Unpacking Economic Buzzwords

July 12, 2022 00:42:46
Unpacking Economic Buzzwords
Just a Bite
Unpacking Economic Buzzwords
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Show Notes

This week, we’re going beyond the buzzwords we’re all hearing to better understand what’s truly going on economically, what’s behind the inflationary pinch we’re all feeling, and what public policy levers must be pulled to protect household stability and meet basic needs for every household. We’re joined by Guillermo Bervejillo, State Policy Fellow for Policy Matters Ohio. With a Ph.D. in economic geography and bachelor’s in economics from The Ohio State University as well as a master’s in geography from the University of British Columbia in Vancouver, Guille brings an incredible wealth of expertise to this conversation and peels back the layers to reveal what’s beneath the economic rhetoric.

References:

Visit Policy Matters Ohio online, take a look at Guille’s past research and testimony here, and follow Policy Matters Ohio on Twitter and Facebook

View Guille’s recent appearance on The State of Ohio, a service of Ohio’s public broadcasting stations.

Investors buy nearly one of out for Columbus-area homes in first quarter of 2022, The Columbus Dispatch, July 5, 2022

Corporate profits have contributed disproportionately to inflation. How should policymakers respond? Economic Policy Institute, April 21, 2022

Credit card balances spike to $841 billion after stimulus checks helped reduce debt, CNBC, June 9, 2022

Companies use inflation to hike prices and generate huge profits, report says, CBS News, May 27, 2022

Corporations are bragging about inflation price-gouging, Patriotic Millionaires Blog, May 6, 2022

 

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Episode Transcript

Speaker 1 00:00:16 Hello, and welcome to just a bite. This is joy today. I'm joined on the podcast by GEHA Berillo state policy fellow with policy matters, Ohio originally from Uruguay GEHA has a PhD in economic geography and bachelor's in economics from the Ohio state university, as well as a master in geography at the university of British Columbia in Vancouver, he has studied antitrust economics trade between China and Latin America. The geopolitics of global soy markets and more GEHA also has a longstanding commitment to community organizing in Ohio and professional experience in Washington, DC. He was a founding member, organizer and researcher for the Ohio student association. And in Washington, DC geisha was an economic policy intern at the center for American progress and an economic research analyst at the antitrust division of the us department of justice. He was generous enough to spend some time talking with us about what's truly going on economically beneath the buzz words. We're all hearing and the inflationary, pinch, we're all feeling. I learned a lot from our conversation and I'm grateful to bring Geisha's expertise to you in this episode. Speaker 2 00:01:33 Thanks so much for being here with us today on our podcast. I'm really excited to learn from your expertise. Um, you have such an incredible background in a lot of the ways in which our world as food security and poverty advocates overlap with a lot of what we're seeing in headlines today. Uh, you know, we're hearing a lot of talk about inflation and what should we do about it and how is it impacting people and what policy choices are playing into that. So we try our best to understand that wrap our heads around it, but it's so great to have someone like you here to share a little bit more of a deep dive with our listeners. So thank you. So why don't we just, why did you be, oh, great, great. Well, why don't we just start with a sort of economics 1 0 1 refresher, if you don't mind, you know, cause like I said, we're all hearing so much about interest rates, supply and demand the stock market, you know, what is really going on right now in the, in the economy for people who have, you know, have a few years since their like high school econ class. Speaker 3 00:02:34 Sure. So, uh, you know, inflation can generally be understood to be a, um, you know, a generalized increase in prices. So, uh, the government keeps, keeps tags, keeps track of a, of a, of a basket of goods that most people buy on a regular basis. And uh, when you see, uh, people talking about inflation, what it means is that those, that basket of goods, you know, which is a, a certain amount of gas, a certain amount of food, a certain amount of basic items like that, housing, et cetera. Um, when you see people talking about inflation, it means that that basket of goods has increased in price relative to what it was before. Um, so, you know, if you want to go back to econ 1 0 1, there's, there's a couple different things we could, you know, you'd probably have to talk about, you know, supply and demand. Speaker 3 00:03:25 If there's not enough of those goods, then sure. The prices of, of those goods will probably increase be because there's not enough supply. If there is, uh, too many people who want those things, then also, uh, prices are