It is interesting to have read an article on The Guardian authored by Robert Reich on a causes of inflation. The article has highlighted recent inflation and its tendencies in the US economy. According to him, the inflation is about 7 percent in compare to the last year. The reasons behind the price increment is the few profit makers kind of monopoly power they been enjoyed.
It is not a perfect competition and free market which has been believed rather it is a deception, asymmetric and manipulation. It is only possible in kleptocracy not in democracy. So, a serious question is do we really have enjoyed the democracy we believed in or are saliently empowering kleptocracy!
Reich has underlined the mocking situation of perfect competition as the companies are not decreasing price to lure more customers to sell more apparently they are increasing prices when the market situation seems murky. The actually are fishing in murky water. Here, bizarrely, big top few companies rake profit but increasing products price too, why? Because they don’t need to reduce price to lure or divert consumers to sell more their products. It does in large numbers of sellers and buyers which a principle of perfect competition market.
But in reality there are many buyers globally for a product but producers are either single or very few in numbers. This why the company do not need to lure, divert customers for their products. For example Pepsi and coke, Apple and Samsung, Google, Facebook, Twitter; their single product has captured the global market. They are not competing each other rather enjoying by raking profit from the globe.
This is not a principle of perfect competition rather it is a greedy monopoly. This is not a democracy rather it is a kleptocracy. He has given several examples such as including Pepsi cola and Coca cola of ‘fixing game’ for increasing price of the similar products. He has mentioned that both companies had hiked price of Pepsi and Cock bit earlier and later in the same occasion. These products are substitutive in each other. Both company deceit the consumers and play in the market by using invisible agreement to increase price. There are other more interesting examples provided in the article by which the article has been more thoughtful and readable.
Robert Reich is a Professor and former secretary of the US government and it is good to read, follow him for the egalitarian thoughts. He provide his thoughts on the Guardian as a columnist.
- Jagadish Wagle | Originally published on INCOMESCO