Roosevelt Rundown

The True Costs of Corporate Markups

May 3, 2024

Corporate profiteering is bad for consumers, workers, and business. Here’s what government can do about it.

The Roosevelt Rundown features our top stories of the week.

(Photo by Scott Olson / Getty Images)

Taking on Unfair Corporate Pricing Practices

Corporate profiteering is hurting consumers, workers, and businesses. On Thursday, Roosevelt’s Alí R. Bustamante testified before the Senate Committee on Banking, Housing, and Urban Affairs about how corporate pricing strategies have fueled inflation—and how the government can restrict these unfair practices.

In industries where corporations have gained significant market power over the years, markups—the difference between the prices consumers pay for goods or services and how much it costs to make or provide them—have ballooned. Recent analysis from Bustamante and Roosevelt’s Ira Regmi found that average markups grew from 48 percent above cost in 2014 to 69 percent above cost in 2023—and that growth is being driven by a few large corporations. Inflation is driven in part by these markups, and research has shown that increased markups also lead to a decline in workers’ wages.

“There are great economic benefits to be gained by reining in markups and unfair corporate pricing strategies,” Bustamante said, “including lower prices in the short term and a more competitive economic environment for businesses and workers in the medium and long term.” Government can make this happen by strengthening antitrust laws, restricting dynamic pricing, and enforcing rules against deceptive pricing practices.

Watch the hearing, and read Bustamante’s full testimony.

 

Promoting Supply Chain Resilience in a Decarbonizing World

“Much of the current trade tool kit was designed for a different point in history with a different energy system,” Roosevelt’s Todd N. Tucker said on Thursday at the Office of the US Trade Representative’s public hearing on promoting supply chain resilience. Tucker discussed three intertwined challenges that the US faces in crafting its trade and investment policy in the face of supply shocks and a changing climate.

First, the climate crisis requires government to balance competing objectives—the crucial imperative of transitioning to a green economy, and the need to do so in a just and equitable manner. Second, the government must incentivize the private sector to invest in clean energy production, the social gains of which outweigh the profit gains to producers. Third, the US must ensure economic resilience at home while navigating complex geopolitical relations.

Read Tucker’s full testimony.

 

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What We’re Talking About

 

What We’re Reading

The Tradwife’s Catch-22 – by Roosevelt’s Shahrzad Shams – Ms. Magazine

The Next Big Energy Fight: Defense Production Act Renewal – feat. Roosevelt’s Todd N. Tucker – E&E News

Is Our Concept of Freedom All Wrong? – feat. Roosevelt Chief Economist Joseph Stiglitz – Freakonomics [podcast]

Workers Taking Center Stage Is Latest Sign US Is in New Antitrust Era – Axios

50 Years of Tax Cuts for the Rich Failed to Trickle Down, Economics Study Says – CBS News