likely to increase because there's too much demand. Um, there's also another way of seeing it, which has to do with, uh, focusing in on the, on the, not necessarily the, the, the goods themselves, but the, the value of money. So another way of seeing this is to say, if the value of your money decreases, then it's harder for you to buy that basket of goods. So that's another way of understanding. Inflation is the, the fluctuation of, of the value of money. So, uh, it's the basket of goods, the BAS you know, whatever, every one of us buys on a regular basis, it's whether there's what the supply and the demand for those goods are, but it also has to do with the supply of money, which affects the value of money. Um, all that is potentially more technical than it sounds <laugh>, but some of it is, is pretty intuitive, but, uh, unfortunately there's, there's a lot of, um, kind of mystification about it all because it's, you know, we treat it as if it was, uh, only, only the, uh, the field of an economist, uh, to understand. So definitely could go deeper into that if you were. Speaker 2 00:04:49 Yeah. I mean, we, I think it's interesting many years ago in the, in the hunger relief world, um, at least from the perspective of like our federal government, we got away from using the term hunger and went toward using a term of food security or food insecurity, right. Or you hear food hardship. Um, and I think these terms are inherently economic. And when we talk more and more, um, on this podcast and in our advocacy work about how food security yes. Is the ability to afford enough food to feed yourself and your family. It's also the ability to access that food. So there's other economic drivers and environmental drivers that play into your food security or lack thereof, but also the security of our food supply long term. Um, when we see, you know, global local, regional national, uh, uh, circumstances playing into the solvency and security of a food supply of the ability to transport that food supply, um, to safely shop for it, um, to, without exposing yourself to a virus without exposing yourself to gun violence, whatever that may be, there are so many factors going into that. Speaker 2 00:06:10 So it's interesting because talking with you kind of put that, puts that into an, almost an economic perspective, which we're still kind of developing those muscles and talking about ourselves, but I, I, I know I hear a lot about, you know, the suggestion that this is, um, an American problem right now that I think a lot of people who don't pay a attention maybe to, um, how the situation that we are feeling here as Americans is very similar to many people across the world, given our shared experience of COVID given our shared connection and reliance on, you know, Eastern European sources for food and fertilizer, for example, during an international war, just as a couple of examples, of course, climate change also being a major factor that we're all coping with. So I say all that to say, this isn't just happening here, right? This is happening globally. Speaker 3 00:07:07 Right. So, no, it's, it's very important that you bring up the question of the stability of the food supply, because, um, one of the things that people, um, forget when in these kinds of discussions is that, um, there is, you know, the, the, the economy, the, the, the food, the food sector, whatever sector we're talking about, the oil sector, um, you know, these are businesses and, and institutions and, you know, um, relations, economic relationships that have been around for decades. And, um, there's a history to why we are where we are and how it's affected our current situation. So, um, but when you bring up the, the international, uh, the international aspects of it, it, it's actually a really useful, a really useful, uh, element to consider when you're, uh, when you're hearing these discussions about inflation, because, um, um, because we can get an idea of, of, of, uh, how these things aren't localized and yet how it's not globalized fully. Speaker 3 00:08:14 So for example, um, inflation in the us is, is probably the highest in the world, or at least no, actually turkeys has really high inflation right now, but, um, the us has very high inflation and, uh, the EU and the UK are pretty close, but they're also following, um, there's also some, uh, Western hemisphere countries, like in south America that are experiencing pretty significant inflation, but, um, but actually there are countries that aren't experiencing the same kind of inflation China for one is experiencing about a two, 2.1% inflation rate, which is, you know, a quarter of what we're experiencing here. And, um, and then, uh, there's also some Southeast Asian countries, Indonesia around that area that, uh, don't have quite as high of an inflation rate. So the reason I bring that up is because I think that it's important to remember that there's a lot that, um, a lot that, you know, social and political institutions can do to, uh, to ensure certain stability and, you know, there's trade offs. Speaker 3 00:09:14 Of