During COVID, corporations blamed supply chain shocks for rising prices while quietly raising prices higher than costs, thereby boosting their profits to record levels. We know they did this because they bragged about doing it on corporate earnings calls. Economist Hal Singer warns that Trump’s proposed tariffs could spark a repeat, giving corporations another “golden opportunity” to jack up prices under the guise of higher costs. He explains why tools like antitrust enforcement and interest rate hikes aren’t enough to stop price gouging—and why failing to curb greedflation could carry a steep political price.
Hal Singer is an economist, antitrust expert, and Managing Director at Econ One Research, where he specializes in competition policy, regulatory economics, and consumer protection. He’s a professor at the University of Utah and a leading voice on market power, price gouging, and the intersection of antitrust and inequality.
Social Media:
Further reading:
Hal’s recent OpEd in The Sling: Progressives Need a New Toolkit to Fight Inflation
How Corporations “Get Away With Murder” to Inflate Prices on Rent, Food, and Electricity
How Trump Is Helping Price Gougers Exploit His Tariffs
President John F. Kennedy News Conference on April 11, 1962
Antitrust Policy for the Conservative
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Nick Hanauer:
The rising inequality and growing political instability that we see today are the direct result of decades of bad economic theory.
Goldy:
The last five decades of trickle-down economics haven’t worked. But what’s the alternative?
Nick Hanauer:
Middle-out economics is the answer.
Goldy:
Because the middle class is the source of growth, not its consequence.
Nick Hanauer:
That’s right.
Speaker 3:
This is Pitchfork Economics with Nick Hanauer, a podcast about how to build the economy from the middle out. Welcome to the show.
Goldy:
I don’t know if you’ve been paying much attention, Nick, but there’s been a lot of talk about tariffs in the news recently.
Nick Hanauer:
Yes.
Goldy:
And of course they’re just kicking in and it takes a while for the stuff we buy to cross the Pacific. Out of our office, if you look out the window, you can see the very empty port of Seattle these days, and that suggests that we’re going to have a supply chain crisis. We’re going to start having shortages. And that suggests, as everybody predicts, that we should be preparing for prices to go up.
Nick Hanauer:
Yes.
Goldy:
And I remember during COVID and coming out of COVID, you insisting, Nick, that we did not have inflation.
Nick Hanauer:
Correct.
Goldy:
It was not inflation.
Nick Hanauer:
Yeah. Inflation is a wage-price spiral. We had higher prices as a consequence of a global supply chain shock. That’s what we had. But we had something else in those prices, which brings me to our guest, we also had margin expansion during the pandemic.
Goldy:
And by margin, we mean profit margin.
Nick Hanauer:
Profit margin expansion.
Goldy:
Much higher profits.
Nick Hanauer:
That’s right. So costs definitely went up because of the global supply chain shock. But our friends who run America’s largest companies used that as cover for raising their prices more than their costs because consumers were so confused and because the norms changed. And what’s relevant about that is that our guest today is an economist named Hal Singer who specializes in these sorts of things. And he’s convinced that the tariff price shocks are going to be similarly exploited by corporate America. He thinks… I know, gasp.
Goldy:
Heaven forfend.
Nick Hanauer:
Gasp. He thinks that there is a good chance that not only are Americans going to be spending more money on products because of tariffs, because of the actual cost of tariffs, but that the corporations will use that as an excuse to pad their margins even more. I know it’s hard to believe that corporate America would do such a thing.
Goldy:
No. Well, they may want to do such a thing and try to do such a thing, but if I know my introductory economics textbook, I know that that’s impossible because in a competitive market, they’re competing for consumers and that competition will always lead to an equilibrium price in which society benefits.
Nick Hanauer:
Yeah, probably not. Well, I can’t wait to talk to Hal Singer.
Hal Singer:
So my name is Hal Singer. I’m a professor of economics at the University of Utah. And I’m also managing director of Econ One, which is a litigation consulting firm.
