“Companies are paying higher wages, spending more for materials and absorbing record freight costs, pushing up economic inflation gauges. They are also reporting some of their best profitability in years.”
The above quote comes from the article “What Does Inflation Mean for American Businesses? For Some, Bigger Profits,” published in The Wall Street Journal in November 2021. The inflation rate has steadily increased since then — and so have corporate profits. While most conservative economists and commentators are quick to blame inflation on demand outpacing supply, supply chain disruptions and government stimuluses (especially those under Biden’s tenure), it’s long past time to acknowledge that large companies padding their bottom lines is a major factor in out-of-control price hikes.
Oxfam, an international organization focused on ending poverty, released its report “Profiting from Pain” this week. The report looks at how many people became billionaires — and how many billions in profit companies made — vs. the number of people who fell below the extreme poverty line between March 2020, the official start of the COVID-19 pandemic, and March 2022.
According to the report, the world added 573 billionaires for a total of about 2,668, and “these billionaires are collectively worth $12.7 trillion — a real-terms increase of $3.78 trillion (42%) during the COVID-19 pandemic.” When Oxfam refers to “real” income or growth, that means it used the U.S. CPI (consumer-price index) for inflation to put previous years’ numbers in terms of 2022 numbers.
Of those 2,668 billionaires, 310 are involved in food, agribusiness, oil, gas and coal, and they’ve increased their wealth by $453.3 billion in the last two years. Food and energy costs account for a sizeable percentage of overall inflation, and yet shareholders and C-suite executives in these industries are making money hand over fist.
The Cargill family, who own 87% of the global food giant of the same name, raked in $14.4 billion (about $2 million a day) in the past two years, and four members of the extended Cargill family recently made Forbes’ richest 500 list. The Walton family, which retains about half of Walmart’s shares, made about $8.8 billion in two years — and that’s with an unexpected drop in profit for the first quarter of 2022.
It’s even worse in oil. As in, the gas you can no longer afford to put in your car. Oxfam says Exxon, TotalEnergies, BP, Shell and Chevron combined made $82 billion in profits in the last year. Mind you, profits are what’s left of revenue after expenses have been paid. According to The Guardian, the world’s 28 top-producing oil and gas companies made almost $100 billion in profits in the first three months of 2022 alone. From January to March of this year, Exxon made $8.8 billion in profits, BP made $6.2 billion, Shell made $9.1 billion and Chevron made $6.5 billion. TotalEngergies made $42.3 billion over the course of 2021.
To put further perspective just how much money all this is, Oxfam calculated “a 99% windfall tax on the COVID-19 wealth gains of the 10 richest men could pay to make enough vaccines for the entire world and fill financing gaps in universal health and social protection; one year financing gap for universal pre-primary, primary and secondary education in low income and lower middle income countries; and efforts to combat gender-based violence in over 80 countries, while still leaving these 10 men $83.7 billion (13%) better off than they were before the pandemic.” By contrast, an estimated 263 million people will be pushed into extreme poverty because of the pandemic and increased prices.
Inflation is a complex issue in general, and this time around, there are myriad factors at play: COVID-19, supply and demand, the war in Ukraine … But you can’t look at those numbers and deny that corporate greed is playing a role — arguably, an outsized one.
How can we, as a society, in good conscience, actively support policies that allow a small handful of individuals to rake in billions of dollars while millions of others are struggling just to get by? This price gouging and profiteering cannot be allowed to go unchecked any longer.
