“Soundbite Economics” Obscures Who’s Causing and Profiting From the Crisis
Capitalism’s apologists are throwing around economic concepts like inflation, recession, labor shortages, and supply chain shortages to justify ripping off consumers, raising rents, and depressing wages. Don’t ask them to define their terms.
A customer shops for eggs at a H-E-B grocery store in Austin, Texas, on February 8, 2023. (Brandon Bell / Getty Images)
A few weeks ago, an obscure video of a years-old lecture delivered in a stuffy Oxford University library resurfaced and made the rounds on TikTok. In the talk, Ha-Joon Chang, a South Korean economics professor at the University of Cambridge, says:
Economics has become a bit like Catholic theology in medieval Europe. It has become the language of rulers. So if you don’t speak economics, you cannot participate in any debate. . . .
But of course they are not going to let you speak it — in the exact same way that the Vatican banned the translation of the Bible into local languages in the medieval times. . . .
Once you create this body of knowledge, which is not accessible to other people, you can basically bully other people into accepting your argument because other people cannot understand you.
Recent years of economic and social upheaval have brought to brighter light how capitalists use the esoteric language of economics to sell the public on class warfare. Since the beginning of the pandemic, capitalists and their allies have blatantly instrumentalized economic concepts like inflation, recession, labor shortages, and supply chain shortages to justify ripping off consumers, raising rents and evicting tenants, and depressing wages and firing workers — and to dismiss anyone who objects to these practices as economically illiterate.
Assigning blame for social problems to abstract economic phenomena lets the real culprits off the hook. A glance at mainstream news outlets gives the impression that skyrocketing rents are a mechanical and inevitable result of inflation. They typically say nothing about increased concentration of the rental market by corporations, landlords withholding units to manufacture lower supply and raise prices, or property owners colluding to keep rents high.
Meanwhile, gas prices in the United States last summer went off the charts, and energy prices left the poor in the UK out in the cold through the winter. What’s responsible for untenable energy prices? Ignore the fact that the oil and gas industry is more profitable than at any point in its history and has been doling out cash to its investors instead of producing more to increase supply. In explaining the trend, ExxonMobil reached instead for euphemisms, claiming that energy consumers’ woes are “largely as a result of a supply-demand imbalance.”
True to form, businesses blamed labor shortages and idle workers for skyrocketing prices, and revered economic experts like Larry Summers claimed we need to fire more workers in order to fight inflation. But as economist Hal Singer points out, reports by the Economic Policy Institute and Institute for New Economic Thinking suggest that the impact of higher profit margins on price hikes is two to three times as large as that of higher wages.
Even the Fed admits that corporate profiteering is driving inflation: in a speech last year, Federal Reserve vice chair Lael Brainard stated, “Reductions in markups could take some of the air out of price increases.” The Federal Reserve Bank of Kansas City was more explicit in a recent report, stating, “Markups grew by 3.4 percent over the year, whereas inflation, as measured by the price index for Personal Consumption Expenditures, was 5.8 percent, suggesting that markups could account for more than half of 2021 inflation.”
As working-class and poor people struggle to pay for groceries and heat, capitalists are now using the excuse of the debt ceiling to recommit to austerity instead of beefing up the welfare state, and are using the Phillips curve to justify increasing unemployment and depressing wages to fight inflation. The problem is that the debt ceiling is not real, and the cure for inflation is not higher unemployment.
There are many more effective alternatives to address the cost-of-living crisis that don’t leave the working class out to dry. We could, for example, raise taxes on the outlandishly large profits corporations are reaping from our crisis, investigate the price gouging that feeds those profits, or explore price controls for certain sectors. Long term, we should reduce our reliance on fossil fuels (as energy is one of the primary drivers of this inflation crisis) and tackle collusion and corporate concentration. But instead of facilitating rational problem-solving, gauzy economic rhetoric is being used as a weapon against those very solutions.
Eggs and Exploitation
Ivory tower economists, Washington bureaucrats, and corrupt politicians are not the only ones responsible for these rhetorical sleights of hand. The media is crucial in manufacturing consent for the economic crisis. For example, the New York Times, in an article about egg price inflation, spends five paragraphs blaming increased demand, global supply chain disruptions, the avian flu, and the war in Ukraine. It then spends ten paragraphs blaming rising wages and labor shortages.
