With the clock ticking on Democrats’ “Build Back Better” legislation, which passed the House last month and now awaits Senate action, West Virginia Senator Joe Manchin has cited yet another in a never ending string of “new” reasons for withholding his support for the bill. This time? Inflation. 

On Tuesday, during a Wall Street Journal CEO Council Summit, Mr. Manchin said of inflation to a roomful of corporate CEOs: “The unknown we’re facing today is much greater than the need that people believe in this aspirational bill that we’re looking at and we’ve got to make sure we get this right.” Sen. Manchin, of course, isn’t alone in singing that tune, with Republicans already testing out their attack ads for the 2022 midterms and conservative media outlets blanketing their airwaves for months with baseless claims that rising inflation is due to pandemic recovery spending. 

So, to help separate fact from fiction in the inflation debate, Rebecca sat down with two of the leading progressive economic voices working to tell the story about what’s really going on with inflation—and the policies we need to bring down prices, address our failing supply chains, and more. 

Rakeen Mabud is chief economist and managing director of policy and research at the Groundwork Collaborative, which is dedicated to advancing a coherent, persuasive progressive economic worldview and narrative. And Matt Stoller is the research director of the American Economic Liberties Project (AELP), which fights to realize economic liberty for all, in support of a secure, inclusive democratic society. He’s also the author of Goliath: The 100-Year War Between Monopoly and Democracy, and writes the newsletter BIG, which focuses on the history and politics of monopoly power. 

For more on all this: 

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REBECCA VALLAS (HOST): Welcome back to Off-Kilter, the show about poverty, inequality, and everything they intersect with, powered by The Century Foundation. I’m Rebecca Vallas. With the clock ticking on Democrats’ Build Back Better legislation, which passed the House last month and now awaits Senate action, West Virginia Senator Joe Manchin has cited yet another in a never-ending string of “new reasons” for withholding his support for the bill. This time? Inflation.

On Tuesday, during a Wall Street Journal CEO Council Summit, Mr. Manchin said of inflation to a roomful of corporate CEOs, “The unknown we’re facing today is much greater than the need that people believe in this aspirational bill that we’re looking at, and we’ve got to make sure we get this right.”

Senator Manchin, of course, isn’t alone in singing that tune, with Republicans already testing out their attack ads for the 2022 midterms and conservative media outlets blanketing their airwaves for months with baseless claims that rising inflation is due to pandemic recovery spending. So, to help separate fact from fiction in the inflation debate, I sat down with two of the leading progressive economic voices working to tell the story about what’s really going on with inflation and the policies we need to bring down prices, address our failing supply chains, and more.

Rakeen Mabud is the chief economist and managing director of policy and research at the Groundwork Collaborative, which is dedicated to advancing a coherent, persuasive, progressive economic worldview and narrative. And Matt Stoller is the research director at the American Economic Liberties Project, fighting to realize economic liberty for all in support of a secure, inclusive democratic society. He’s also the author of Goliath: The 100-Year War Between Monopoly and Democracy, and the author of the newsletter BIG, which focuses on the history and politics of monopoly power. Let’s take a listen. [upbeat music break]

Rakeen, Matt, thank you so much for taking the time to come on the show. Really appreciate both of you making the time.

RAKEEN MABUD: Thank you for having us.

MATT STOLLER: Yeah, thanks for having us.

VALLAS: So, a lot to get into and a lot that I’m really grateful to both of you for being willing to break down and to explain in English. But before we get into it, I’d love to give each of you the chance to talk a little bit about how you come to this work and each of your organizations, both of which, as I mentioned up top are doing a lot of work together to actually, really get the facts out there about what’s really going on when it comes to inflation. So, Rakeen, I’m gonna start with you. Talk a little bit about how you came to Groundwork and what Groundwork does.

MABUD: Yeah, absolutely. So, I’m a political scientist by training, even though my title says chief economist. But I’ve been in economic policy for a really long time. And even though I spent most of my career thinking about economic inequality and how we generate more widespread prosperity, I have always had a really deep appreciation for the role of power in our economy and in our politics, and I think that’s the political scientist in me. And in this moment in particular, but always in the American economy, you can’t talk about economic health without talking about economic power: who has it, who’s hoarding it, and what implications that has for the rest of us. And that’s really what brings me to Groundwork.

At Groundwork, we like to say that we are the economy, not the stock market, not corporations, not fictional job creators. It is our spending, our productive capacity, our labor that powers the economy. And so, we really believe that when people do well, so does our economy. And that’s particularly true when the folks who have always been left behind—Black and brown folks, particularly women—are thriving. So, in other words, contrary to popular belief, the stock market is not the economy, and I’m really, really excited about this conversation today.

VALLAS: And every time I hear someone from Groundwork or really anyone say, “the stock market is not the economy,” I feel like I have the Michael Linden in my head cheering, “Yes, yes! We need to repeat that,” because it really is a sort of a founding principle for you all.

Matt, I’m gonna bring you in next. And I mentioned up top you’ve got a book. You’re over at the American Economic Liberties Project where you’re the research director there. Talk a little bit about how you come to this work and why you spend as much time as you do thinking about breaking up unchecked corporate power.

STOLLER: Yeah. So, I got my start really thinking about political economy during the financial crisis when I was a staffer in Congress. And there’s really no better way to learn about finance and the economy than to have a front row seat to it all collapsing, and all of the smart men in suits being wrong about everything and then feathering their own nests. So, anyway, that’s how I learned. I was like, oh, banks and corporations, they’re a thing, they matter, and they’re political.

So, after that experience—where, by the way, we fixed everything. So, don’t worry—I started to learn about monopoly power in the retail space. And it turns out— And then I noticed ‘cause I had done a bunch of work on the financial crisis, the same people in the 20th century who were opposing retail monopolies were also opposing concentrations of financial power. And that led me to write a book, called BIG, or sorry, called Goliath: The 100-Year War Between Monopoly Power and Democracy, which was on this hidden anti-monopoly and anti-speculation tradition in American history. And it’s only hidden from us today. If you went back 80 years and talked about monopolies, everybody would know what you were talking about. “It’s terrible. Of course, we would never allow that.” But this history of populist outrage at a concentrated financial and corporate power was kind of hidden from us.

