On the 16th, Jeff Bezos, the founder of Amazon and the world's third richest man, updated the latest episode of the battle of words with the White House. Bezos said the Biden administration's policies are likely to further stimulate inflation. The confrontation between Bezos and the White House began on the 13th. "Do you want to reduce inflation? Let's make sure the richest companies pay their fair share," US President Biden said on social media platforms
Bezos refuted this on the same day that although "high inflation rate" and "company tax level" are issues worthy of discussion, these two issues should be discussed separately, "confusing them will only mislead".
It is rare for Bezos to get involved in political debates on social media. US media said that the public quarrel between the two sides highlighted the friction between enterprises and the Biden administration and Democratic legislators on the issue of inflation. Since this year, Amazon has been seriously impacted by inflation drivers such as supply chain bottlenecks and rising labor costs. In April, Amazon reported its first quarterly loss in seven years. Although this result reflects the economic trend, it also surprised some investors, who have always regarded Amazon as a safe harbor during the epidemic.
According to the latest data from the U.S. Bureau of labor statistics, the U.S. consumer price index (CPI) grew by 8.3% in April, still close to a 40 year high. Some Biden administration officials accused that American enterprises used their strong pricing power to bid up prices and took the opportunity to raise prices at the expense of ordinary consumers. Since the second half of 2021, the Federal Trade Commission under the Biden administration has conducted "anti consumer behavior" investigations on many departments.
Dhaval Joshi, chief strategist of BCA research counterpoint, an investment consulting company, told China business news that the main reason for the rise in inflation is the booming demand for durable goods, which reached a huge demand 26% higher than the trend at the peak. If this distortion is eliminated, the inflation rate will be about 3%. When many services cannot be provided, huge fiscal stimulus measures have contributed to this, leading to the transfer of consumption from goods to services. Even if the volume of products is several percentage points higher than the trend, commodity manufacturers using the just in time supply chain are unable to produce, which inevitably leads to a sharp rise in prices.
Bezos and the White House mouth battle full record
Over the past few days, the debate between the White House and Bezos has ranged from taxes, inflation, the Biden administration's trillions of social spending bills to trade union negotiations.
Last Friday, Bezos responded impolitely to Biden's remarks. "The newly established false information governance committee (the US government) should review this statement," he said. "In fact, this administration has worked hard to inject more stimulus into an already overheated and inflationary economy." "Inflation is a tax rebate that hurts the poorest people the most. Misleading doesn't help the country," Bezos said
Bezos refers to the nearly $2 trillion spending bill that the Democratic Party is still trying to pass Congress, called "build back better", with an initial budget of $3.5 trillion. The bill wants to increase taxes on the rich and large companies to pay for childcare, education and climate change programs. However, due to the opposition of Democratic Senator Joe Manchin, the negotiation of the bill has been deadlocked for many months.
On the 15th, White House spokesman Andrew Bates said in a statement: "it doesn't take much effort to understand why one of the richest people on earth opposes the economic agenda for the middle class, which reduces some of the biggest costs for American families, long-term combat inflation, and helps the president's historic deficit reduction, which requires the richest taxpayers and companies to pay their fair share."
"But not surprisingly," Bates said at the end of the statement, "this tweet was released after the president met with labor organizers, including Amazon employees."
On the 16th, Bezos said: "it's understandable that they want to confuse the topic. They know that inflation hurts those who need help most. But the trade unions do not create inflation, nor do the rich. You know, this government has done its best to increase federal spending by another $3.5 trillion. They failed, but if they succeed, inflation will be higher than it is now, and now inflation is the highest in 40 years."
Bezos was also attacked by former US Treasury Secretary summers on the 16th. Summers called Bezos "mostly wrong" and agreed that the United States should raise taxes to reduce demand and control inflation. And tax growth should be as gradual as possible.
Who is to blame for inflation
Most economists say the inflationary pressure is caused by a variety of factors, including high demand driven by government stimulus measures and insufficient supply caused by the situation in Ukraine and supply chain bottlenecks.
But previously, the White House believed that large companies should be responsible for price increases. Last November, Biden said in a letter to Lina Kahn, chairman of the Federal Trade Commission that "there is increasing evidence of anti consumer behavior by oil and gas companies". He instructed the Federal Trade Commission, "if you find any illegal behavior, please use all the tools of the Commission". Biden later issued the same instruction to the U.S. Department of agriculture, ordering them to "investigate large meat packers who control a large share of the poultry and pork market".
Despite Biden's accusations against large companies, economists are skeptical that antitrust law enforcement will reduce prices. According to a survey of top university economists in the United States released by the Booth School of business at the University of Chicago in January this year, only 5% of respondents agreed that "antitrust intervention can successfully reduce inflation in the United States in the next 12 months". Only 7% of the economists surveyed believed that "companies that dominate in uncompetitive markets use their market power to raise prices" was an important factor leading to high inflation.
In addition, according to US media reports, although the CPI of used cars and energy sectors soared, these are also one of the most competitive rather than lack of competition sectors. In the field of gasoline sales, five major companies operate in the United States, but none has a market share of more than 12.5%. In the used car market, the top 10 used car retailers contribute less than 10% to used car sales in the United States.
Nancy Vanden Houten, chief U.S. economist at the Oxford Institute of economics, told the first financial reporter that at present, the Federal Reserve will try to reduce inflation by raising interest rates, but "solving the problem of supply chain is the necessary condition to reduce inflation, which is largely outside the control of the Federal Reserve. It takes time and depends largely on the process of the epidemic."
Author / elegant