Wednesday, January 26, 2022

One big reason for inflation that is often over looked is the rising cost of housing. That pushes up wages and thus other prices.

I see quite a few posts about economics by Robert Reich, secretary of labor for president Clinton a while back. He has a fairly standard left leaning take on things. Recently he has taken on inflation. Blaming most of it on corporate monopolies.

Seems like he has, along with many others, overlooked the role that rising home values and costs play in pushing inflation. 16% jump in home prices, nationwide, last year. I don't think he's even mentioned that. Overall inflation is just 7% versus 16% for homes.

Housing costs must be pushing up other inflation as wages and other prices need to go up so people can afford a place to live. One wonders why there is such a blind spot about that.

Maybe because home price increases benefits a lot of people as well. Homes are owned by people whereas corporations are non person entities; easier to pin blame on.

Easy money and low interest rates has lead to inflation in asset values of many kinds, including homes and stocks. In the case of stocks, this largely benefits corporate executives who own large shares of stock.

Asset inflation does relate to the problem of corporations as well. Yes, there are a lot of rich corporate executives.

I guess if one wants to target the problem, one should talk about asset inflation. If you own assets you get richer, in inflationary times, than if you don't.

As for the corporation, some of them are still operating on a thin margin so it isn't necessarily the corporation that's the problem. It's a problem if the executives make too much and / or get too wealthy just from owning assets. Stocks, housing or whatever.

Reich seem to think the problem is monopoly corporations, but usually bigger corporations have lower prices. Economy of scale. Think Walmart and Amazon. His argument doesn't seem convincing.

Yes, monopoly power is a problem. I guess Amazon and Walmart aren't monopolies as they compete with each other. I don't know of very many monopolies. Corporations are big, however, but not often total monopolies. Bigger corporations do often bring the lowest prices if they aren't monopolies.

For low price, maybe size isn't the problem. Economy of scale. On the other hand, size is a problem when it comes to other things besides just price; like the value we place on local business versus multinational / impersonal corporations.

Sometimes it's worth paying more for a higher quality community.

Seems like mainstream left thinking doesn't quite get the true picture, at least in my opinion. Neither does right wing thinking. Much of the problem is run away asset values, but people also benefit from that so it's harder to criticize.

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