Critically there is no evidence whatsoever that the labor market is responsible for exorbitant egg prices on a macro level. But even all the other factors combined can’t account for the 138 percent increase in egg prices. The missing piece is profit. Egg suppliers like Cal-Maine Foods, which supplies 20 percent of our country’s eggs, saw increased profit margins year over year of 345 percent. The advocacy group Farm Action alleges that suppliers like Cal-Maine are taking advantage of consumers through price gouging and collusion to artificially jack up prices higher than they need to.
In the fifteen mainstream articles I read attributing the high cost of eggs to external forces like the flu, inflation, and supply chain issues — the very first fifteen that were served to me in a Google Search — every expert bar one claiming these causal links is bought and paid for by Big Egg. (This conflict of interest is not addressed in any of the publications; see graph below.) The only expert that is from an objective research group admits that “relatively modest percentage decline in production has resulted in a very large percentage increase in prices.” In other words, the avian flu has not warranted egg suppliers’ price gouging.
|
Pub |
Expert |
Egg conflict of interest? |
Affiliation |
|
Amy Smith |
Y |
Vice president of Advanced Economic Solutions, a food industry consulting firm with egg clients. |
|
|
Emily Metz |
Y |
President and CEO of the American Egg Board, which states that it was created “at the request of America’s egg farmers, who desired to pool resources for national category-level egg marketing. . . . We are honored to serve America’s egg farmers.” |
|
|
Michael Swanson |
Y |
Agricultural economist and consultant for Wells Fargo, “the largest commercial agricultural lender in the United States.” |
|
|
Emily Metz |
Y |
See above |
|
|
Maro Ibarburu |
Y |
Associate scientist at the Egg Industry Center at Iowa State University, which claims, “Founded in 2008, we are proud to continue to serve the US Egg Industry industry today.” |
|
|
Maro Ibarburu |
Y |
See above |
|
|
Maro Ibarburu |
Y |
See above |
|
|
Brian Earnest |
Y |
Animal-protein economist at agricultural lender CoBank, “one of the largest private providers of credit to the US rural economy.” |
|
|
Emily Metz |
Y |
See above |
|
|
Bill Lapp |
Y |
Founder and president of Advanced Economic Solutions, a food industry consulting firm with egg clients. |
|
|
Brian Moscogiuri |
Y |
Global trade strategist at Eggs Unlimited, “one of the largest egg companies in the nation.” |
|
|
Bill Mattos |
Y |
President of California Poultry Federation, a trade association for California poultry producers and marketers. |
|
|
Maro Ibarburu |
Y |
See above |
|
|
Pat Westhoff |
N |
Director of the Food and Agricultural Policy Research Institute at the University of Missouri. |
|
|
Brian Earnest |
Y |
See above |
|
|
Cites reporting from CNN, CNBC, NPR |
Y |
N/A |
|
|
Maro Ibarburu |
Y |
See above |
|
|
Michael Swanson |
Y |
See above |
|
|
Glenn Hickman |
Y |
President of Hickman’s Family Farms, “the largest egg company in the Southwest.” |
The chief economist at UBS Global Wealth Management agrees. In the Financial Times, he writes:
The power of storytelling has conditioned consumers to accept price rises. Imagine a story about a farmer who takes wheat to the windmill, where it is ground into flour, and then baked into bread. In that fantasy world, a rise in the cost of wheat of say 22 per cent might be used to justify a 15 per cent rise in the price of bread.
An economist might splutter incoherently over their morning toast, and point out that only 10 to 15 per cent of the price of bread is attributable to the cost of wheat — the cost of food in developed economies is not about food at all; it is labour costs. But the narrative might seem plausible to many a consumer.
And consumers seem to be buying stories that seem to justify price increases, but which really serve as cover for profit margin expansion. Indeed, the soundbite economics of the Twitter era helps this process along.
The utility of this type of “soundbite economics” is twofold. First, the goal is to compel working-class people to accept conditions. Workers accept higher prices and lower wages, become deterred from organizing or fighting back, individualize and internalize financial pressures, and accept the government’s austerity measures on top. We do not question the economists because, as Ha-Joon Chang says, “Economists are fantastically good at making people believe what they do is very difficult.”
The second goal is to permanently deflect responsibility for creating these inhumane economic and social conditions. Instead of blaming Big Oil and Big Egg for unlivable wages and prices, the working class is fleeced into believing, as Margaret Thatcher infamously said to justify ravaging the UK’s welfare state, “There is no alternative.”
But there is an alternative, and we can take advantage of this moment of economic upheaval to agitate and organize for it. One crucial aspect of that effort is increasing what Chang calls mass economic literacy. “Ordinary citizens need to know what’s going on,” he says. “They need to understand the basic principles of economics and what is wrong with the version they’re getting.”