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STEALTH INFLATION IN SECTOR ECONOMICS – THE PRICE OF BEANS

August 5, 2014

STEALTH INFLATION IN SECTOR ECONOMICS – THE PRICE OF BEANS
When a 16-ounce can of Great Northern beans costs more than it used to compared to another 16-ounce can of Great Northern beans, we can say that there is inflation in the price of Great Northern beans – or can we? Such enhanced pricing could be ascribed to a number of things, such as drought in bean-producing areas, fluctuations in currency value used to purchase the beans, collusions between producers in pricing, relative efficiencies of competing producers or any number of factors alone or in combination that could directly or indirectly influence the retail pricing of beans to consumers. The same may be true of bacon. I just heard today that bacon is at an all time pricing high due to two factors: drought and disease in the bacon-producing areas of the country.
I don’t always believe what I hear as those who raise prices are always ready to tell us why the increase cannot be avoided, invariably with reverently clasped hands and a halo approximately six inches over their heads. However, there may be some truth in what industry PR people have to say about why they so reluctantly have to raise prices of their products (one of which is to maintain and/or increase the profit margin on their client’s per unit output). Fortunately, the doctrine of supply and demand takes over and people buy less beans – and bacon. PR people for the beans and bacon industries are, of course, paid like diplomats to lie but cover well with great gobs of mea culpa and plausible deniability. I am reminded in this connection of my old political science professor who defined a diplomat “as an honest man, sent abroad to lie for his country.” (We send women now as well – see Hillary.) Liars and spies, like beans and bacon, are essential to our national security and domestic well-being.
There are other ways to raise prices without (at least ostensibly) raising prices. You will note that the foregoing compares the same can sizes. This essay has to do with manufacture and producer stealth in packaging, the worst inflationary brush of all. I can recall when beans came in 18-ounce sizes – then 17 – then 16 (where it stayed for a while as an industry standard) – then 14 and a half – and now I am seeing 12-ounce cans. The sizes have marched steadily downward – but the prices have not. Cottage cheese has finally gone from 16-ounces to 15 ounces without any fanfare at all. Imagine! Likewise, ice cream used to be by the quart, half-gallon or gallon. Now it has been reduced to 56 ounces, 48 ounces and who knows what next as net weight descent is not matched by price descent. How to make more profit? Easy – give the customer less for the same price (though the necessary by-product is price inflation).
There is probably an area known as sector economics, but if so, I am ignorant of it, and have chosen to label pricing between consumption sectors such as food, clothing, insurance, automobiles etc. as sector economics for purposes of comparative pricing in this essay. For starters, I very much object to stealth in pricing, the kind that is epidemic in the marketplace these days. If you and I get the same amount of beans for X dollars and then get less beans but still for X dollars, it’s really a double whammy because we not only are getting less for (relatively) more; we also have to buy more beans sooner than usual which means that we are paying yet even more as measured on a time scale.
So we eat less beans (supply and demand and pricing kicks in), but guess what? When we go to buy bacon (now 12-ounces) or ice cream (48 or 56-ounces) with the money saved by not buying beans we are getting ripped off there, too. We are told that improvements in automated processing are reducing costs. One would think that the profit generated by such improvements in efficiency would be sufficient for the corporate bottom line profit enhancement, but not so. Corporate greed not only fails to pass such savings along to retail consumers; it gives such consumers less product at static pricing, thus assuring a doubly and much healthier profit margin to the capital gain structure of investors and assured bonuses to executives of corporate producers and manufacturers (and a corresponding and continuing drain on retail customers’ pocketbooks). It’s a familiar story: They get more and we get less.
I have also noted that there is great ballyhoo accompanying sales in which more is promised for the same price but total silence is the order of the day when stealth inflation is afoot, i.e., less for the same price. (Perhaps the Federal Trade Commission should by regulation require that equal advertising space must be given to retail pricing when the consumer is promised either more or less – though that idea may not be helpful but rather self-defeating since advertising costs are folded into the price of product.)
The fact is that we are being ripped off across the board by manufacturers and producers (and, of course, their corporate owners on Wall Street) for all they can get. Here’s the crux of the problem as I see it in price inflation for food: It reduces the amount of purchasing power you have to buy other goods and services in the marketplace (a complaint, of course, that could be made with any other ballooning sector cost, i.e., if the price of health care insurance goes up, for instance, and it invariably does – you would have correspondingly less money for food). With wage inequality and stagnant or even decreasing family median wage incomes the order of the day for the last 40 years – and food prices increasing (whether by stealth or by straight-out price increase announcements), what is left for car payments, the kids’ books and clothes and shoes for school, the rent or mortgage payments, car repairs, leaky roof repairs, homeowners, health, life and car insurance etc. etc. etc.?
The answer: Much less, and the insurance agent, landlord and the people at the bank are having to pay more for food and/or some other sector or sectors for goods and services in the economy as well, and they want their payments on time – or else. Result: The wage earner (if he or she has a job) is trapped in a stagnating income regimen due to the greed of Wall Street (which wants that wage differential along with its efficiency in production and even lesser wage costs if possible added to its own bottom line) and such wage earner must, among other things and if bankruptcy is to be avoided, increase his/her family’s health insurance deductible to get a better price (but greater exposure to bankruptcy if the worst happens), delay car repair and leaky gas stove replacement etc.
How can wage slaves living in an economy where wage inequality reigns ever take their families to a nice restaurant or on a vacation? They can, but they will have to run up their credit card balances and risk usurious interest rates and penalties if late with a single payment. Banks own credit card companies and have – via their lobbyists and legislative toadies – even designed the bankruptcy code to call for payment of credit card balances over payment of support by deadbeat fathers for the latter’s children in perhaps the most grotesque result of all grotesque results – children go hungry while Wall Street banks drain that last penny out of a Chapter 7 petitioner who has earlier been found and ordered to pay child support by a state domestic court with jurisdiction. The federal bankruptcy court has no jurisdiction over support and domestic relations matters but has nevertheless overruled the state domestic relations court on support, a finding which guarantees the poverty of such innocent children, a nauseas outcome engineered by Wall Street banks which favors famine of people over reduction in its profits.
The ultimate irony? You and I pay corporate welfare to banks by paying for welfare to support such children whose support orders Wall Street banks have effectively reversed via their bought tinkering with the federal bankruptcy code in a disgusting and nauseaus show of total and oblivious greed.
There used to be an old saying in my day when one wanted to question what relevance there was to what a speaker had to say, and it was this: “What’s that got to do with the price of beans?” As can be seen (and the topic is far from exhausted), there is a lot that has to do with the price of beans. GERALD E

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