course, there's certain things that we don't necessarily, um, aspire to do, uh, with our society. But there are, when people talk about when, when, you know, when politicians talk about doing everything possible to, uh, address inflation, it's, it's a little bit disingenuous because they say that, but then they tie their hands to certain market, um, certain market, uh, signals and certain kind of actions by the fed and all this kind of stuff. So, um, it's important to know that this is a globalized, a globalized relation, a globalized situation, so that you know, that, uh, it's not one thing that specifically was done in the us that led to all this, but it's also important to know that it's not, uh, it's not felt the same way across, across the globe. And that has to do a lot with the circumstances of each one of these, uh, specific regions or countries and so on mm-hmm <affirmative>. Speaker 2 00:10:07 Yeah. So, and that's really helpful the, that while it may not be an isolated, um, mix of circumstances, how we respond to it through our public policy choices can greatly impact our ability to support people through this economic period and to absolutely limit suffering. Yes. Um, encouraged stability. So I, I think you're actually kind of leading me into what I wanted to ask you next, which is that, um, we hear a lot as anti-poverty advocates, of course, this, this just boils my blood in a way. I can't really articulate mm-hmm <affirmative> and I bet you'll do a much better job of it, but when I hear the suggestions that basic income supports for people with low incomes, um, like the monthly expanded, actually these are, this, these payments were not only for people with low incomes. These were for, um, low to middle income families, almost every family with modest incomes and kids in our country received for a glorious six months of 2021 expanded monthly child tax credit payments that helped them. They widely reported to through the census Bureau's household pulse surveys that they were spending that money on food. Yeah. On clothing, on utilities, mm-hmm, <affirmative> on rent mortgage on just basic expenses mm-hmm <affirmative> to, um, survive and try to thrive. Yeah. And so we hear suggestions that investments like that in our families who are raising kids in this moment, um, are responsible for the inflationary pain that, you know, we're, we're all feeling now, what is the, you know, how do you feel about that as an economist? Is that an accurate representation? Speaker 3 00:11:52 You know, uh, you often hear econom, economic analysts and, and, uh, economists say, when they talk about these things say that, you know, this is just simple economics, the truth is this is just simple minded economics. Um, there's nothing simple about inflation and the idea that you can tie it down to one factor is just, is it's unscientific to be, to be sure, but specifically this idea that stimulus checks and, and other forms of direct assistance or the drivers of inflation, it's, it's an absolutely, um, ridiculous idea. We can approach it for many different ways. Um, for one, if you look at the, um, the disposable household income, so the amount of money people have to spend, um, sure. There is a, a little bit of a peak that happens after the stimulus plans. Like people are actually able to pay for basic necessities. You know, they're able to, uh, make sure that their kids are well fed, for example, make sure that, you know, they have the clothes and stuff that they need personally, as a father of two, I also, uh, experienced a situation of like, wow, you know, I'm not, I can, you know, there's some things that we've been putting off and, you know, we're right. Speaker 3 00:13:07 I we're in a good situation, but still, you know, tight in some places. And all of a sudden we're like, okay, we can do that thing that we've been needing to do for a long time. And believe me, it wasn't buying, you know, an Xbox or something. It was, you know, buying some <laugh>, you know, clothes that fit my son better or something like that. Mm-hmm, <affirmative>, mm-hmm, <affirmative>, um, all that extra money, um, that the households had, uh, thanks to the stimulus package has disappeared. You look at the peak, you look at the graph of disposable household income, it peaks after the stimulus checks, and then it drops like a rock. People do not have people have less disposable income now than they did before the pandemic they're in a worse situation than they were before. On the other hand household, um, credit card debt is, you know, climbing, climbing like, uh, you know, like there's no tomorrow. Speaker 3 00:14:01 And, um, and the fact of the matter is at this point, any, any amount of generosity that working class people received has with has disappeared on the other hand, all that money that the financial and corporate sector received. So all that money that people spent in those days after the, uh, after the lockdowns went away, we can, if we look at the national accounts, the national, um, product accounts from the bureau of economic analysis, you can, um, you can see what