https://www.commondreams.org/news/corporate-profiteering-inflation
JAKE JOHNSON
Dec 07, 2023

Study Shows #Corporate #Profiteering 'Amplified' Global #Inflation

The new report by the Institute for Public Policy Research (IPPR) and Common Wealth argues that while corporate profiteering was not the "sole driver of inflation," the market dominance of a few powerful companies "amplified" economywide price increases.

Examining the profits of major firms listed on the stock exchanges of five countries, the analysis shows that many large corporations were able to keep their margins stable or even boost them—as in the case of major oil and gas companies like ExxonMobil—during pandemic-related turmoil and global energy market disruptions caused by Russia's attack on Ukraine.

The researchers estimated that the profits of major corporations, bolstered by a relatively small number of companies, were at least 30% higher at the end of last year than they were at the end of 2019, prior to the coronavirus crisis.
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Jung argued that economists have focused "too much on the labor market" as a source of inflationary pressure. The U.S. Federal Reserve and other central banks have explicitly targeted job markets by jacking up interest rates in a bid to rein in inflation, which has cooled substantially from its peak.

"In fact, most wage earners have taken real losses while many businesses protected their profit margins or even raised them," Jung noted. "We should be scrutinizing the role profits have played in amplifying inflation."

To prevent corporations from exploiting future inflation shocks, Jung and Hayes called for a "new international approach to taxing excess profits," which they said would help "reduce inefficient behavior by dominant corporations." The Economistestimated in July that excess corporate profits globally hit around $4 trillion over the past year.

Other interventions, such as price caps, could "help stabilize markets during economic emergencies," Jung and Hayes added.

"Such fiscal measures have been applied by about half of European economies in the last two years, and were found to be effective in helping to lower inflation," they wrote."...