And then after the financial crisis, and as I was researching my book, I started to look at big tech firms, which were, you know, had risen to power the same way that banks did, but just a little bit later under the same pro-monopoly philosophy and regulatory scheme under both parties. And then from there, I started looking into the whole globalization framework and just-in-time supply chains and consolidation in ocean carriers and and airlines and consolidation kind of across the board. And once you sort of see the financial system and the financial crisis and you recognize that there’s politics embedded in that, it’s not too hard to look around our economy, our commercial society and see power embedded in how we build things and move things and distribute things. And so, from there, it’s, you know….

I was early on in the pandemic ‘cause I pay attention to China ‘cause that’s where we make a lot of stuff. And I was like, oh, we’re gonna have really serious supply chain problems because we’ve built this optimized system in the physical world that looks a lot like the financial world, and there’s not a lot of resilience there. So, yeah, so since then, I’ve been really tracking our supply chains and how we move stuff and pricing. And a lot of the same problems that we had during the financial crisis we’re having today. It’s just today it’s with our physical systems, but it’s all about market power. And so, yeah. I’m excited to talk about it and try to fix everything perfectly like we did 10 years ago.

VALLAS: I really appreciate the note of sarcasm that we’re opening on. Here, it is important, and also, yeah, lots of collective sighing, I’m sure, as folks are listening and remembering all of what you are describing and connecting it to the current moment here. I noted up top that there has been no shortage of conservative handwringing about inflation in recent weeks. Now we’ve seen West Virginia Senator Joe Manchin echoing similar concerns of late, in fact, just this week, telling a roomful of corporate CEOs that he’s far more concerned about inflation than he is the need for the policies in Democrats’ $1.7 trillion Build Back Better package. And seemingly in saying this, setting the stage for holding up that legislation further still on the grounds of his big, bad inflationary concerns. We’ll come back to Senator Manchin, as we should and as we often do on this show.

But Rakeen, I’m gonna ask you to help us set the stage for this conversation by laying out some of what we’ve seen when it comes to recent inflationary trends that have folks like Senator Manchin expressing concern and to help us understand a little bit of how they fit into broader economic trends in recent months as we all continue to strive towards economic recovery. So, help us with a little bit of table setting there about what folks are so concerned about.

MABUD: Sure. I mean, I think it’s helpful to start with just the numbers that everyone pays attention to. So, the most recent CPI data has inflation at about 6.2 percent year over year and .9 percent month over month. Core inflation, which excludes food and energy prices because those goods tend to be pretty volatile in price, are at 4.6 percent year over year and .6 percent month over month. And the main drivers we’re seeing behind inflation are high gas and energy prices, which have risen nearly 50 percent year over year. Obviously, these are big price increases, and obviously, they’re hitting people where it hurts, right? Gas costs and food costs are the greatest concern amongst people who worry [about] inflation. And we have seen in poll after poll that people are really feeling the effects of these price changes.

So, I know we’re gonna get into kind of what’s actually driving this, but just to sort of preempt that question, inflation is a complicated thing to unpack. And I think it’s really important to understand the extent to which inflation is a symptom of a long-broken system and not the cause of what we’re seeing. Inflation isn’t being caused by really proximate factors. It is really a symptom of a really, really deep set of issues that we’ve been facing for a long time. And I’m really excited to dig into that later.

VALLAS: And that’s exactly what we’re gonna spend the bulk of our conversation today on, and there’s lots and lots that we wanna get into there.

Matt, I’m gonna bring you back in here because it feels like we’ve got to start by sort of erecting the straw man and taking down the straw man and then moving on to what’s really going on. A groundswell of Republicans in Congress and conservative think tankers and others have been trying to pin the inflation numbers that we were just hearing Rakeen summarize on pandemic recovery spending. And now we’re hearing, of course, similar concerns from our dear friend from West Virginia. Groundwork and the American Economic Liberties Project have been working together to actually really lead the charge to help policymakers and the media understand what’s actually driving inflation. So, again, I wanna start by taking down the straw man. Matt, what do you say in response to claims that the inflation that we’re seeing is the result of pandemic spending? I have to be honest. That line of argument, or maybe we should really call it scaremongering, really seems to kind of bizarrely or maybe even conveniently ignore that we’re in an unprecedented pandemic. But how do you respond to those claims, given that they are pretty much everywhere right now?

STOLLER: Yeah. So, I mean, in a sense, like there’s definitely, it’s not like the pandemic had nothing to do with pricing changes. We shut down global trade for a little bit and then restarted it, and people are buying different things than they were before. So, whenever you see a really significant change in consumption patterns and demand, you’re gonna see changes in pricing. The question is why we haven’t adjusted more, we haven’t adjusted our economy to those demand shifts more effectively. And that’s where you really get to monopoly power because that’s what we think is going on. So, what you’ll see is a lot of companies right now are saying, “Oh, we’re having higher input costs, and therefore we have to raise prices.” And to some extent, there are higher input costs. But what they’re not saying to anyone but their investors is that their margins are going up, right?

And so, they don’t, you know, profit margins among the biggest publicly traded companies are about 50 percent higher today than they were in 2019. So, in many ways, what happened is this big demand shift gave firms with dominant market power the excuse to raise prices that they’d wanted to do for a long time. So, like the Dollar Store, this was a big thing. Dollar Store said, we’re gonna raise prices in our store to $1.25. Well, what they didn’t say is that Wall Street activist investors like hedge funds have been asking the Dollar Store to do that for a long time. And now there’s this moment where they have the narrative of legitimacy to do that. And there really isn’t anybody competing with them. In a lot of places, they are a dominant provider of particular goods and services for a lot of reasons that I can go into if you want. But there’s just not a lot of competition, and so they could raise prices.