portion of that went where, um, there's a, a study by the economic policy Institute that shows that 54% of additional costs of the increase in costs of goods can be attributed to corporate profits. Um, so what that means is that sure people had a little bit of extra money for a little bit of time, uh, but that they've spent it all. And, uh, it is not coming back into the economy. Speaker 3 00:14:56 It's not recycling in the economy. It's actually sitting nice comfy, uh, you know, pockets in Manhattan and, you know, other rich places in this country. Um, on the other hand, these kinds of these kinds of assistance payments actually, um, were a relatively small package of what, uh, the government did. So there was about $4 trillion in these kinds of payments, actually, not all of that went to, uh, low income households or, or, you know, uh, in the meantime there was, uh, a lot of people forget, but March, 2020 there was, um, you know, the BA the stock market kind of tanked. And, uh, the response from the federal government was to engage in quantitative easing, which is a fancy way of saying, um, you know, holding the ship afloat, uh, buying BA bonds, treasury, bonds, stocks, um, all kinds of different, uh, financial implements that allowed there to be more money in the market. Speaker 3 00:15:58 Um, their, their balance sheet, the feds balance sheet right now, which, uh, went up to 9 trillion. Uh, so this is more than twice the amount that, uh, the cares in APA bills accounted for. So what I'm trying to say was that with that, is that the proximate cause of this, um, of the generosity of, of this stimulus plans is the question of how much of that was captured by the financial sector and the corporate sector, the, the capture by corporate entities and financial entities of these, of these, uh, stimulus, uh, funds, but also of the quantitative easing means that they've had the chance to reinvest in themselves, buy back stocks, uh, you know, invest very heavily in the housing market. Uh, I I've seen a Washington post study recently that shows that, um, about like, I, I forget exactly what the figure, but I think it was like 24, maybe 22% of houses, single family homes here in, in Columbus are owned by, uh, investors now, uh, rather than families. Speaker 3 00:17:04 And that's pushing up rent, which is a huge part of the, uh, of the inflation. Um, there are also many firms that have leases on, uh, on oil and, uh, tar sands and, and, you know, shale, uh, places, you know, across the country where, which is not something I necessarily think is the best outcome, but if we wanted to truly wanted to reduce oil prices, one of the things that you could do is, you know, create, uh, short term production, um, and oil companies left and right, are telling their managers not to drill, to keep the, uh, keep the oil on the ground so they can profit as much as possible. So they can buy back stocks to increase the value, pay back, uh, some debts that they might have, but just overall ensure that they are, uh, doing well, uh, increase, you know, maximizing their profit mm-hmm <affirmative>. Speaker 3 00:18:03 Um, so to summarize it's, uh, the, the generosity given to, uh, working class families is a small piece in the pie, and it has already withered away. It, you know, we're talking 2020, what's driving the prices now has nothing to do with that. Yeah. You know, the, there, we have to look into deeper, more structural elements. We have to think about why we're unable to respond to a crisis like the pandemic, um, why we're not able to increase production in oil or why we're not able to provide housing for everybody, why we're not able to provide food for everybody. And this has to do with a, a deeper question of the way that we've chosen to do business over the past, uh, 40 years. Speaker 2 00:18:52 Mm-hmm. So, yeah, I think it's easy for those of us who don't have as much depth of understanding to think of this as well. The pandemic was a huge, I heard you use this term recently on an appearance on the state of Ohio, you talked about a shock to the system, right? So of course the coronavirus is impact on public health. Our response that happened globally, really the response that we all had to take to protect lives in the short term. Um, and then that evolved into also trying to stabilize our, like our, our healthcare providers and that system, um, all that evolved out of the immediate risk of the virus. So, you know, we tend to attribute the situation. We find ourselves in mid 20, 22 to COVID and are maybe ideological disagreements around what the government did or didn't do, um, in that had an economic effect. Um, and whether or not that was, you know, so a lot of political ideology wrapped up in all of that. But what you're saying is, is that for decades, we've been experiencing shocks to the system, so to speak mm-hmm <affirmative> that have ill equipped us to respond to a crisis like that, and that we're ill equipped to come out of a crisis, like we've been in and continue to be in, um, because of those factors. So, Speaker 3 00:20:25 Yeah, but I think