Nick Hanauer:
So Hal, before we get to your recent Twitter thread where you warned that Trump’s tariffs could spark another wave of price gouging, we thought it’d be more useful for you to just lay out your perspective on how pricing works today and the ways in which it, in real life, deviates from that Econ 101 supply and demand model.
Hal Singer:
I think that the biggest concern that I have today is that I fear that firms through technological innovations and basically just running around the law, are figuring out ways to coordinate their pricing decisions. We’d like firms to price independently. But think about the proliferation of common pricing algorithms, not just for rents, but you also see it in hotels. And now we have this new crop of consultant named a pricing consultant or a pricing strategist, and I’m very concerned about what kind of mayhem that could lead to. If you have one consultant who’s advising two firms in the same industry, it seems like it’d be very easy to use that common pricing consultant to perpetuate a pricing [inaudible 00:05:11].
Nick Hanauer:
If that’s not collusion, what is?
Goldy:
Well, it’s not collusion, Nick, because the two firms aren’t colluding with each other. They’re just getting advice from the same consultant that’s advising both of them.
Nick Hanauer:
Yeah, yeah.
Goldy:
Right? It’s a perfectly legal loophole.
Nick Hanauer:
Oddly, it works exactly the same way on executive compensation. You’ve got the same consultants going to every board saying, “Your CEO is really underpaid.”
Hal Singer:
You would hope that some of this could be caught up in the trust laws. And that’s of course where I practice. The problem is that this area is gray. It’s new. Common pricing algorithms is new. It involves information sharing, and there’s some types of information sharing that courts think are okay. And there are others that the courts think are not okay. But the real problem in my mind is just that it takes way too damn long to prosecute a price-fixing case via antitrust. I do this for a living and I’ve got cases five, 10 years long. That is not the way to get out in front of inflation.
Nick Hanauer:
That’s right. But also, just to be clear, the other big problem is that in almost every important industry you have the kind of consolidation which makes coordination incredibly easy.
Hal Singer:
That’s right. This is just a, I don’t know why this was so controversial, but it’s just a basic tenet of economics that coordination is easier, all things equal, in a more concentrated industry. This is just so obvious. But if you’ve got a hundred atomistic firms in a highly competitive industry-
Nick Hanauer:
You can’t coordinate prices.
Hal Singer:
… it’s like herding cat. Yeah, how would you do it, right?
Nick Hanauer:
That’s right. You cannot do it.
Hal Singer:
With real estate agents, there’s famous stories about going to conferences and everyone stands up and pledges to raise their rates a certain amount. But other than that, yeah, it’s hard. It’s hard. The more people there are, the harder it is.
Nick Hanauer:
Because in a truly competitive market, there will always be some firms who are desperate for more business, who desperately need more volume. And certainly that was the way it was in my family business industry, which is the home textiles industry. There was always some clown who was going to go bankrupt if they didn’t increase their volume. And so pricing coordination was impossible. Right?
Hal Singer:
Yeah, but I worry. Look, competition is going to help a lot. If we can de-concentrate some of these industries, we’d be much better off, but I don’t want to hold it out as some elixir that’s going to bring us back. We have real big problems. I mean, you’re not going to outrun common pricing algorithms. It doesn’t matter. You could have thousands of atomistic firms. If everyone’s turning over their pricing authority to some common algorithm or some common consultant named Joe, it doesn’t matter how unconcentrated the industries are, you’re going to get price. And then we can talk too about information asymmetries. But I’m just worried that competition, it is helpful, but it’s not going to deliver us to the promised land. We need a lot more.
Nick Hanauer:
Okay,
Goldy:
See, you call it collusion, Nick, but some people call it a single representative agent. So all this consolidation just makes the models easier and more accurate to… The market’s going to reach its equilibrium price.
Nick Hanauer:
So just speak a little bit more about the way in which pricing has decoupled from cost in so many industries. Because you’ve made that argument before and I think it’s a very important argument.
Goldy:
Also, was it ever that strongly coupled to cost?