And perhaps a better example would be Tyson Foods, which said, our inflation, it’s driving up our costs. But they didn’t— So, we have to raise beef prices by a third. And one of the main drivers of food inflation is the price of meat. Well, what Tysons didn’t say is that their margins are going way up because they’re raising their prices to consumers. And what they’re actually paying cattle ranchers, who are the ones that raise the cattle to be slaughtered, is actually pretty low. And what’s happening is the spread, which is the price what the cattle rancher gets and the price of what the consumer pays, is at record highs. And that’s because four firms control 85 percent of the meatpacking market, and there has been a price fixing lawsuit, antitrust lawsuit and alleges, I think pretty credibly, that since 2015, these four firms have been colluding to raise prices to consumers and lower prices to cattlemen. And that’s just one example.

This is a pervasive problem across the economy, in everything from search ads and to ocean carriers where you have a similar oligopoly. So, really, what we’re talking about when we’re talking about inflation is an excuse for all of these dominant firms with market power to massively raise prices and jack up their margins. And because there’s very little competition in the economy at this point, there’s no one there to compete over market share.

MABUD: Can I just add—

VALLAS: Rakeen, I wanna bring—

MABUD: Yeah.

VALLAS: That’s exactly what I was gonna do! I was gonna say, I wanna bring you in on this because you all at Groundwork have really been referring to what Matt’s describing as “pandemic profiteering.” And you’ve been compiling story after story after story of large, wealthy corporations doing exactly what he’s describing. Talk a little bit about that larger trend. And would love to hear some of those examples as well. He’s started to put a few on the table to get us started.

MABUD: Yeah, absolutely. And to your original question, large scale government spending is the solution, not the problem. I mean, it is almost inverse to the way this issue is being framed. And I think Matt started to get at this, too. When you start to tackle the root causes of inflation, which are shortages that are the direct result of decades of disinvestment in our supply chains and corporate extraction that’s weakened our economy’s responsiveness to crisis, it’s really clear that actually what we need is more investment and not less. Because at the end of the day, what we’re seeing is that excess corporate power is keeping prices high and wages low, and in some cases, to your point, Rebecca, engaging in price gouging.

And essentially, the pandemic was kind of the straw that broke this really, really fragile system, right? There was a temporary demand shock for goods from a reopening economy. All of a sudden, we were not getting as many haircuts but maybe wanting more things for our kitchen as we sat at home. And businesses have had a hard time keeping up with that consumer demand. And the supply chain issues are made worse by the corporate concentration and chronic underinvestment in our economy, which has led to even higher prices.

So, long story short, we’ve built a system that gives private actors a ton of power, and they’ve used that power to build a supply chain and, quite frankly, an economy that prioritizes short-term profits over actually delivering the goods that they are set up to deliver. And that power gives these corporations the ability to jack up prices on the backs of workers and consumers, and to Matt’s point, hide behind the screen of so-called inflation. And that’s exactly what we’re seeing now. So, let me offer— Yeah, go ahead.

VALLAS: Yeah, that’s exactly what I was gonna do is, I feel like this stuff gets a lot more understandable and tangible when it gets concrete. And some of the offering of examples I find is kind of what helps take it from the theoretical and into the what this really means for consumers and how this all connects to supply chains. So, yeah, help us out with some examples of how we’re actually seeing this play out in real time.

MABUD: Sure. So, I think a really poignant example is diapers. Diaper costs have gone up almost 15 percent over the last year, even as caregivers really have been hit from every possible conceivable angle in this crisis. And there are only two major diaper manufacturers in this country, Kimberly-Clark, which makes Huggies and Pull-Ups, and Procter & Gamble, which makes Pampers, Loves, and All Good. So, if you have ever gone shopping for diapers, you’ve probably bought one of these brands. And even as they have jacked up prices on consumers, these same companies have seen huge increases in CEO pay, in stock buybacks, and dividends.

So, just to pick on Procter & Gamble for a moment. In April of this year, at the same time as they announced price increases, Procter & Gamble also announced increased share buybacks. And then by July, the company had reported that it had paid $19 billion to shareholders in 2021. And over the course of the pandemic, the CEO to median pay ratio increased from 333 to 1 to 343 to 1. So, what we’re seeing is that consumers and workers are bearing the brunt of this moment. And what’s happening? Shareholders and CEOs are lining their pockets.

The one other example I wanted to add is grocery stores. Kroger, which is this huge grocery mega chain—so many of us have shopped there—spent the summer of 2021 really gloating. Their CEO, I believe, said, “A little bit of inflation is always good for our business,” before using inflation to justify their price hikes. And their CEO also recently said, we’ve been very comfortable with our ability to pass on increases we’ve seen at this point and would expect to continue to be, that to continue to be the case. So, Kroger is basically publicly acknowledging that they can get away with increasing prices on consumers. And they said, as long as prices don’t rise by 3 or 4 percent, customers are not gonna notice, and we can continue to rake in the difference.

These are supermarket staples, right? These are goods and services that people interact with every single day. And over and over and over again, we see Wall Street charting record highs, CEO after CEO crowing on weekly earnings calls, saying, look at how good we’ve been able to get away with jacking up prices. So, we really need to center corporate greed and corporate power when we talk about inflation and rising prices.

VALLAS: And I’m gonna stay with you there for just a moment, Rakeen, because zooming out a bit, each of your organizations has really been ringing the alarm bells about the dangers of unchecked corporate power, of monopoly power, which doesn’t just hurt consumers in the form of price hikes, as you both are talking about right now and then sort of inventorying with some examples, but it also really hurts small businesses. And then zooming up yet another level, the nation’s overall economic health, right, something that is not a new phenomenon in the pandemic era, but which we’re kind of watching on steroids in some ways. This, you both argue, is the conversation that we really need to be having right now and one that we needed to be having long before the pandemic, as with so much else.

So, staying with you for just a moment there, Rakeen, ‘cause I know you’re encyclopedic on a lot of the research here and how these dots connect. Talk a little bit about what we know about the broader economic consequences of unchecked corporate power, and in particular, some of the impacts on small businesses as well, which we’re watching really bear incredible shares of the brunt of some of the pandemic profiteering, but also broader corporate greed trends that were not created by the pandemic.

MABUD: Yeah, absolutely. And I know Matt has more on small businesses, too, so I’ll save some of that material for him. But I think the key point here is that market power shows up in a lot of ways. It can show up in prices. It can also show up in really being the first in line for inputs and for inventory. And so, what we’re seeing in this moment are huge corporate giants like Wal-Mart and Amazon being able to absorb some of the higher prices, higher input prices, and having the buying power to negotiate more favorable contracts with suppliers. And all of that is crowding out smaller businesses that simply don’t have the power to negotiate those terms for their own company.