what's, what's important is yeah, it's not just that shocks have ill-equipped us, it's the way that we've responded to shocks in the past has ill equipped us for, for our capacity to respond to previous shocks, because what we've done in the past, uh, time and time again, is to ensure that, uh, investors and, and corporate owners are the ones who come out, uh, with, you know, their, with everything, uh, taken care of mm-hmm <affirmative> mm-hmm <affirmative>. So what that has taught that sector of the economy is that the government will be there to make sure that they're okay too big to fail too big to fail. Yeah. And you know, we've said this over and over again since 2008, but this is, this is, uh, the true reason why we're unable to respond to, uh, the current crisis isn't because it was completely unforeseeable. Speaker 3 00:21:13 Sure. Nobody realized that Panda the pandemic was gonna be what it was, but people knew that this was in fact, uh, people were talking very specifically about infectious diseases and lung, um, respiratory diseases as a PO possible global shock kind of situation. Like it wasn't completely unknown. Maybe nobody, maybe it was hard to foresee, but it wasn't a complete impossibility mm-hmm <affirmative>. And, and mind you, uh, anybody who is, um, worth a diamond in business knows that you have to be able to deal with shocks. You have to know what you're gonna do. Either have, uh, extra stocks, extra, you know, storage facilities or plan BS, you know, some kind of something to respond to a shock, cuz the shocks happen all the time. Like sure, this was a globalized shock, like none other, but shocks happen all the time. So you have to have some capacity to respond to it. Speaker 3 00:22:06 Mm-hmm <affirmative>. Now what, what I'm saying is that what we should understand is that we weren't able to respond to this shock. Not because it was completely unforeseeable, but because the business Des decisions that we've been making in the past, not we not you and I obviously a very small portion of this country, the business decisions that corporate owners have been making in recent decades have been, uh, all about understanding that the government will step in if they fail and that, and so they have to take so that they're willing to take as many, as much risks as possible, um, and to reduce their investment in things like physical capital, physical capital stock, like reduce their investment in, um, storage in, you know, uh, plan BS basically reduce their, their investment in, in production here at home. Mm-hmm <affirmative> um, because they've been looking for the, uh, the cheapest, uh, and least, uh, least committed way of producing and getting things where they go mm-hmm <affirmative>. Speaker 3 00:23:10 Um, so again, the way that our economy is structured, it encourages and the way that, you know, people, what people have learned in the past, it encourages people to, um, act as if, every act as if every economic sector should be treated as kind of like the financial sector, you know, by high, by low sell high, uh, be as, uh, diversified and uncommitted as possible and all these kinds of things. But the fact of the matter is that basic things like the needs of like life, you know, the things that we need to like live life and happen in full required commitment require investment require physical capital require infrastructure, require all these kinds of things that aren't the most profitable mm-hmm <affirmative> for corporations. Mm-hmm <affirmative>. Um, for example, in the oil sector, uh, part of the reason why we aren't capable of producing the, the oil, the gas that we need is because the oil sector has become more and more unwilling to respond to price. Speaker 3 00:24:16 So price goes up, but they don't invest in more production. Um, and, uh, they have no reason to, because they're gonna make profit from what they're producing already. And they see the volatility of the market as their main concern. So if prices go down in the future, like they did in 2014, 2015, uh, then they have, then they might lose if they invest in, in actual physical capital stock, actual capacity to produce oil mm-hmm <affirmative>. So what, what's the answer? Well, perhaps, perhaps we shouldn't be, uh, if, if the main issue is that you can't provide stable profits from that kind of thing, then perhaps it shouldn't be private profits that are leading the decisions mm-hmm <affirmative> right. It should be national concern. Mm-hmm <affirmative> and actually in the question of oil production, considering that we're in amidst the climate crisis, um, I think that nobody should be profiting from, you know, further increasing our, uh, our, uh, carbon monoxide, carbon dioxide levels. Mm-hmm <affirmative> but, um, there needs to be considerable change in, in our kind of institutional framing to approach these things in a systematic way, uh, rather than just these kinds of blunt instrument responses like the fed is proposing. Speaker 2 00:25:40 Yeah. When I hear the, the kind of high level talking points, you know, from, from the fed about