Hal Singer:
Well, I can’t claim that I know… This is what we know is that profits and the profit share of output have exploded since COVID. So something fundamentally changed in this experiment. It’s gone awry. And I guess profits could go up for one of two reasons. You’ve got demand-based reasons, that demand shifted out. And this can work for certain… There’s some stories you could tell here for durables. There was talk about how demand after COVID shifted out for certain durables. People thought they were going to change their behaviors. And maybe you could tell a story there. But the demand-side stories don’t really work very well for things like rent or auto insurance or eggs. I don’t think people are demanding more eggs today than they did five years ago on a per-person or per-family basis.
So there, I think that the most logical story that can explain the explosion of profits, which have been estimated by about five different studies, by the way, that contributed about half of the inflation, that drew about half the inflation. The best story that I can tell is that firms were able to exploit a bad situation by raising their prices by more than what their costs went up by. That to me is the simplest story as to how you get higher profits, higher inflation.
Nick Hanauer:
There is simply no doubt of that.
Hal Singer:
Well, I don’t know. A bunch of mainstream-
Nick Hanauer:
Well, they were bragging about it on the quarterly calls.
Hal Singer:
… a bunch of mainstream economists poo-pooed the idea and they can come up with stories. But what I fear is-
Nick Hanauer:
Okay, but those stories are based on assumptions which do not pertain to planet Earth.
Hal Singer:
Yes, but they do appeal to their corporate funders, however.
Nick Hanauer:
Oh, yes, they do. Of course.
Hal Singer:
And so those stories will be spun until the day we die.
Nick Hanauer:
Yeah. But anyway, this gets to your recent insight or the thread, which is-
Hal Singer:
I do have a piece behind that thread, by the way. It’s under review somewhere.
Nick Hanauer:
The tariffs will function in largely the same way as the pandemic. It’s yet another excuse to raise prices.
Hal Singer:
Yeah. And what’s interesting, it’s the same mechanism of course during COVID, but strangely, the mainstream, and I affectionately referred him as the Vox voice. I won’t mention him by name, but one of these guys actually embraced me yesterday, even though it’s the same story that I was telling during COVID. For some reason, I think it’s that they’re opposed to the tariffs. And so they’re naturally glumming onto the story now because it’s being applied in the tariff context, but it’s the same fact pattern. You’ve got a common shock that’s raising cost. You have massive information asymmetry that I think we’ll get to later on, hopefully. But the consumers basically don’t have any clue as to the extent to which your costs are going up. And these price hikes are justified. And as we mentioned at the top, it’s happening in industries that are highly concentrated or coordination is easier. And they’re coming at us with all sorts of new technologies, surveillance pricing, which is a customized pricing based on our particular preferences and demand, common pricing algorithms, common pricing strategists.
So I think that you’ve got the same ingredients for something going horribly awry once more. I’m glad to have the mainstream guys in our camp this time around. It would’ve been been nice to have them during the COVID, but that’s okay. One out of two ain’t bad.
Nick Hanauer:
There you go. So talk a little bit about information asymmetry.
Hal Singer:
So I think what happens is that consumers get primed to expect a price hike. I mean, the business press just kind of feeds this. You almost get it on a daily basis. “Costs are going up, costs are going up.” The only way these firms can survive is by raising price. So as a consumer, you sympathize with the merchant because you think that he needs a break, he needs to go up, and this is justified. Now, the problem is you don’t know the extent to which his cost truly went up. Just to take the tariffs. You don’t know where the inputs are coming from, which country rate would apply. What portion-
Nick Hanauer:
Impossible to know. By the way, even if you run the company, it’s hard to know
Hal Singer:
I know, but what portion of the cost is exposed to a tariff. And then finally, what tariff applies. Trump is literally changing them daily, sometimes by the minute. So it’s just an impossible thing. So you have this huge information asymmetry.
I learned a word the other day that I just want to make sure you guys got because it was in a DealBook story. And the phrase that pricing consultants are now using is called taking price. Have you ever heard of it? Taking price?