And so, I think this gets back to the broader point of what I really see as the central thesis of Groundwork’s work, which is, we are the economy. So, if companies are getting rich and profiting and doing well, all while people can’t buy diapers, I mean, that is a problem. That is not a healthy economy. And so, as we think about the way, as we think about inflation in this context, a healthy economy looks like one where consumers and workers are not bearing the brunt of price increases, and that brunt is being really absorbed by these companies who can do it, who can absorb the costs.

And so, again, I always return to, we are the economy. When we are doing well, the economy’s doing well. And as long as we’re seeing Walmart and Amazon shoving small businesses and their workers out of the way in order to line their own pockets, that is not a healthy economy.

VALLAS: Matt, I’m gonna let you come back in there as well ‘cause I know you have a ton to add and have been doing a ton, as you said, of thinking about supply chains long before they were at the level of focus that they have been in recent months. So, pick up there, where Rakeen left off, and also with anything else that you feel is helpful to add around what folks need to understand about how supply chains fit in with this larger inflation conversation.

STOLLER: Yeah, I mean, what’s interesting about coming to the antimonopoly world, which is relatively new, and I think five years ago, you wouldn’t have heard anyone talk about monopolies, and today, it’s a thing.

I wanna just drill down on how Procter & Gamble has market power, right, ‘cause it’s important, and Kroger. And you have supermarkets which are really pretty big. And then you have firms like Procter & Gamble, which is a result of a series of mergers. The latest big one was, I guess, in 2005 with Gillette. But really, what gives them their power is they have distribution agreements with supermarkets. So, when you go into a supermarket and you go into the aisle with a bunch of razors on it or diapers or whatever, it’s usually not the supermarket—unless it’s a small store—it’s usually not the supermarket itself that sets up that aisle.

They will contract with a company like Procter & Gamble to say, OK, you are what’s called the category captain, and then Procter & Gamble will come in and design the aisle. And they’ll put all this stuff on the shelf, and they will put their own products and maybe exclude competitors’ products. And then beyond just saying Procter & Gamble gets to set up the whole razor aisle or diapers aisle as the category captain, they will also, Procter & Gamble will also give these supermarkets rebates or whatever (maybe you could call them bribes) saying the more Procter & Gamble diapers you sell, the more rebates you’ll get. And maybe they’ll try to exclude competitive diapers, so if you try to enter the diaper market, you just can’t because you can’t get access to shelf space. And that’s a pretty common thing that is pervasive across the economy. It is used to be illegal in the 1970s. You weren’t really allowed to do that. And so, you didn’t see, while there were big companies, there wasn’t the exclusionary practices that we have today.

And but what’s important to understand about our economy is that all of this is designed under the premise that it’s efficient. You’ll often hear people say, “Oh, you know, Amazon. They’re just so great. They’re just so efficient.” Or “Walmart, wow. Their supply chain is amazing.” But what’s really happening is they have core infrastructure that small companies can’t take advantage of because they are very much excluded from supermarket shelves and shipping lanes and all of the things that you would need. And if you are excluded from core efficient infrastructure, then you just can’t compete, even if you are just as efficient or more efficient or closer to the community than anyone else.

So, it’s important to recognize that when we’re talking about how our systems are structured and who gets access to supply is very important here. So, small firms don’t get access to supply. Small manufacturers actually can’t get access to store shelves. We’re talking about legal arrangements. We’re talking about business methods that used to be, that are structured by law. And because we haven’t really paid attention to the legal framework by which we do commerce, and we’ve just kind of said, “Oh, well, that’s a thing for economists, and that’s a thing for experts. And oh, the Republicans, they care about business. We’re just kind of anti-business and pro-consumer,” because we’ve taken that attitude and said that these details don’t matter, all of a sudden, we wake up one day, and the economy is kind of out of control, supply chains are going kerflooey, and meanwhile, we haven’t really had a discussion about the market power that’s embedded in everything that you buy on the supermarket shelf.

And now we have to actually get in there and actually start to wrestle with these problems and wrestle with market power and say, “No, Procter & Gamble, the contractual arrangements that you have with, say, Walmart, that’s not appropriate for a democratic society. We need small stores. We need small manufacturers. We need flexibility in our supply chains.” So, it’s kind of like it’s a really bad moment now just to see all of these problems emerge. But it’s actually pretty exciting because it’s opening the door to a whole bunch of solutions that like that door was closed for a really long time. And now we can actually say, oh yeah, there is power there. Let’s, you know, we can do something about this as a democratic society. So, I think that’s actually pretty exciting.

VALLAS: Well, and I’m gonna stay with you because you’ve been writing actually a lot about some of the new energy that has been getting channeled into talking about solutions and talking about, well, how do we address problems in our supply chains? How can we get to a place of that greater resilience that you predicted pre-pandemic or early in the pandemic we weren’t gonna to see realized under the stress test that this moment has sort of provided? Talk a little bit about what some of those solutions are and some of the movement that we’re seeing within the Biden administration, including from, say, the Federal Trade Commission, when it comes to starting to take some steps here.

STOLLER: Yeah. So, I’m gonna give you one thing Biden is doing that’s really stupid and another thing that Biden is doing that’s really good, right? ‘Cause people need to understand why is Biden so hated right now by voters at large. And it’s not just a fake story peddled by the media. His administration is not doing a good job. There are parts of the administration that are. So, I’m gonna give you a sense of one thing he’s doing that’s just dumb and then something they’re doing that’s good.

So, I know that if you go to Germany or England or Israel, you’d be able to find rapid COVID tests that you can take at home. They’re like a dollar or two dollars, three dollars, sometimes free, but you can go and get them at the store. Like, in Germany, they’re less than a dollar at the store. But here when you go to CVS or you go to a drugstore or supermarket—if you can find them at all, and they’re hard to find—they’re usually like $23, and you buy them from a company like Abbott. That’s the most common one. And the reason that it’s hard to find rapid COVID tests here versus Germany and in other countries is because in Germany, the regulators, it’s not a money thing. Our government spent a lot on tests. Their government spent a lot on tests. But in Germany, their regulators have approved 50 different companies to make COVID tests, which are basically the similar complicated level as pregnancy tests. They’re not a very complicated product.