how, what we will have to see in order to, uh, you know, drive down inflation is that we will likely see unemployment tick, right? You like, we hear these talking points in, in the headlines and it, it seems almost like a disservice. I, I think to, um, household to are eager to, I think, understand the implications of a lot more of these poly policy decisions for them. We like need to tear back the layers so that we have a better shared understanding to your point of all of the, um, all of the levers and decisions that are allowed to happen at different tables that are ultimately taking power away from yeah. People all over the country. Yeah. Speaker 3 00:26:38 Like, let there be no confusion when they're talking about increasing interest rates and these kinds of actions, what they are talking about is basically, uh, undermining the capacity of workers and laborers to buy for their own interests. Uh, so what they're doing is sure, there's kind of like a, what they call like a hot economy. Like there's like there's too much demand, too little supply. Right. And they're saying, okay, well, if we cool it down by forcing the workers out of, out of work, basically the, the problem with these kinds of increasing interest rates is that they come eventually they trickle down to the workers, something that actually does trickle down mm-hmm <affirmative> and, uh, jobs, jobs are lost. Uh, people lose, um, their livelihoods and so on. Yeah. So this is like, you know, it seems very like abstract and cold guarded, but, you know, when you, when you actually look at what it means, it means, uh, people's lives and livelihoods. Speaker 3 00:27:34 And, um, it doesn't address the core of the issue. It doesn't address the fact that we have, uh, overly financialized economy. We, it doesn't address the fact that corporations are responding to incentive structures to, um, that, that, uh, uh, ensure that they don't, they externalize their risks. Like they don't internalize the cost of risk taking mm-hmm <affirmative> they just assume that it's gonna be taken care of by the government. Um, and it doesn't, it doesn't address the fact that we need to, um, respond to incentive, to incentives other than profit making yes. To ensure that people can live. Speaker 2 00:28:10 Yes. Um, yeah, we can have debates all we want about luxury goods, but I would like to live in a country where people being able to afford the food and the housing that they need is not a, a up for debate that, that is a shared value and that we should, um, make our economics work accordingly. Um, yeah. So we've touched a little bit on a little bit of these topics, like for example, energy diversification, um, antitrust regulation, certainly revenue policy. So those are things that maybe, again, we, as first and foremost, hunger relief providers who are worried about just feeding the line, um, each day, don't always take a few steps back and pay close attention to, but do you think you could help us put into context how an Ohio family that's at risk of food insecurity? That is right now, you know, barely making it paycheck to paycheck will be back in a food pantry line. If, if a kid is sick for a couple days and some wages are lost, you know, how do these seemingly unrelated policies impact them? Why should we as food security advocates and people impacted by food insecurity care about them out them? Speaker 3 00:29:30 Right. So, as we were saying before, uh, there's a misconception that in this, in this society, it's existed here for a couple, a few decades, at least, um, uh, by which, in which we, we believe that we can solve these kinds of problems that we're facing today by tinkering with, um, with the market, basically by kind of addressing the, uh, supply of money by increasing the cost of lending, all these kinds of little things. Um, the problem is that the profit incentive is just that it's an incentive, it's a focus on profit. It's a focus on, um, making as much money for a small amount of people as possible. So one of the big things is that we need to, we need to be able to see beyond that. And the only way to see beyond that is by having an ambitious, um, visionary stance about what society and the state can do for its people. Speaker 3 00:30:36 Um, we need to believe that we can, uh, and because we can do it, we need to believe that we can address climate change by, uh, diversifying our energy. For example, as you were saying, uh, our energy sources, but also by taking out, not waiting around until the, uh, the, the corporations think that it's profitable for them to do so. Um, and if they're not willing to step up for that profit, then let that profit be, um, be captured by society itself. We have this, uh, this long standing, uh, kind of knee jerk reaction to the question of, um, of, uh, state action in, uh, in, in different economic sectors. A lot of it is kind of left over from this red scare stuff from the mid 20th century. The fact of the matter is like, yes, you can do this in a wrong way, or you could do this in a right way. Speaker 3 00:31:33 It's just a matter of how you set up