Hi Kerry, you're definitely right -- it's normal for businesses to pass along costs whenever they can. There's certainly a lot of sense in businesses maintaining a healthy profit margin.
Neoliberalism fits in here as the ideology that's inspired a historic amount of mega-mergers over the past 10-20 years, as companies look for ways to continuously keep growing. How is neoliberalism connected to growth & mergers? The super short version is: the concept of GDP was first applied to US economics in ~~1937 (by a guy called Simon Kuznets) and the idea that GDP growth signifies a healthy economy was "proven" by neoliberal think tanks throughout the 50s, 60s, and 70s as they waged war against Keynesian economics.
When Reagan and Thatcher took office in the 80s running on a platform of neoliberal economics, ideas like "growth is good" became an unquestionable adage.
So endless growth as a business model is closely connected to neoliberalism. It's all pretty recent. Now we have companies desperately pursuing arbitrary growth targets just for the sake of it, so they're prone to acquiring other companies to help them hit those goals.
Once again -- there's certainly some truth that GDP growth is good and contributes to a healthy economy. But we've gone way overboard in suggesting it's the sole indicator of a healthy economy...
In fact it seems to be really damaging for our economy, because these oligopolies can now set any price they want. We aren't seeing "perfect monopolies" but we are seeing a handful of companies with unchecked power.
How does this tie back to inflation? It happens these companies now control the price for all the goods we account for in our CPI and inflation calculations, so (months after the Fed issued covid relief funds and managed to keep inflation at a reasonable level -- and even after the Fed announced earlier this November that they would keep interest rates near-zero) the sudden decision to raise prices is causing inflation by our own definition (the change in CPI over some period of time). Corporations are claiming that inflation is the reason they need to raise prices, but it seems like it's a self-fulfilling prophecy. Somehow, someway, we survived the COVID recession without any significant inflation. So seeing a historic level of inflation now (albiet, just over 6%) when there hasn't been a new injection of money in some time, that tells me it is corporate-caused. Something entirely new than the inflation we're used to
Many thanks for your thoughtful comment -- I always enjoy talking with you, Kerry!