But here, the FDA—and there’s a guy named Tim Stenzel at the FDA—has only approved two rapid COVID tests. And it turns out he worked at both companies. Now, Biden, instead of firing this guy, Tim Stenzel, and saying, “Hey, let’s just approve all these tests and use European data,”—’cause some of the companies are American companies selling in Europe—and just radically like, you know, that would cut the price immediately. ‘Cause then Abbott would have competition. Abbott’s CEO said that. Biden’s announcement was, oh, we’re gonna let you apply for free COVID tests through your private insurance company, which is super annoying and dumb and doesn’t get to the basic problem. And he’s doing that across the board, which is why people kind of don’t really like what he’s up to. ‘Cause in a lot of places, the administration’s not actually taking on market power. They just don’t see market power as the problem.

But let me go to an area where he is doing a good job. So, this is the Federal Trade Commission, where Lina Khan, who is a kind of rock star in the antitrust world, she became the chair of the FTC. So, they did two, I think I’ll bring up two things that they’ve done that are meaningful. The first is they’ve been focusing on a movement called the Right to Repair Movement, which says that if you buy something from a technology company or a tractor company or whatever, you should have the right to repair it. And that’s important in a pandemic and when you have supply chain disruptions, because sometimes when things break, you can’t replace them; you have to be able to repair them. And if the company that’s selling them puts restrictions on you and says, we’re not gonna give you access to technical manuals or data, or we’re even gonna lock down the products, then you might be screwed, and you might not be able to get a replacement. This is true for tractors and iPhones and military equipment, a bunch of stuff.

So, the FTC has started to say actually, dominant firms are not allowed to lock down this stuff. They have to provide technical data and equipment. They have to let people repair their own stuff. And Apple and Microsoft have both announced that they’re gonna allow people to repair Apple and Microsoft products. Much of the electronics sector will probably follow suit, and that’s things like, eventually you’re gonna have things like ventilators and various other medical equipment. And so, that’s a big deal, right, to let people repair their own equipment, to let third party stores repair equipment, and that’s something that the Federal Trade Commission’s been doing.

The other thing that they’ve been doing is they did a study—investigation is probably a better way to put it—where they sent letters to dominant firms in retail and distribution of production. And this includes Kraft Heinz, and Procter & Gamble, as well as Walmart, Amazon, Tyson Foods, and a series of distributors saying, tell us how you are using the supply chain disruption to mess with competitors. That’s the gist of the order, and it’s effectively a subpoena where they’re gonna get internal corporate correspondence. And it’s the people that are promoting this that are saying to the FTC, “We need help here,” are actually small stores, small grocery stores, medium-sized grocery stores, and distributors saying, “We can’t get supply.” So, the FTC is, this investigation is gonna be a big deal. It’s gonna change the terms by which smaller stores can bargain for limited supply, and it’ll affect things that people may not assume are a result of policy but are.

Like, for example, in New York right now, there is a cream cheese shortage, and the reason there’s a cream cheese shortage is because a lot of bagel stores are like, “We can’t get cream cheese.” The base that they use is Philadelphia cream cheese, and then they mix their own. They take that base, and then they make their own sort of special cream cheese. But that’s sold by Kraft Heinz, and Kraft Heinz is not selling enough of that right now wholesale to these stores. Presumably, they’re doing something else with it, probably packaging it as their own Philadelphia cream cheese. But we don’t really know. But now we will know because the FTC is gonna find out what is happening with these supply chain disruptions. And if you don’t, and so, once you can figure out what’s actually happening with these micro markets, you can actually start addressing them.

And right now, nobody knows. Nobody’s tracking it all. You have companies that might see isolated spaces, but we don’t actually have that much knowledge about the economy. So, the FTC’s study—and you could, by the way, any of your listeners can add a comment if they see shortages. So, you can just go to the FTC website, go ahead and do that—but this is actually, you know, it’s gonna lead into a real investigation and report, which will then move into policymaking. And in the meantime, it’s gonna help smaller stores bargain more effectively with suppliers and even out supply and hit some of these, start reducing some of these price increases and disruptions that we’re seeing.

VALLAS: And we’ve got in our show notes some links to some of your newsletters on this for folks who wanna dig in more deeply. But huge, huge deal, some of what you’re describing, right, with letters sent by the FTC to the likes of Amazon and Walmart and Tyson Foods and Procter & Gamble and others all in service of this investigation, which I believe, according to your reporting, is the first major investigation into shortages and into monopoly power that we’ve seen of its kind. So, a really big, big deal what you’re describing here.

Rakeen, I wanna go back to that [chuckling] Joe Manchin quote that I shared earlier because I feel like we kind of have to. And it’s sort of the elephant in the room for why getting it right in the conversation on inflation is not just incredibly important in the long term, but is actually really important in the short term, too. Because Build Back Better, that legislation that we’ve already seen Senator Manchin hold up on many occasions before now really, is sort of hanging in the balance based on what we’ve been hearing from him as recently as just a couple of days ago. I wanna repeat the quote, he said, “The unknown that we’re facing today,” and he was referring here to inflation as he was talking to a roomful of CEOs hosted by The Wall Street Journal. He said, “The unknown we’re facing today is much greater than the need that people believe in this aspirational bill that we’re looking at. And we’ve got to make sure we get this right.” And he said that as Senate Democrats are preparing to try to move forward Build Back Better legislation before Christmas if possible.

And I think we can all probably agree with at least one part of what he said, which is that we’ve got to make sure we get this right. But I’d love to give each of you the chance, and you first, Rakeen, to highlight why getting it right in this moment—which means not falling for the scaremongering from him and from conservatives—matters, especially for low-income families right now, who are not just those who, in many ways, are most set up to have a lot on the line, whether Build Back Better passes or does not, but who are also hit incredibly hard, and relatively speaking, hardest by inflation. So, Rakeen, I’m gonna give it to you first to start dealing with that quote from Joe Manchin.

