Inflation is the result of too many dollars chasing too fewer goods and services. It takes place because of a decreased manufacturing capacity and disruption and or shortage in the supply chain of distribution. The U.S. economy lost over 20 million jobs in 2020 due to the economic recession and the COVID pandemic which included several major surges. Those conditions and job losses shut down the economy and its infrastructure to a great extent. People stayed home, consumer goods were in short supply and a back log of orders took hold. The GDP in 2020 contracted to a minus 3.4% and the U.S. ended Trumps time in office with the worst job creation record since the great depression of 1928. Unemployment went up and was higher when he left office than when he took office.
President Biden knew something had to be done to bring the economy back, create jobs and reduce unemployment. As a candidate for President in 2020 he had a plan to do so and his number one priority was COVID relief legislation which included a stimulus check, expanded unemployment for those who lost their jobs, child care and other benefits that put money and buying power back into the consumer's pockets. And the consumer was ready to spend. The President also saw that America bought enough of the approved COVID vaccine to vaccinate every American and planned the distribution to do so to keep America safe and working.
The President anticipated what needed to be done and the economy responded by adding over 8 million jobs in Biden's first 17 months in office, a record number in such a short time. The GDP in 2021 was 5.7%, the highest since the 1980's and unemployment continued to fall. Along came inflation because the business community did not anticipate nor did they give much thought that the economy would respond in such a positive way so soon. As a result, manufacturing and the supply chain distribution was unable to handle the demand of consumer spending even though they knew the economy's growth was steady. Inflation took off to what it is today.
The President did his job knowing what had to be done and what the country was facing without action. The business community failed to do their job with manufacturing and the supply chain distribution even though they had the profits and financial means to do so to handle the challenge of consumer needs and a growing economy. We know they had the financial means and profits because of the following information.
(1) The Americans for Tax Fairness and Institute for Policy Studies reported: Between March 18, 2020 and April 15, 2021 the combined wealth of U.S. Billionaires increased $1.6 trillion, a 55% increase. That covered the period of COVID pandemic and we know it is billionaires who control Walmart, Amazon and other major monopolies. (2) The AFL-CIO Labor Union Board that tracks CEO and workers earnings reported just this week that: Average CEO earnings of S&P 500 companies in 2021 was $18.3 million, up 18.2%. The ratio average of CEO earnings to it workers earnings was 324-1 in 2021. 299-1 in 2020 and 264-1 in 2019. (3) CEO earnings of the major corporations have increased every year for the last 6 straight years. The years those increases took place include the pandemic years so their companies were certainly making money. The earnings ratio also tells the great disparity between executive earnings and the average workers earnings are still miles apart.
So, the business community, especially the ones who are monopolies had the financial means to keep manufacturing and the supply chain of distribution running and open to avoid the delay of goods and the inflation we are seeing today. Yes, my fellow Americans, "Innovation, Lost in America's Business Community" the subject of previous commentary here in Politidose is still taking place. And it is still taking place despite the 14% decrease in Corporate Income Tax (from 35% to 21%) thanks to the Trump/GOP tax cuts, tax loop holes and other benefits the business community has been given by a generous Uncle Sam.
President Biden's liberal/progressive innovation economic policy worked to move the country and its people forward. The Business community had no policy or innovation and therefore planted the seed of inflation.
This commentary written by Joe Lorio
Note: The increase in CEO earnings noted in (3) above were all at record levels.
