We subscribe to several newsletters at our house, liberal and conservative, because we kind of want to take the pulses of the various parts of the political spectrum. One of those we enjoy is by Robert Reich.

He worked in the administrations of Republican Gerald Ford and Democrats Jimmy Carter, and was Bill Clinton’s Secretary of Labor. He also was part of President Obama’s economic transition advisory board.

He’s been the Chancellor’s Public Policy Professor at UC-Berkeley for eighteen years. He used to be a lecturer in government at Harvard, and a prof of social and economic policy at Brandeis University. Time magazine said he was one of the ten best cabinet members of the Twentieth Century (2008) and ranked sixth on the Wall Street Journal’s list of Most Influential Business Thinkers.

So it appears he has some pretty solid bipartisan credentials.

A few days ago, he explained why prices remain high despite the slowing of inflation. His explanation recalls a warning I heard thirty years ago or more from Abner Womack, an Ag-Econ professor at the University of Missouri, a co-founder of the Food and Agricultural Policy Research Institute.  He warned of the dangers of vertical integration in the agriculture industry—a time when only a few companies controlled the agriculture industry from providing the seeds, providing the fertilizer, processing the harvested product, and marketing it to consumers, and doing the same thing with the livestock part of agriculture. In effect, he was talking about the growing tendency of creating agricultural monopolies.

In his column on February 16, Reich began with a chart:

The chart shows corporate profit trends from 1946 through the third quarter of 2023.

This, he says, is why President Biden is not getting the credit he deserves to improving the economy—-corporate monopolities are unnecessarily increasing prices, or charging the same prices but reducing the size of the products.  For example, he says—

“In 2021, PepsiCo, which makes all sorts of drinks and snacks, announced it was “forced” to raise prices due to “higher costs.” Forced? Really? The company reported $11 billion in profit that year. 

“In 2023 PepsiCo’s chief financial officer said that even though inflation was dropping, its prices would not. Pepsi hiked its prices by double digits and announced plans to keep them high in 2024.

“How can they get away with this? 

“Well, if Pepsi were challenged by tougher competition, consumers would just buy something cheaper. But PepsiCo’s only major soda competitor is Coca-Cola, which — surprise, surprise — announced similar price hikes at about the same time as Pepsi, and also kept its prices high in 2023.

“The CEO of Coca-Cola claimed that the company had “earned the right” to push price hikes because its sodas are popular. Popular? The only thing that’s popular these days seems to be corporate price gouging.” 

And that is why, he explains, consumer prices are still high even though inflation is down and prices are rising “far more slowly” than in the past couple of years. However, those trends are not reflected in the prices of the products.  The result is that the corporations can “get aay with overcharging you” because corporations have few competitors who can force them to lower prices to compete for customers.

Why are prices thirty percent higher than they were in 2020?  Because “four companies now control processing of 80 percent of beef, nearly 70 percent of pork, and almost 60 percent of poultry.”  He suggests, but offers no proof, that these companies coordinate price increases.

Reich says it’s time federal antitrust laws be enforced, noting the Biden administration has been more aggressive in this field than any administration for the last forty years. It has acused the meat industry of price fixing. The administration is suing Amazon with “one of the biggest anti-monopoly lawsuits in a generation.”

He points to legislation suggested by Senator Elizabeth Warren and others. She says, “Giant corporations are using supply chain shocks as a cover to excessively raise prices and sometimes charging the same price but shrinking how much consumers actually get.”  Among other things, the bill would force public companies to divulge more about their costs and pricing strategies.

But, he says, don’t expect this idea to go far because Democrats have only a slim majority in the Senate and Repulicans have a slim majority in the House that enables them and their business allies to blame the Biden administration instead of solving the problem by going after that important constituency for the GOP.

So ends Robert Reich’s basic economic course for the day. He’s clearly a liberal but that doesn’t automatically mean he’s not worth appreciating any more than a conservative’s thoughts are automatically worthy of dismissal.  And those who wear the label “conservative” honorably will find some points of agreement with him, perhaps.

Late in the 1890s and early 1900s, it was popular in politics to be a “trust buster.”  Reich has suggested targets for a new generation of them.

It’s time to get started.