MABUD: Right. We were warned not to violate FCC rules before this, and I feel like this is the question where it becomes most likely. But with Manchin, it’s just not about inflation, right? This is the same person who’s working so hard to reduce the price tag, to skinny down the investments, to add these burdensome work requirements, all of which puts an additional burden on people who have always been the most vulnerable in our economy.

And I wanna return to the supply chain point for a second because I think it ties into something that is really important here, right? I think when we talk about supply chains, it often seems like we’re talking about big cranes and big ships and kind of big things. But it’s not just big things. These supply chains, these machines, these cranes, these ships all rely on people to keep them functioning, and our current system is so deeply reliant on precarious labor. So, we’re seeing these incredibly critical jobs in like short-haul trucking—the trucks that take goods from ships to other parts of the port—in short supply, not because workers are somehow to blame, but because these jobs have been really terrible for a really, really long time. And so, from misclassification to wage theft, our reliance on precarious labor is a real liability in our supply chain.

And this is important because people are feeling the moment, this inflation moment, but what they’re actually feeling is the weight of a series of terrible decisions, of lack of investments that we have made for decades, right? This is a culmination of a bunch of decisions, not just the time to shirk on one. They’re feeling them as workers and consumers. And I think the key thing here is we really cannot afford to turn the water off before the fire’s out, and this fire has been burning for a long, long time.

In November, the Black workers were still facing unemployment rates almost double that of white workers. That’s not just this month. That’s not just this pandemic. That has been true for decades. That is an unacceptable level of race-based inequality in our economy. And we can’t say that what we need to do right now is turn off the spigots to investment in child care, in lowering prescription drug costs, in climate investments when so many people have been struggling for so long. So, I think it’s really helpful to be clear about how Manchin is using inflation as a tactic to actually achieve aims that have nothing to do with inflation. It is just full-on fearmongering.

VALLAS: And Matt, I’m gonna give you an opportunity to get in there as well. And Rakeen, I appreciate your remembering that we try to be FCC compliant, but I recognize that poses some challenges as I asked you to respond to that kind of line of argument. So, Matt, same question to you.

STOLLER: I just wanna pick up on something that Rakeen said, which I think is important, which is talking about the workers in the supply chain. Let me make the cruel, efficiency-oriented case for treating workers better ‘cause it’s easiest for us as progressives to be like, “We need to be nicer to people,” but it doesn’t sound serious. The reason that we have a really, like, they say there’s not enough truckers, and that’s nonsense. The reason we’re having problems moving stuff is because truckers don’t get paid in an efficient way. So, truckers get paid, since we deregulated trucking, they stopped being paid for their time and get paid per mile that they move something. So, what you’ll have is a bunch of truckers that will drive a shipment of whatever to a warehouse. And then the people at the warehouse will say, “Yeah, yeah. We don’t need your thing yet. So, just stand over there, and in five hours we’ll get to you.” Or they may say, “Oh, we need your whatever’s in your truck immediately ‘cause we have to ship it out. So, we’ll unload it now.” But they don’t know. I mean, they just will use the trucker as like a warehouse on wheels. And that trucker has to sit around for five hours while they decide whether to unload it or not. And that’s a really inefficient use of that trucker’s time. And the only reason that the warehouse, the client, does that is ‘cause they don’t have to pay the trucker for their time.

If you changed the system so that you had to pay the trucker for their time and you had to pay overtime and these kinds of things, what you would have is those warehouse, the clients, the ocean carriers, and various other shippers who use truck drivers would stop wasting the time of the truck drivers. And you would get an immediate, like probably 30 to 40 percent boost in productivity. And then you don’t need— If somebody said, “I have this magic solution that will create 40 percent more truck drivers,” people would say, “Oh my gosh! That sounds like amazing technology.” And we do. It’s called paying them for their time. So, there’s a lot of problems like that in our supply chain that you don’t necessarily think of as, you know, you don’t necessarily think of them as efficiency-enhancing measures, but they are.

Part of what we point out at American Economic Liberties Project is that, yeah, we’ve run our economy in a way that’s pretty immoral for the last 40 years, but it’s also really stupid. And I think that’s what we’re seeing now. When you can’t make personal protective equipment in the midst of a pandemic, when your medical professionals are wearing garbage bags, when you’re dependent on semiconductors, which is a technology we invented, we’re near dependent on Taiwan for that, I mean, this is all really dumb and really bad. And so, we have to get in there and actually start changing and fixing some of these incentives.

And there’s an opportunity to do that because it’s not just progressives who think that this stuff is really stupid. Everybody is having problems right now with our supply chains, so there is a pretty extraordinary opportunity. I mean, I’ll just say, progressives aren’t noticing this, but later this week, it’s likely that the first industry sector to be reregulated since the 1970s, the House is gonna pass a bill of the Ocean Shipping Reform Act of 2021, which will partially reregulate the ocean carrier market. Now that’s pretty extraordinary, and it’s entirely driven by U.S. trade associations, businesses of importers and exporters. They’re super mad at the ocean carrier oligopoly. But that’s true across the economy. So, there’s a really awesome opportunity to get in there and start fixing some of these problems.

VALLAS: So, we’ve got about another chunk of our conversation left and I think a lot left that we’d love to get into. So, I wanna make sure that we get to look forward a little bit with some of what each of you expects to come. Some of what we’ve seen in recent weeks is a little bit of a change of tone at the Federal Reserve from Chairman Jay Powell, whom Biden, President Biden, renominated to that position earlier this fall, now making it sound as though he no longer does expect the inflation that we’re seeing to be transitory, the sort of buzz word that has been out there as how a lot of folks have been up until fairly recently talking about the trends that we’ve seen in inflation. And of course, that is part and parcel of what we’re seeing the likes of Senator Manchin and conservatives and others all try to hang their hats on as they use inflation as cover for opposing a bill that obviously, as Rakeen, you were describing before, there have been no shortage of other reasons that they’ve been trying to stop.

