESSSSS I 100% agree with this thought process. Generally speaking, they were already underpaying employees, over-rewarding investors and shareholders, and GROSSLY overpaying C-suite and so for THOSE corporations increasing prices is bonkers. Probably.

BUT............

I own a cleaning company in Cincinnati and since 2015 I have always tried to pay well for a M-F, 30 hours/week job (House cleaning is a workout and 40 hours isn't possible unless it's just offices which isn't us). I've paid at or above $15/hour, several cleaners over the years have made closer to $18-$20/hour as a trainer etc. The past 20 months has been the most chaotic climate to run a small business in, and I'm grateful for all the extra stimulus so that when I had to lay someone off for a bit they were covered with extra unemployment. I was blessed with PPP and used it for payroll and that was such a blessing to my employees.

Ohio is a relatively low cost of living state, and I was charging $40/hour for cleaning services, starting people at $14, with $1 raise at 5-6 weeks, another $1 by 6 months. That’s pretty decent for a part time job first shift. But it just wasn’t enough to keep labor and by this past June I had to increase client prices 25% (from $40 to $50/hour) so that I could ALSO increase wages by 25% ($4/hour across the board). This move, along with a 2-page essay ahem I mean letter to my clients, is what saved my business and solved our labor bottleneck and we’ve been able to double billable work since the summer because we finally have a fantastic crew and can take on as much work as we want to.

So for MY BUSINESS, in which about 40% of my client rate goes to base wages (fully-loaded payroll that includes employer taxes, mileage, and paid travel time between clients, and office staff that’s not billable) ends up being about 65-70% of each billable hour. My employees all make $18/hour to start, $1 raise in 5-6 weeks, another $1 within 6 months means my average wage is right around $20/hour.

FOR MY BUSINESS, I had to increase prices (adding to inflation) because though I paid well, it wasn’t good enough. And I don’t even make 2x my average employee’s salary. Please, do NOT lump my small business that had to increase client rates in order to increase wages in order to be able to actually sustain my business and provide for 10 families with Kellogs. Or P&G.

PS If you ever want a small-business incubator/experimental example of what we are facing in post-pandemic times, I volunteer!!

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I hear Republicans complaining about how Biden is causing inflation/higher prices. But it is the corporate power structures and price gouging by large American industries, Big Pharma, etc. that is to blame. If they ALL have the excuse of inflation to hide behind, it seems to be true, and all the while they are bringing in record profits! "The aggressive use of anti-trust laws to bust up monopolies" sounds like a fair remedy. And the "windfall profits tax" seems like a just solution. I learned much from today's newsletter. We need to somehow convince the American people and tell our neighbors and friends the truth by talking to them and spreading the word on social media. Biden has a lot on his plate right now, but hopefully we can legislate these solutions in Congress.

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Jane, please do spread word of this. Most people don't know that corporate concentration is really the problem here.

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I completely agree with the need to leverage antitrust laws in the face of this wave of corporate malfeasance.

My question relates to the arm's length relationship of these companies though. They're not part of the same umbrella corporation, as was AT&T and the Bell System. It appears to be more a case of 'collusion' and/or price fixing. Can antitrust laws apply in those cases?

Also, in your diaper example, it seems that Kimberly Clark was handed the opportunity to leave their prices where they were, and increase their market share by virtue of their (now apparent but unchanged) lower price. Can someone shed some light on the thinking here? Thanks in advance.

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The Sherman act does cover collusion/price fixing.

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The Sherman Act! Look around. How many monopolies are out there! Amazon is the king of demanding prices on books etc to be set to Amazon demands. An act not used is meaningless! It is also a constitutional high crime to incite a deadly coup attempt!

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I’m not a lawyer. Maybe someone else can answer your question.

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Maybe they're limited in their ability to ramp up production?

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This will cause an eventual crash, won't it? If people's salaries stagnate, they will stop buying. This may sound weird because consumer spending is very high right now, but what happens when the buying slows down? I'm confused because of course, we're being lied to, again. People are spending at a record rate, but instead of enjoying the ride, the greedy corporate bastards have found a legal form of price gouging cleverly hidden behind the supply chain slowdown. It's eventually going to go over a cliff.

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author

At some point, so much of the nation's economic gains will be going to the top that there won't be enough consumer demand to buy all the stuff that the rest of us create.

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Exactly. Everything is going to stagnate. People are already complaining, but it's going to be like the 70's again, when nobody will even be able to afford the things we take for granted now - smartphones, SUV'S, athletic shoes, big TV's. Just think how easy it has been for corporate giants to siphon off covid relief money and use it to buy back stocks. I spent years outside the US but I don't want to do it again. But there is less reason to stay here than there used to be. We're going down like the Titanic.

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They will be killing the goose that lays the golden eggs.

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And possibly raiding the treasury to keep banks that are 'too big to fail' from failing?

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I once asked in a town hall meeting with Congressman Steve Womack, Arkansas, who was the backbone of America. He instantly replied small business. I told him he was wrong. It was the American consumer. He blasted me and said I had no concept of business. I owned a small business at the time. If this pandemic has proved one thing was that I was right. Without the American consumers buying from small business, which support a lot of American families, our economy started tanking. No money , no spending. Simple

What is your thoughts on this concept Robert?