the institutions, same thing with, uh, with antitrust. Um, we have a situation now where we've allowed corporations to grow larger and larger, especially if they do it in a particular way, uh, which, you know, we don't have to get into the details, but it's not a surprise. It should be a surprise to nobody that Amazon, for example, is as big as it is, uh, because of the way it does its business. Um, the fact of the matter is that when you, when you have a corporation that's very large, they have, uh, a lot of influence on price. They have a lot of influence on policy. They have influence that exceeds the market, and we can't, uh, continue to believe that we're gonna address them by tinkering with market tools. Uh, and so part of the, part of the question is how we, um, how we ensure that the, we have the resources to respond to this and how we ensure that we can be as ambitious as possible. Speaker 3 00:32:33 And I think here is where we need, um, we need to address our revenue situation. We have a tax situation here in Ohio where, uh, a long line of corporate politicians have led us to lower and flatter tax rates, uh, which is another way of saying, let us to tax the poor more than the rich, um, and poor and middle and middle incomes. Uh, and we need to flip that around. We need to actually tax people according to their con, according to what they've perceived from society, if you've been benefited by society, because you are, you know, wealthy, uh, wealthy person here, then, you know, your contributions should reflect that. For example, a, another thing that we should be considering is how, what are the factors? What are the different tools that we can use to ensure that people can, um, feed themselves and their kids and their families, uh, what are the, the institutions that we can build to ensure that people can work, if they want to work, take care of their families, if they want to take care of their families, um, what are the things that we can do to ensure that people are thriving in Ohio mm-hmm, <affirmative>, uh, across Ohio, from rural Ohio to urban Ohio, and, um, and also how people can get the healthcare that they need. Speaker 3 00:33:51 Mm-hmm, <affirmative>, uh, coming out of such a, uh, terrible situation, which, you know, it's easy to just talk about these like inflation questions and stimulus and quantitative easing and all, but we have to remember that a million people passed and it's absolutely it's, uh, it was a tragic situation and it should inspire us to be more ambitious, ambitious, and visionary than we've ever been. Speaker 2 00:34:12 Absolutely. We had, we achieved for a brief moment of time. It felt like some collective public awareness of some of the failures of, um, like our family supporting policies. We had a temporary paid sick leave policy. Uh mm-hmm <affirmative> if we were all recall that that went away, um, just as one, one of many examples. So, um, definitely, you know, as you were talking, I was thinking about how we often talk in our world about, um, again, how food security includes access and how they're at many places that our food deserts, or sometimes we talk about healthy food deserts or some, some folks use the word food swamps, where the only, um, the profit, again, the profit that's available in feeding people, um, is very slim. Speaker 3 00:35:06 That's very, Speaker 2 00:35:07 Okay. So it's very, very slim and, and challenging for local and regional growers and farmers and producers to stay solvent. Yeah. Um, given all of the external factors that they're coping with rising volatility and climate being one of many, um, increased input costs. Um, and then of course that hits the retailers as well. So we know that, um, if you are a, a retail grocer in a, an upper middle class community, your profit margins are happening with the luxury items. You know, the, the folks are shopping for their produce and they're dairy, but where you are making your profit is in the, um, the bag of, um, luxury cookies that they're bringing home that week, or they're trying out this new granola that they want on their yogurt. And that's where maybe a little bit of the profit is, is coming in, but there's very little driver there so that in lower income communities, where there is less money available to afford those luxury goods at the grocery store that might, um, drive a little bit of that profit. And there's only the ability to afford the cheapest foods. Mm-hmm, <affirmative>, um, where there's not a lot of margins. Then we see for profit retailers pull out of those communities because they're operating in the red in those communities. And we see small local farmers struggling to stay solvent because they don't again. So it, it begs the question of how well our for-profit food system is serving people when, you know, access to food is, has to be the basic most fundamental. Right. Um, that's Speaker 3 00:36:47 Absolutely. And, and we have this, um, yeah, that's like a very clear, a clear factor of how, uh, there's we need some kind of response to that. And the profit, the profit incentive is never gonna be