If each of you needed to look in your crystal ball and take a look about what we expect for the long term, as well as what tools the Fed has to address inflation, talk a little bit about what you will be looking for in weeks and months ahead, and also some of how you respond to folks who have raised concerns that we might end up with runaway inflation or overheating, something that we’ve heard from a number of kind of conservative handwringers as well. And Rakeen, I’ll go to you first with that question.

MABUD: Sure. Thank you so much. I mean, look. If I’ve learned anything over the last couple of months, it’s like don’t make predictions about inflation, and that’s due to a lot of different reasons, right? I mean, I think we’ve also not really hit yet the role of the pandemic in driving price pressures. I mean, when you rely on a global supply chain, when whole cities are being shut down in giant manufacturing cities because of COVID scares, that messes up your supply chain. That affects prices. And because we can’t predict the trajectory of the pandemic, I think I truly don’t believe anyone who tells me they know exactly what’s gonna happen with inflation in the coming months.

But what I do know is this: I think it is really clear that people are feeling the hit of price pressures on their pocketbooks, and they are worried. And while there is a robust and important academic and economic debate about how transitory this period is, how transitory these price pressures are, it’s also sort of irrelevant for people who are struggling to heat their home this winter because it’s too expensive. And I have great respect for the economic debates, and I’m eager to see where they head. But I think we really need to keep our eye on the prize, which is a real empathy for the impact of inflation on people’s lives and their frustration with our rigged economy. And that really needs to undergird all of our responses on inflation.

And there are certainly many factors behind inflation that are longstanding and will take time to fix, but there are also things that policymakers can do right now. The best thing policymakers can do right now is not get distracted by inflation and use that to, say, raise rates or not make investments on the monetary and fiscal side, respectively. I think inflation has also often been put into a category that the Fed is responsible for. But as Matt and I have been starting to unpack today in this conversation, price pressures come from a lot of places, and monetary policy is an extremely blunt tool to address them.

We are certainly not in a world where we have any sort of runaway inflation. We’re not seeing wage price spirals. The model of inflation that people are scared of is literally actually not what we’re seeing today. And so, there’s absolutely no reason to start to raise rates when the economy’s still getting back on its feet. That would be a death knell to this recovery, and particularly for those who are lower income or have always been left behind in recoveries, Black and brown folks in particular. So, I think that’s one point.

And the second is that there’s actually a lot that fiscal policy can do to address the underlying cause of inflation. The reason we’re in this mess is because we have knife-edge supply chains that have been deregulated, where private actors have stepped in and really built a system where they can extract without actually offering any, you know, delivering on their promises. And that is something that fiscal policy and regulation and enforcement can take on. So, I’m really, you know, I think there is a lot of challenges in this moment when there is so much uncertainty around the trajectory of this pandemic, the trajectory of some of these trends we’ve been talking about. But I think it is really important to take a step back and understand that this is not, the pandemic or COVID or whatever was the straw that broke the camel’s back, right, we’ve been dealing with these issues for a really, really long time. And we need to look at those root causes in order for us to actually address these price pressures that people are facing. And we need to really keep front of mind that people are hurting. I mean, that needs to underscore and override every other consideration here.

VALLAS: Matt, same question to you. And unfair as it is to ask anyone to look in a crystal ball in this moment, it obviously is a lot of what folks are kind of wondering as they read the headlines. But I’m gonna also ask, as I ask that unfair question, how do you feel that the media has been doing in reporting on inflation and its connection to other policy choices like pandemic spending or the potential for Build Back Better to happen in this moment?

STOLLER: Yeah. So, if I had to make predictions, what monopolization in an economy does is it increases volatility. So, I think well, for about 30 years, we got rid of excess supply. That’s what our policy was meant to do with efficiency. When a firm rolls up an industry and monopolizes it, then they shut down a bunch of factories, and that, for a while, looks pretty stable, which is what we saw. But then now you don’t have excess supply, and all of a sudden, you need more than you can produce. Prices go way up. And then there’s big investment, which is what’s happening now. And then all of a sudden, if there’s a demand pullback, then prices go way down. And so, you could see inflation and then deflation, which is what we saw right after World War I.

So, I could see, I think there’s a bunch of inflationary pressures built into the economy going into next year. That’s when we talked to business people, and there’s things like fertilizer prices are going way up, and so that’s gonna show up in food prices. And there’s planting, you know, there’s a year-long kind of run time. But I also, you know, there’s a ton of investment going into semiconductor production right now, which means there’s gonna be a glut of semiconductors, and prices will go way down.

If I’m the Fed, I mean, the Fed, what they’ve been doing for the last, really since the financial crisis, is they’ve been blowing asset bubbles, right? That’s why we have all this crazy stuff like crypto, which is just like a giant scam, or Tesla, which doesn’t make any money, but now, Elon Musk is the richest man in the world, or Nike shoes or GameStop. All these things are, we’re living in a, it’s a weird economy where real wages for normal people are going down, but you have all these bubbles everywhere. And that I lay directly at the feet of the Fed. So, if I were the Fed, I would basically try to pop that bubble, I don’t know, through, they like to call it macroprudential tools, but another way to call it is regulation. So, pop the bubble in speculation and finance. That’ll do a number of things. But one thing I’ll do is it’ll kill the giant merger wave that’s happening right now, and mergers are a way that we’re rolling up supply and ultimately raising prices.

And then you got to have, like Congress has to make the decisions about how to run the economy. And that means that Congress is gonna be making fiscal policy. It really is inappropriate for the Fed to be the only way that we economy and for the Fed to say, oh, we need to raise wages, and the way we’ll do that is we’ll blow really, really big speculative bubbles and hope some of that trickles down to workers. So, it’s like a weird moment because you are seeing inflation. I think the Fed’s speculative blowing bubbles probably encourages that inflation. But part of that inflation is wage inflation, and that’s so, basically, some people are starting to get raises, and we don’t wanna stop that. All of which is to say it’s a very delicate situation. You need Congress to get very heavily involved in economic management, and the Fed can’t do it alone.