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As a former antitrust investigator, then corporate (very small) insurance company director, I agree with you on the Fed’s call. Powell’s easing off the QE appears a bit knee jerk. And, it’s a shame Democrats are not messaging this much, much more about corporate concentration. Isn’t it also the case that as we bring more goods back to US “on shore”production, there will be decreased competition, ergo, some higher prices? Your solution deserves championing now!

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Paula, I do wish Democrats in Washington would talk more about this. Democrats need to make it clear they're on the side of the bottom 90 percent, not the side of big corporations and Wall Street.

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Polling shows that people see themselves in the upper 10% when they simply are not. To reach our people, we have to explain again and again what middle class means, and that these are the very, VERY rich.

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Dec 17, 2021Liked by Robert Reich

Big corporations play a similar game with suppliers. When you the only market for intermediate goods, or one of only a few big corporate buyers for those goods, you have the power to tell the supplier the price you will pay him, take it or leave it. This is a growing problem. It is called, "Monopsony".

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Mr. Reich, I agree with you that an "agressive use of antitrust laws to bust up monopolies" would be a solution to the problem of inflated prices of consumer goods. The problem is that it requires an administration with the will to do so. I voted for Joe Biden because the alternative was unthinkable. But, let's face it, Joe Biden has always been a corporate Dem and he's not going to bite the hand that feeds him and most of his party as well as all Republicans. Until we have a successful grass roots movement to overturn Citizens United, we will be at the mercy of corporations and the donor class.

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We must increase use of our Ant-trust laws to address corporate oligarchs like Coca Cola and Proctor & Gamble. They are causing Inflation and then using it as an excuse to jack up their prices and their profits. We must keep our eyes on the prize and Pass the Build Back Better Legislation and the Freedom to Vote and John Lewis Voting Rights Acts NOW!!!

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Robert, to go back to an earlier post of yours, who is responsible for putting more money into the defense budget than the military even asked for? And how do we hold these people accountable? Charles Pohl

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founding

Guardian reports Senema still resisting changes to the filibuster rule. Let's see, why would a freshman senator with no other obvious influence want to keep a rule that makes her a pivotal figure in what happens to legislation, say anti-monopoly measures? How much does she make from corporate donations?

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You can look up her donors and amounts on Opensecret.org.

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founding

So many things are wrong! It is hard to know where to start, but clearly putting the brakes on the economy right now is a political move, not a warranted economic response. I have a little money in the stock market for example - big boost by this move. Ms. Alexander just below has the counter example. I think we need to think carefully and take actions in the political realm to get balanced policies that take the welfare of most people into account.

We must return the Democrats to a majority in both chambers of the Congress! Manchin and Senema are only influential, only able to block the Biden agenda, because the Democratic majority is so marginal. Two more "real" Democrats in the Senate must be a goal and is more important than increasing the Democratic majority in the House of Representatives.

It is tough to accept, but living in a blue state means that pro-Democrat activism must take the form of money. Sending money (and love) to those candidates around the country who can most likely bump out a lukewarm Democrat, or even a Republican here and there, is the surest way to move the needle on needed anti-monopoly legislations and improvements to tax law.

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As usual, you provide a clear-headed and accurate analysis of the problem. The question is: will Congress and President Biden do anythinng about it, or are they simply too bogged down with other major issues e.g. COVID and the January 6 insurrection to anything about it?

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The Republicans keep a lot of balls of fire in the air so we have trouble even focusing on problems that are identified. Abortion laws? Right to vote prevention? Machine guns in the hands of children and nutcases? They want to keep us down.

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Bacco they government should be focusing on COVID, homelessness, medical expenses drug prices, suicide and mental health, climate issues and the Southern border. Our government gets bogged down in witch hunts. Like HRC computer. Now it is the younger Biden computer. And then it was a Russian dossier. Back in the day it was Monica Lewinsky. We can't get anything done with career politicians building their own brand on TV. We must shut the witch hunts down and get back to business. Taking care of our legal American citizens. We have non profits doing the bulk of the work helping others because our federal and state governments are stuck in mud.

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Isn’t that what Bernie Sanders said to centrist Democrats? Do you think they will wake up before the looming disaster of 2022? Or will it be Hilary summering in the Hamptons and Obama on his 26 mil island estate telling us how hard they tried to teach across the aisle but it just didn’t work.

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Of course not. They got rid of those guys during the Reagan regime.

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This is an issue we can get all most all Americans to rally around. This is what the media should be focusing on. But, we know who pays the salaries.

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Once they obtain an oligopoly they don't even have to conspire to fix prices since all parties can guess what the response of their "competitors" will be to any action they take. I don't know how much concentration in an industry is required to create an oligopoly but it's pretty clear that the many sectors of the US markets already oligopolies and there is a drive by the big companies and hedge funds to spread oligopoly to other sectors (e.g., water, toll roads, rental properties, etc.).

In addition to obtaining price control, the oligopolies also end up with a tremendous amount of power which allows them to further distort the "free" markets to their advantage. Only the federal government has the ability to take on the ravenous oligopolist by breaking them up, incentivizing competition or providing public services to wrest their oligopolist's hands from our throats.

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Exactly right.

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founding

@MinuteMan. Oligopoly! Thank you for introducing this word into this conversation. To keep up with the complexity of modern economic arrangements people need to keep up on vocabulary. I have heard people discount "monopoly" because there are TWO firms providing a product!

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