Nick Hanauer:
Price taking.
Goldy:
Price taking.
Nick Hanauer:
[inaudible 00:13:21] let me know that this phrase came up a lot during investor earnings calls. But taking prices when you raise prices, not because your costs went up, but because others in the industry went up and you can just mimic them. That’s called taking price. Pure margin, pure windfall. Anyway, I learned a catchy phrase. I was excited about that. But that’s an example I think, of information asymmetries that are contributing to a certain level of price taking price gouging.
Goldy:
I’m curious, what is the consensus these days, what do economists think actually causes inflation? Because in the time we’ve been talking, a headline flashed across my screen, breaking news that the Fed held interest rates steady amid concerns that President Trump’s tariffs would stoke inflation and weigh on growth. Which seems weird because if you’re worried about growth, you’d want to reduce interest rates. So what is the theory here? Keeping interest rates high? What do they think causes inflation?
Hal Singer:
Oh, I think that inflation expectations are high, and a bunch of leading firms are announcing price hikes already, or their intention to raise prices. In this case, I was pretty harsh on the Fed, I got to say, during Biden. I don’t know if you want to talk about that. I felt like they completely misdiagnosed the problems [inaudible 00:14:39].
Goldy:
Yeah.
Nick Hanauer:
100%.
Goldy:
Yeah.
Nick Hanauer:
100%.
Goldy:
Oh, we’re going to take the thing that prices are rising the fastest in, housing, and we’re going to shoot interest rates through the roof to make it more expensive to construct and buy.
Nick Hanauer:
Right.
Goldy:
Good job.
Hal Singer:
Yeah. So by raising the interest rates, we are channeling demand that would’ve otherwise gone to housing into rents, which put upward pressure on rents. Be careful. You sound like you’re channeling your inner Hal there, I don’t want you to go full commie on me during this podcast.
But I think Trump is putting them in a bind. I think that had he not been speaking of tariffs and had the economy just naturally slipped into a recessionary state, I don’t know if he helped it go that way, but it certainly looks like we’re headed that way, I think that the Fed would’ve been sympathetic and they would’ve cut rates. But I think they were rightly are scared that we’re on the cusp of some inflationary outbreak, and they don’t want to be fanning the flames of the economy, fanning the sales as inflation takes off.
Nick Hanauer:
Yeah.
Goldy:
I’m trying to remember. I think it was Mike Consol who had this piece talking about the Fed and talking about how the Phillips curve disappeared and the Fed doesn’t know why. They just don’t want it to come back. And so they’re being really cautious with interest rates out of fear that somehow… And by the Phillips curve, we mean that relationship between inflation and unemployment. So the Fed doesn’t know why it disappeared. It seems reading your stuff that it’s pretty obvious why the Phillips curve might’ve disappeared, and that is we totally disempowered labor.
Hal Singer:
Oh yeah, the relationship now between labor… Well, look, if we can go do a little history, in 2020, you had a lot of mainstream economists start off by blaming labor and wage increases as the cause of price inflation. Fortunately, that went away. That kind of talk went away. But then they came up with demand side stories.
Nick Hanauer:
Completely nuts.
Hal Singer:
They were trying so hard to get attention away from the actual parties who were raising prices. And I think this problem is rooted in, can’t think of a nicer way of putting it, but corruption of the profession. I mean, the profession is so dependent on corporate funding. Your funder doesn’t want you to tell stories that implicate your funder, just to be obvious. So economists will bend themselves in pretzels coming up with stories that deflect attention away from corporations.
Nick Hanauer:
Yeah, yeah. They were confusing a wage price spiral for a global supply chain shock.
Hal Singer:
Initially.
Nick Hanauer:
Just nuts.
Hal Singer:
But let me tell you though, I do sympathize with them. Their mandate, I mean, they have a dual mandate. One of them is to stamp down on inflation. They have one tool. The one tool cuts off-
Nick Hanauer:
If you’re a hammer, everything looks like a nail. I know. I know.
