What Will I Do?: Rising Prices Calls for The Us Government to Take Action!!

‘What am I going to do?’: soaring prices fuel calls for US government to step in

According to analysts, large firms are passing on higher-than-necessary price hikes to customers under the guise of inflation, conflict, and supply chain constraints. Latasha Holmes bemoaned the growing cost of toilet paper, beverages, food, and other products she had just purchased outside a Dollar Tree in Detroit. She claimed that the price hikes were forcing her to choose between essentials for herself and her four children.

“I’m not sure what I’m going to do.” “Prices are going up all across town,” she explained. “I’m sorry, but I can’t afford everything.” Dollar Tree, on the other hand, booms while Holmes struggles. Between 2019 and 2021, the retailer boosted its pricing by 25% as profits climbed by 269 per cent and profit margins widened.

Shareholders benefited as well. The business also announced a $1 billion stock buyback programme, which will return cash to investors as a result of the price increases.
According to consumer advocates and economists, Dollar Tree and other huge firms are juicing profits by passing on higher-than-needed price hikes to customers like Holmes under the guise of inflation, war, and supply chain constraints. They want the federal government to take decisive action to rein in the corporations.

Price controls, improved price-fixing regulations, commodity market intervention, stock buyback regulation, and antitrust enforcement are among the recommended remedies. A robust business lobby and a fragmented Congress that appears incapable of passing big legislation stand in the way of these initiatives.

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“There are reasons to have a profit motive, but there are also reasons to have an overall regulating authority that can say, ‘This is actually profiteering… while everyone is struggling,'” Krista Brown, a policy analyst with the American Economic Liberties Project, explained.

Price controls, improved price-fixing regulations, commodity market intervention, stock buyback regulation, and antitrust enforcement are among the recommended remedies. A robust business lobby and a fragmented Congress that appears incapable of passing big legislation stand in the way of these initiatives.

“There are reasons to have a profit motive, but there are also reasons to have an overall regulating authority that can say, ‘This is actually profiteering… while everyone is struggling,'” Krista Brown, a policy analyst with the American Economic Liberties Project, explained.

Instead, she suggested that limited and targeted price limits for staples like bread could work, but that they would need to be combined with a bailout plan for badly affected businesses. Weber stated that “increased pricing for fundamental products like bread can exert significant pressure on salaries” and cause inflationary vibrations across the economy.

Despite the fact that price controls are divisive and widely considered a socialist concept, the last president to implement them was Richard Nixon, who in 1970 implemented a 90-day wage and price freeze to combat inflation. Price controls were also enforced during and after WWII, when increasing prices were caused by supply chain concerns and pent-up demand.

‘What am I going to do?’: soaring prices fuel calls for US government to step in

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However, price increases aren’t the only issue that critics want the Biden administration to address. Others, such as Lindsay Owens, executive director of Groundwork Collective, have advocated for a moratorium or new regulations on stock buyback plans. In his 2023 budget, Joe Biden recommends preventing executives from selling their stock for three to five years after a buyback programme is implemented.

“The CEOs are the other big beneficiary in surplus cash that’s going to buybacks, aside from the shareholders,” Owens said. “They announce the buybacks, their stock prices skyrocket, and then they sell their shares, and there are a lot of ways to improve this.”

According to the Guardian’s study, firms’ repurchase programmes reached $544 billion in the last 15 months. Consumer advocates argue that the money could have been reinvested to keep prices low or raise workers’ wages.

Others accused the company of price-fixing and price gouging. By making private corporate conversations more accessible, the American Economic Liberties Project is assisting in the drafting of legislation that would make it easier for businesses to sue companies for price-fixing. According to Brown, just 3% of price-fixing cases make it to trial.

“In times like this, where a war or Covid are used as excuses for corporations to hike rates just because they can,” she continued, “reinvigorating price-fixing regulations and going after price gouging could help a lot.”

Fixing is particularly problematic in heavily integrated businesses, according to consumer activists. According to Martin Schmalz, an Oxford University economist, companies have benefited from “decades of under-enforcement of consolidation restrictions.”
The bulk of the US cattle sector is controlled by four businesses, four airlines control nearly 80% of domestic passenger traffic, Walmart controls the majority of supermarket sales in the majority of US states, and so on.

And it’s not just corporations that have excessive power. Large investors have an important role to play as well.

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Schmalz cited the Investment Company Act, which prohibits investment funds from owning more than 10% of a company’s stock. According to Schmalz’s analysis, Vanguard owns 10% of all S& P 500 firms, but it is not breaking the law because the shares are owned by companies within Vanguard’s fund family, not by Vanguard itself. Vanguard, on the other hand, continues to exercise the voting rights of more than 10% of its shareholders.

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