When corporate profits force 53% of inflation the rats are fleeing Western-style democracy

From 11% to 53% - a 382% worsening of societal norms - requires our discussion

Talk to honest businessmen and they’ll admit it: charge your customer more than 30% profit and you’re cheating them.

Keep in mind that you can only charge 30% for those few goods/services for which you have a real advantage. You are surely providing some goods/services at perhaps just a 3% markup - or at cost, or even at a loss - just to keep your customer returning/in the door.

So it’s not like you’re charging 30% across the board - if you did, your customer would quickly know that they are being cheated and take their business elsewhere. So your average profit margin isn’t 30% but more like 11%.

And, according to a recent report, for the 40 years prior to Covid corporate profits were responsible for just that: 11% of inflation. That makes sense, as the rule of thumb in business is that the standard profit margin is 10%.

However, per the headline, the same study found that corporate profit-gouging in the United States in the second and third quarters of 2023 were responsible for a stunning 53% of inflation.

The gross numbers show a huge jump in post-pandemic profit-taking: In December the US Bureau of Economic Analysis reported $3.3 trillion in corporate profits in Q3 2023 - that’s 50% more than Q3 2017’s $2.2 trillion in quarterly profits.

11% to 53% - a 382% worsening of societal norms - requires our discussion

I’m currently reporting from the United States and that’s taking me to all types of places. The difference in grocery prices in small towns is far less than in city suburbs. Food prices there and in the actual city leaves one sputtering, and that’s even if you’re in a poor part of a city.

I’d say I sound like a complaining old man, but the fact is that the price of food - that most basic of good; even more important than petrol to car-loving (car-requiring) Americans - is just stunning here, and it’s stunningly aggravating over and over and over.

My only consolation to Americans is: You ought to see the prices in Paris! (Definitely stay out of the tourist areas.)

This damning indictment of corporate behaviour was picked up by less than a handful of mainstream media… which are corporate owned, of course. So it’s important to not just be made aware of this report, but to spend a bit of time reflecting on it.

I think the top-line conclusion we should draw from this - an enormous collapse in almost a generation and a half of traditional business morals - is just how drastically more dog-eat-dog Western elites have become since 2020.

It is not the average shopkeeper, gig worker or service provider which has raised their profits 53% but corporations which have stepped over this social boundary of “profit, but reasonably”. When you have to look someone in the face it may be human nature to say, “Ok, I’ll stop at 30%,” but faceless corporations don’t have this inhibitor.

Corporations are most definitely staffed by people with faces, however, and it’s clear the elite corporate class has obviously turned a wrong corner since 2020 - boxing with the Marquess of Queensbury rules has been replaced with awful, cruel, short-sighted mixed martial arts bloodsport.

This metaphor and this alarmist language isn’t out of line - I am doing my best to reflect on these generational changes reasonably. In my reporting in 2020 I constantly faulted my journalistic brethren for doing the most irresponsible thing journalists could have done when the pandemic started: inflaming hysteria and worries instead of responsibly trying to keep a very worried society calm. (Anyone examining things objectively saw very early on that Covid was almost totally attacking the elderly and the sick, and not the youth or the average person, but… anyway.)

The failures by Western elites in 2020 - and since - have their created palpable desperation

So our top-line conclusion is that Western elites are even more dog-eat-dog following 2020, but why?

My answer is: 2020 drastically reduced the Western elites’ faith in their own abilities to manage society, and they are “getting while the getting is good” because they fear it won’t be good for long.

Fifty-three percent of inflation being the result of corporate profits almost three years later is proof of desperation among the elites - don’t confuse it with arrogance. We are talking about people throwing out a generation and a half of moral standards, after all - a 382% expansion of greed must be driven by fear.

Many say that 2020 felt like “war”, and war changes morality. War is very much like a revolution, and the latter always produces the former.

The elites’ failed gambits of 2020 - the disputed lockdowns, the changing of how the presidential vote was conducted, the shamelessly manipulated and discarded George Floyd protests, the hysterical and pro-establishment Red Scare Trumpism Scare - might have merely wobbled their confidence, but we have to include what has happened since: Trump will likely still win the White House, people are so disillusioned with Biden that he’s stunningly the least popular president since 1948, the Western military has irretrievably lost its lustre along with eastern Ukraine, Western monetary policy is so discredited that Bitcoin is now the world’s 11th biggest asset, the Palestinians have dared to rise up in challenge, and no one can stop the world’s richest man from broadcasting both Palestine’s suffering and their victories of the West’s most infamous creation. These are all stunning failures.

The desperation among the Western elite resides in the fact that their answers to what we can call nation-building - maintaining a stable society; the universal human act of good governance - simply do not work. The dysfunctional European Union is the best example of how the West cannot nation-build even among their own culture, much less in Afghanistan or Iraq. The problem is the fundamentally 1%er-dominated tenets of Liberalism, of course.

Thus, 53% is the reflection of a Western elite which is grabbing as much as they can carry while they still can.

Reminder: Not everyone thinks, feels and governs like Americans

And thankfully so.