Hal Singer:
I know. But let me tell you what they’re doing. They have one tool. It’s based on a theory of demand-led inflation, which we didn’t have after the first few months of COVID. And they used the tool. In their defense, no one was helping them. There were tools that Biden could have used. I even got invited to the White House and I told them about these tools. They were not willing to use the tools to fight inflation.
Nick Hanauer:
What were the tools?
Hal Singer:
They put the whole onus on the Fed and we got what we got. So we can go through them. Kamala eventually got to a federal price gouging law. We have several state price gouging laws, but it’s not federal yet. And the idea here is that during a crisis, you can’t exploit a crisis to pad your profits. It’s very simple. I don’t even know who could be against that concept, but it would tolerate price-
Nick Hanauer:
Well, I can think of plenty of people who could be against that process.
Goldy:
The price gougers.
Nick Hanauer:
Exactly.
Hal Singer:
I know, the price gougers and their army of economic consultants.
Nick Hanauer:
The Chamber of Commerce will be very, very against that.
Hal Singer:
Aside from them, it’s okay to raise prices during a crisis, but you can’t exploit the situation by raising price by more than your actual cost increase. So if you were investigated, you’d have an opportunity to demonstrate and justify on a cost basis while your prices went up. But if you couldn’t, then you would be smacked down.
Nick Hanauer:
Yeah, but if your margins during a crisis go from 7% net to 10% net, obviously there’s a problem.
Hal Singer:
So let me just tell you. So that’s one. Can I kind of roll through my [inaudible 00:19:01].
Nick Hanauer:
Yeah, yeah, yeah, please.
Goldy:
Sure.
Hal Singer:
We have the bully pulpit… This is in no particular order, but there’s a great story I want your listeners to know, and you probably know it, but it was JFK and the steel price hikes that started rolling in within weeks of him becoming president, they all went up in unison. And JFK gave a speech where he effectively called the steel makers and they walked back the price hike. I mean, he recognized that if that were to start, it would be a cascade that would ripple through the economy and potentially doom his presidency. So if you Google bully pulpit Kennedy, this is the story that you get.
Kennedy:
“Simultaneous and identical actions of United States Steel and other leading steel corporations, increasing steel prices by some 6 dollars a ton, constitute a wholly unjustifiable and irresponsible defiance of the public interest….at a time when restraint and sacrifice are being asked of every citizen, the American people will find it hard, as I do, to accept a situation in which a tiny handful of steel executives whose pursuit of private power and profit exceeds their sense of public responsibility can show such utter contempt for the interests of 185 million Americans.”
Hal Singer:
And so what frustrated me about Biden, and I think Trump, I’m not a fan, but he’s at least willing, and we’ll go into the egg story in a bit. Biden went about as far as calling out people for putting not enough chips inside of a bag of chips. I can’t remember, but there was shrinkflation. I was like, “Come on. That’s what you’re going to do. You’re going to use the bully pulpit to be mad at people about chips in a bag? I mean, call out industries, call out names.” And so this leads to my-
Nick Hanauer:
Yeah, they just couldn’t bring themselves to do it.
Hal Singer:
They couldn’t bring themselves to do it. Well, and they had good advisors, but I think they unfortunately had some bad advisors too. They had some guys that were in the Larry Summers camp, including Larry himself. They were telling him, “Don’t blame corporations for this.”
But number three, what I would like to see is, if the inflation in industry like eggs, like auto insurance is double the size of general inflation, I would like to see an automatic inquiry occur, potentially by the DOJ, by the FTC. Now, look what happened with eggs. The egg guys, I don’t know if you’ve ever read Basel, but Basel has great writings about how consolidated the egg industry is. And they have of course been investigated under the antitrust laws for prior price fixing arrangements. But inflation was spiraling, spiraling. You probably heard people talk about it through the election, and even into early parts of this year. Trump’s DOJ announced an investigation into the egg industry. And guess what? They knocked it off.