sufficient. You'd have to, unless you do something very targeted and, uh, focused on those communities and, and the people who live there and all these kinds of things. And the, the, the funny thing is, you know, I'm, I'm currently writing a report on, uh, some of the small business, um, incentives that we have here in Ohio, for example, the business income deduction, which was sold to Ohio as a small business, uh, incentive. And when you start looking at the details, you see how whenever we create these types of incentives, it actually ends up benefiting the wealthy more than the, than working class of islands. So the business income deduction, for example, it's just a, a, a giveaway to people who are able to maneuver their income into a particular legal form. Speaker 3 00:37:45 If you have the accountants, if you have the wherewithal to, uh, to find the loophole basically, then, um, then you're able to manipulate your income that might otherwise, um, that you might always might otherwise have to contribute taxes from into a, a form that gives you basically no taxes at all up to $250,000. So, you know, when, when people, so it's like, yes, absolutely, we need to find new, uh, institutional strategies to ensure that there's food for everyone. That seems it's, you know, when the 21st century, and we're saying that still it's a little bit ridiculous, but what people, what people point to in these situations is like, oh, small businesses, so easy. And then they create these small businesses incentives that, um, actually just benefit, you know, lawyers and lobbyists and, uh, people with well paid accountants. Um, so sure we need, perhaps a small business kind of situation would help in this situation, but, you know, how do we, uh, what are the institutional, what is the institutional support that ensures that, uh, a small business in a, in a low income community, which for all the reasons that you described, isn't really able to make a profit, um, at least not like Kroger, uh, what ensures that, um, that they'll be able to stay afloat. Speaker 3 00:39:06 And again, here, another thing to consider is how do we, um, how do we kind of get beyond just the, the business, the business mindset, mm-hmm, <affirmative> in the sense of like, how do we create social institutions that are responding to the needs of a community? Um, and perhaps how do we, you know, incentivize, uh, collective cooperative, uh, institutions in a community that can like bring food to a community, not necessarily profit driven, but also not necessarily competing against the big food suppliers. Mm-hmm <affirmative>, uh, the other thing I was gonna say is that, you know, we don't in, we incentivize, uh, accounting acrobatics, and we incentivize sugar and corn, and, you know, basically like cheap non-nutritious, uh, ways of getting calories. Mm-hmm <affirmative>, uh, Speaker 1 00:40:02 I'm sure we'll be talking a lot more about that going into the, we are already, um, seeing that in farm bill discussions, for sure. So that will be, that will be something we certainly dive into more in this space and in other spaces. So, um, I look forward to that and look forward to reading your newest report and just wanna thank you so much for your time with us today for sharing your wisdom and your thoughts. And, um, maybe we'll have you back some time if you're willing. Yeah. <laugh> Speaker 3 00:40:28 So, thank you. Thank you. Thank you for having me Speaker 1 00:40:38 A recent blog by Josh Bivins director of research at the economic policy Institute summarized much of what geisha and I talked about this way, the price of just about everything in the us economy can be broken down into the three main components of cost. These include labor costs, non-labor inputs and the markup of profits over the first two components since the trough of the COVID 19 recession in the second quarter of 2020 overall prices in the non-financial corporate sector, which are those companies that produce goods and services have risen at an annualized rate of 6.1%, a pronounced acceleration over the 1.8% price growth that characterized the pre pandemic business cycle stretching back to 2007, strikingly over half of this increase, 53.9% can be attributed to fat or profit margins with labor costs contributing less than 8% of this increase. This is not normal from 1979 to 2019 profits only contributed about 11% to price growth and labor costs over 60% non-labor inputs, a decent indicator for supply chain SNS are also driving up prices more than usual in the current economic recovery. What does the abnormally high contribution of profits to price growth mean for how policymaker should respond to the recent outbreak of inflation? The already excessive power of corporations has been channeled into raising prices rather than the more traditional form it has taken in recent decades. Suppressing wages, thanks again to geisha for his time and to all of you for listening, hit the subscribe button. So you don't miss out on future episodes. And we'll talk to you next time.

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