How we talk about the economy is important.
I have written before On how the personification of financial markets obscures how powerful entities manipulate these markets. The Federal Reserve’s current anti-inflationary efforts are another example of how language helps create unfair economic conditions.
When Jerome Powell, Chairman of the Federal Reserve, speaks, Wall Street listens. The suggestion that the Federal Reserve will raise interest rates drives down stock prices. Nobody likes high inflation, and the Federal Reserve’s primary tool for fighting inflation is to raise interest rates, but the recent use of this strategy has not been effective because it is based on a limited concept of what causes inflation.
Any vocabulary consists of what the rhetorical theorist Kenneth Burke calls “terminological screens”. There are no neutral terms. Burke writes that any term “must be a to choose From the fact “therefore also” a deviation of reality.” It draws our attention to some concerns and distracts us from others.
Robert Reich He writes That the monthly Bureau of Labor Statistics reports the pricesAnd CareersAnd wages Shaping our views on the causes of inflation and how to combat it. The media and policy makers distinguish these three terms when assessing the state of the economy. Therefore, most explanations of inflation emphasize that it is a function of how jobs and wages affect prices. When wages or other forms of income rise exponentially, inflation occurs. And what common sense suggests is that good things – higher wages and lower unemployment rates – become bad.
a The New York Times column He explains how the three terms act as screens that direct attention to particular strategies: “Federal Reserve officials are laser-focused on job gains and wage growth as they quickly raise interest rates to constrain the economy and slow rapid price increases. Officials are convinced they must sap some of the economy’s momentum to resist the worst inflation in four years.” decades down to their 2 percent target.”
Powell is forthright about this. Its stated aim isto cut wages“because if workers earn less, it is assumed that companies will pass the savings on to consumers. He also states that higher unemployment will benefit the economy, which is controversial an idea That some CEOs applauded Because they believe it “puts employers back in the driving seat”. More unemployment means more labor supply which therefore costs less to hire.
But this is where our terminology leads us astray. Focusing on prices, jobs and wages distracts us from a fourth key term that is not subject to any monthly report: earnings. At a time when inflation is going wrong, companies are reaping huge profits. bloomberg reports Because companies raise prices more than is required to cover their increased costs, companies’ profit margins are at their highest levels since the 1950s. For large companies, inflation is an excuse to raise consumer prices.
They can do this because they have monopoly power in many areas. Albertsons, Kroger, and Walmart control more than 70% of the grocery market in 167 US cities, and its dominance would increase if Albertsons-Kroger suggested merger Has been approved. Delta, USA and America dominate most of the aviation industry. Since the 1980s these three companies acquired What were 25 different airlines? Drug prices in the United States are among the highest in the world and partly due to lax antitrust measures. In 1995, there were 60 pharmaceutical companies. By 2015, they had merged into 10. Their monopoly on certain drugs has enabled them to double, triple, quadruple (and more!) the prices of those medications. Corporate profits are skyrocketing, and it’s not in spite of inflation, it’s because of inflation. Or more bluntly, because they can use inflation as a cover to drive up prices.
Some CEOs openly acknowledge this strategy. William Meany, CEO, Iron Mountain Inc. , a multi-billion dollar data warehousing company, States He was “calling for inflation” because “every inflation point is our expansion.” [profit] margins. Inflation, he says, is a “net positive,” because “we are able to set prices before inflation.” And “FedEx, UPS, and others” do the same thing: raise prices more than it takes to inflate costs for greater profits.
As long as the Fed focuses on wages (keeping them low) and jobs (keeping unemployment high) to combat inflation, the main cause, which is corporate profits, will not be dealt with. From the pain caused by the Fed’s rate hike, Powell He says, “These are the unfortunate costs of lower inflation.” Those costs are mostly borne by workers, though, like Pulitzer Prize winner Matthew Desmond notes, “The United States offers some of the lowest wages in the industrialized world.” It is not tolerated by companies, many of which, as mentioned above, are making record profits. and quot; Washington Post reportsAnother consequence of these interest rate increases are recent bank failures, the largest since the 2008 recession.
Inflation is a problem. But until we realize that “prices, jobs, and wages” act as idiomatic screens that blind us to the problem of profit inflation, we will remain mired in ineffective solutions that disenfranchise workers and enrich shareholders.
Jeffrey L. Benham Professor Emeritus in the Judy C. Pearson Department of Communication Studies at Saint Cloud State University.