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    Wednesday, May 22, 2024

    Dems scapegoat supermarkets for government’s inflation tax

    Democrats in Connecticut think they have found someone other than their national administration to blame for the inflation ravaging the country: supermarkets charging too much for groceries.

    So state Attorney General William Tong announced last week that he is sending letters to supermarket chains asking about their profits, and Democratic leaders in the General Assembly are proposing legislation to give him more authority to investigate "price gouging" generally.

    It's more like scapegoating than consumer protection.

    While the food industry has suffered much anti-competitive consolidation as other industries have, supermarkets are at the bottom of the food chain and typically their profit margins on products are low. Sales volume is where supermarkets have made their money.

    A Federal Trade Commission report cited by the Democrats as having prompted their inquiry about supermarkets is not so alarming. It says supermarket profits are marginally higher now than they were before the recent virus epidemic and the supply disruptions it caused. But then corporate profits have risen elsewhere as well, perhaps because the epidemic drove many smaller companies out of business.

    In any case most prices of important products and services, not just food, have risen sharply around the world, and food prices have soared even in countries without supermarkets in the American style. So even if anti-competitive conduct can be found in the supermarket business, food price inflation extends far beyond it.

    As for "price gouging," the term is overused in free-market economies, since "price gouging" is possible only where there isn't enough competition. If "price gouging" in food retailing is really a problem, Connecticut Democrats are opportunistically late to discover it — just when their president has presided over more inflation than the country has suffered in decades.

    Even as Attorney General Tong was complaining about food prices last week, the U.S. Postal Service announced that postage rates soon will be raised 7%. This will have taken them up 30% in four years. That inflation is government's doing, not the private sector's.

    In addition, over the long term government expenditures generally exceed the official inflation rate, and most groups getting money from government in Connecticut are clamoring for still more, and it isn't just because food has gotten more expensive. Everything has.

    Taxes lately have not gone up to match increases in government spending, which is a big clue about where inflation is coming from. For both the federal government and state government increasingly are being financed not by taxes but by spectacular borrowing by the federal government, a form of money creation, since the debt is purchased by the Federal Reserve or foreign governments.

    This financing of government via money creation is the biggest part of inflation — and no one in the Democratic federal and state administrations expresses concern about it.

    Practically every day Democratic elected officials in Connecticut congratulate themselves on their disbursement of goodies or grants financed with federal inflation money. They also insist that billions more should be spent on our proxy war against Russia in Ukraine. These devotees of free money paused last week only to blame supermarkets for the dollar's loss of value, confident that journalism would not pose even one critical question to challenge the ruse.

    Local autonomy or not?

    If, as advocates of repealing property taxes on cars maintain, municipal property taxes on cars are unfair because identical cars can be taxed at different rates in different towns, then local autonomy is unfair too, since different rates are the products of local autonomy.

    The big issue behind the car tax is how much local autonomy Connecticut wants. Should all towns operate the same way, with state government making all municipal decisions?

    Connecticut's political economy long has been to make the cities concentration camps for the poor, exploited by the government class ministering to them, provided that people who want and can afford something better can escape to the suburbs.

    Would a consolidated system rescue the cities or just ruin the rest of the state? Who wants to take the risk?

    Chris Powell has written about Connecticut government and politics for many years. He can be reached at CPowell@cox.net.

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