In 2020 I wrote of how Iran - with its cheap health care - was able to send out hundreds of thousands of volunteers to canvass neighbourhoods to inform people (mainly the elderly) about the problems of Covid, but how the lack of affordable health care made such selflessness financially impossible for the average American, whose civic goodwill would have been just as willing and generous. Nearly four years later, as selfish corporate profits are destroying the West, Tehran was just ranked by The Economist as the 172th cheapest global city out of 173. (How much lower would it be if there weren’t cost-inducing Western sanctions? 173rd, I guess….)

People who tell you to expect a counter-revolution in Iran to break out any day don’t know that half a kilo of bread is $0.07, gas is $0.03 a litre (cheapest in the world), and that keeping the price of chicken low is a constant, multi-decade object of obsession for Iranian politicians. Do some people think that Iranians are so politically illiterate that a Liberal Democratic coup is actually going to provide them with cheaper gas? The West’s shameless price-gouging is simply impossible in a socialist-inspired economy where the state is the majority owner and driver - and, far more than mere Islamophobia, this is why the West has daggers drawn for Iran.

Iran doesn’t have a problem with Liberal Democracy because they had a revolution inspired by Socialist Democracy to dispense with it. The West, however, is asking you to believe that even at a 53% markup Liberal Democracy isn’t pricing itself out of the ideological market.

The West’s Robber Baron Age began almost precisely with the fall of the Paris Commune in 1871 (the term first appeared just seven months earlier in The Atlantic magazine) and that armed, truly treasonous restoration of Liberal Democracy in France via the 3rd Republic. La Belle Époque lasted 43 years and didn’t stop until World War I, aka the War to Forestall Socialism. The West is obviously now at the end of Robber Baron Age II - the common American term the “Gilded Age II” (a term coined by Mark Twain, and whose irony is lost on most) has already been bandied about for four decades.

But there’s no colonial/frontier safety valve like in the 19th century; there’s no recourse to phony, racist nationalism like World War I; there’s no deflection of “at least Liberal Democracy isn’t as bad as fascism” like World War II; there’s no recourse to the hysterical anti-communist wars like during the Cold War; and there’s no “just watch how good we nation-build now that we have no ideological opponents” of the unipolar era.

The West post-2020 - this is how they “nation-build”, and it is atrocious.

Ask anyone in the West: they are exhausted post-2020

It’s not as if Joe Biden or the Democratic Party is offering anything remotely close to a “New Deal”, or a communist revolution, or anything at all to try and end Robber Baron Age II. Western elites have no solution other than fear mongering about the far-right, violently suppressing obviously leftist and patriotic groups like the Yellow Vests and to start wars in Ukraine, Palestine and now Yemen, too.

Capitalists and die-hard Liberal Democrats have many lies to sell you about the reasons for the current inflation, but they are well below the mental cost required to read them.

First off is forgetting that US inflation hit over 4% in April 2021, ten months before the conflict in Ukraine stepped up. The latest is that inflation is being blamed on Yemen’s naval blockade on Israel.

All in between are those perpetual boot-lickers of the rich - followers of the school of Austrian economics - which tells us that literally not “even part” of inflation is caused by corporate profits. (They even resort to these totally absurd absolute terms - I guess “the bigger the lie the more believable” is their logic?) For these blind ideologues it’s worth returning to The Guardian’s coverage of the study which originally spurred this article: “The report’s authors scoured corporate earnings calls and found executives bragging to shareholders about keeping prices high and widening profit margins as input costs come down.”

I don’t know how Putin, the Houthis or Western central banks are responsible for “shrinkflation”. French supermarket giant Carrefour finally booted out Pepsi, after months of publicly shaming them to change their behaviour, for their shrinking of product sizes without a commensurate price decrease.

And I don’t know what else besides a 382% decrease in moral standards is to blame for “crapification” - a widespread perception in the decrease in the quality of goods and services. Of course, when inflation is sky-high but wages are not it would take an Austrian economist to still insist that low-wage workers must break their backs for a customer or boss.

I do know that the current hip term of “greedflation” is more mainstream media nonsense designed to do everything but tell the obvious truths of Western-style capitalism.

2020 changed something in the West - the dysfunction and desperation is palpable, as is the existential dread caused by their hopeless lack of solutions. How much worse is it? Three hundred and eighty-two percent worse is as good a figure as any.

Might be undercounting, though?

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Ramin Mazaheri is the chief correspondent in Paris for PressTV and has lived in France since 2009. He has been a daily newspaper reporter in the US, and has reported from Iran, Cuba, Egypt, Tunisia, South Korea and elsewhere. His latest book is France's Yellow Vests: Western Repression of the West's Best Values. He is also the author of ‘Socialism’s Ignored Success: Iranian Islamic Socialism’ as well as ‘I’ll Ruin Everything You Are: Ending Western Propaganda on Red China’, which is also available in simplified and traditional Chinese. Any reposting or republication of any of my articles is approved and appreciated. He tweets at @RaminMazaheri2 and writes at substack.com/@raminmazaheri