A PYMNTS Company

A Return to Rentiership

 |  June 23, 2023

By: Luke Goldstein (The American Prospect)

In recent weeks, there has been a noticeable shift in mainstream circles towards embracing the once-dismissed theory known as “greedflation.” This theory, also referred to as “excuse-flation” or “choke-flation,” suggests that major corporations have taken advantage of the current period of inflation to further raise prices.

Although economists and pundits are only now beginning to acknowledge its validity, companies have openly acknowledged their use of “pricing power” during earnings calls for the past three years. A study conducted by the Kansas City Fed revealed that a significant portion—around 60 percent—of the inflation experienced in 2021 can be attributed to corporate profits.

The term “greedflation,” like any catchy slogan, oversimplifies the situation to convey a broader message that monetary policy alone may not be sufficient to address the various challenges present in the economy. From a more traditional economic perspective, greedflation can be viewed as a form of rent-seeking behavior. When companies hold dominant market positions, they extract excessive profits from consumers who rely on their goods and services, without contributing to increased productivity or overall economic value…