VALLAS: Well, and that feels like the place to stay for the last few minutes that we have. What would your recommendations be at this point when it comes to the policies that we need to bring down prices, to address supply chains? We’ve gotten into some of this. We’ve gotten into some elements of this already in the conversation. But I sort of feel like the spoiler to start with is that the answer is not killing Build Back Better or further shrinking it, something that each of your organizations has really been screaming from the rooftops. And Rakeen, you were actually describing before that in fact, what we actually really need is that kind of spending, much of which is sort of being discussed in almost like a bizarro world kind of way as folks turn things on their heads in the way that the mythology around these issues sort of gets trotted out by conservatives. So, Rakeen, back over to you to sort of close us out with what you want the takeaways for policymakers to be in this moment and for the media, to the extent that they have an important role to play here in shaping this conversation as well when it comes to what we need to be seeing right now.

And one of the things I wanna throw in is just a little bit of a side note—and we won’t have time to talk about it in depth here, but we’ll put it in show notes—is actually the Center on Budget and Policy Priorities just put out a really helpful new paper answering kind of one of the questions that many folks, I think, have had, and speaking directly to some of the concerns from the likes of Senator Manchin, really walking through that Build Back Better is not likely to meaningfully affect inflation. In fact, citing the major ratings agencies, Moody’s and Fitch, who both agree that Build Back Better and the recently enacted infrastructure legislation are not expected to add to inflationary pressures. So, Rakeen, what takeaways should policymakers and the media have in this moment when it comes to the policy conversation we should be having?

MABUD: Yeah. I mean, I am so grateful to you and to Off-Kilter for having this conversation and hosting it. Because to your point, media has a really critical role in telling the story about what’s actually going on with inflation. And we’re starting to see a shift, right, not just in this podcast, but in Bloomberg and Business Insider and CBS and Washington Post, that really highlights the role of corporate greed in driving up prices. And it’s so exciting to me that there’s finally a spotlight being put on this aspect of price pressures. And we’re really seeing, as we’ve discussed, that message making its way to the Hill and all the way to the White House. So, my hope is really that policymakers take this information, take this framework of understanding what’s actually going on with inflation and make the policy changes that we need to make.

And what that is, is big investments. I mean, we are on the cusp of making some pretty, pretty important investments for this country. I hope they happen soon. I think the longer we push them out and delay, the more likely there are to be cuts. I mean, I’m fully in the no cuts, no delay camp. And I think importantly, to the long discussion we had around supply chains, not making those investments now will blunt out the effectiveness of our fiscal policy going forward. So, by investing in our economy, by investing in our supply chains, by investing in the goods and sectors that people need and in the people needed to make our economy run, that is how we have a healthy economy, a healthy economy where prices are down over the longer term.

And I think there’s a laundry list of things I could list out here, from rebuilding our manufacturing capacity to really doubling down on enforcement to taxing these big companies who are exploiting the pandemic and really squeezing workers and consumers. But all of it comes back to the idea that we really need to center all of us regular people in the way we’re making policy decisions. And if you use that framework, everything falls under that, from taxation to investments to enforcement. And my hope, if I can ask for a holiday present, is that we pass this bill as a down payment to the many, many investments we haven’t made for decades and that we need to make in the years to come.

VALLAS: And Matt, you’ve talked a little bit about some of what you’re especially excited about in terms of recent steps. You’ve also talked a little bit about some of your biggest gripes in this moment, which I appreciate. You’re gonna get the last word. Key takeaways you hope that folks in the policymaking realm, as well as in the media, really learn and hear in this moment from the likes of you folks as you try to help folks get this conversation right.

STOLLER: Yeah, I mean, I think it’s a great moment to understand and investigate what’s going on in our economy. It’s exciting that we’re gonna start regulating ocean carriers. We need to also start regulating railroads. We need to start putting clamps down on finance. It’s exciting what the FTC is doing on looking at supply chains.

I just, I don’t think that we have, like…I don’t wanna be a bummer here. But we don’t have the institutional setup right now to figure out how to restructure the economy. We really have just started to think about these problems in the last few years. But it doesn’t take that much time to really figure it out. We just need a lot more investigations. And then we need to figure out how to facilitate this massive wave of kind of militant, largely unorganized labor wildcat strikes that are happening. What we have to figure, there’s like a lot of dissatisfaction in the economy. This is the most militantly pro-labor society that we’ve seen, maybe in 60, 70 years, and that’s not going away. And if we can just figure out how to connect to that and to the frustration that people feel, I think we’ll have a pretty successful form of political organizing. We haven’t figured that out yet. I think it’s important to be honest about that. But looking squarely at corporate power, I mean, that’s the place where this is all happening, and it’s all the money and power in the world. That’s what monopoly power is. So, we know that taking that apart will well help a lot, and I think we’re starting to get on the road to do that.

VALLAS: Matt Stoller is the author of Goliath. He’s also the author of the newsletter BIG. You can find a link in show notes for where to subscribe for lots more from him. And he also serves as the research director at the American Economic Liberties Project, which fights to realize economic liberty for all in support of a secure, inclusive, democratic society. And Rakeen Mabud is chief economist and managing director of research and policy at the Groundwork Collaborative, which is dedicated to advancing a coherent, persuasive, progressive economic worldview and narrative.

I’m extremely grateful to both of you for taking the time and for breaking so much of this down. And somehow neither of you needed to swear at all during this conversation! But we’re really grateful to both of you for laying it all out there and breaking all of this down. So, thanks to both of you for taking the time, and I look forward to having you both back on the show at some point soon, hopefully to talk about some more from the good news camp of actions that we’re seeing this administration take, many of which are a long time coming, but finally starting to get some of the attention that they deserve. [theme music returns]

MABUD: Thank you so much for having me.

STOLLER: Thanks a lot.

VALLAS: And that does it for this week’s show. Off-Kilter is powered by The Century Foundation and produced by We Act Radio, with a special shoutout to executive producer Troy Miller and his merry band of farm animals, and the indefatigable Abby Grimshaw. Transcripts, which help us make the show accessible, are courtesy of Cheryl Green and her fabulous feline coworker. Find us every week on Apple podcasts, Spotify, or wherever you get your pods. And if you like what we do here at Off-Kilter Enterprises, send us some love by hitting that subscribe button and rating and reviewing the show on Apple Podcasts to help other folks find the pod. Thanks again for listening and see you next week.