And so I don’t want it to happen this way because I don’t want it to feel like it’s politicized. I just feel like there should be automatic inquiries that get triggered if your industry is running it twice the national average of inflation. Why did the DOJ announce an inquiry into eggs but they didn’t announce one into auto insurance? Why is what the egg guys are doing and a less sinister than what the auto insurers are doing?
Goldy:
Obviously, because the egg guys didn’t buy enough of that Trump crypto.
Nick Hanauer:
Pretty much. Yeah.
Hal Singer:
And then I’m also excited about just outright bans. Several cities including San Diego has now banned . You probably heard about this
To me, it’s so obvious that you can’t allow rivals to turn over their pricing authority to some common agent. It doesn’t matter if it’s a sophisticated algorithm or some unsophisticated schmo named Bob who’s a pricing consultant. You can’t turn it over to a third party. And so the idea that we should tolerate RealPage on the front end and then prosecute them via the antitrust laws. I mean, it’d be great business for me and for defense attorneys, but it’s horrible for consumers in the interim.
Barcelona, there’s a great story about how Barcelona is trying to rest rental inflation, and they’ve just banned Airbnb. The idea that people can take properties that would otherwise be long-term rents and move them into daily or weekly rentals. It’s just creating an imbalance in supply and demand and putting upward pressure on rents.
But I’m now in favor of all tools. They’re coming after us. I don’t mean to use a war analogy, I don’t want to demean people who are fighting real wars, but they’re coming after us like full artillery. And we have one tool, which is antitrust, which takes five years, and then we’ve got the Fed. And that’s all that we deployed. We were only willing to deploy two tools during the Biden administration. And if we ever get to see another Democratic administration after this, I would hope that they’ve learned a lesson and they’re never going to allow inflation to be the reason why they get voted out of office. When you allow prices to rise for basic necessities, you’re going to convert a whole bunch of voters who now are open all of a sudden to the idea of an autocrat. Democracy can melt away in the face of inflation. So I feel like they missed the alarm bells and we can’t ever let it happen again.
Nick Hanauer:
That’s such a great point that I had never considered. And I mean, just to underscore a couple of things that you’ve just said is that if you’re dealing with prices, you’re right, antitrust is an important thing, and corporate concentration is a thing, but my God, we’re talking about a 20-year battle here. There’s nothing that is going to happen in the near term that is going to affect this trajectory soon. And the Fed-
Hal Singer:
Certainly not during a presidential administration [inaudible 00:24:23].
Nick Hanauer:
And by the way, these legal cases are just a cost of doing business for most of these firms.
Hal Singer:
Oh, God.
Nick Hanauer:
Right? I mean, you get a little bit of a fine, but in the meantime, you made tens of billions of dollars. It doesn’t mean anything, right?
Hal Singer:
I do a lot of work in this space, and I watch it just drone on. The evidentiary burdens are huge for the plaintiffs. And then if you make it past a few thresholds and the defendants come forward with the settlement offers, there’s big incentives for the plaintiffs to settle at that point. So it almost pays.
Nick Hanauer:
No, sure it pays.
Hal Singer:
It’s sad, but it pays basically to cheat,
Nick Hanauer:
Right.
Goldy:
Wow, crime pays.
Nick Hanauer:
And sadly, we don’t criminalize these things. So if you started throwing CEOs in jail, that would start to make a big difference.
Hal Singer:
Yeah. I’m a fan of that idea. But again, my message for you is we don’t want to lean exclusively on antitrust. We’ve done that experiment. That was the Biden administration. You can’t be more antitrust than the Biden administration was.
Nick Hanauer:
Right.
Hal Singer:
Right?
Nick Hanauer:
And in 20 years, maybe it will make a difference. But certainly isn’t going to make a difference in the near term.
Hal Singer:
You’ll be voted out of office [inaudible 00:25:34] for that.
Nick Hanauer:
Interesting. Interesting. So I mean, we’ve circled around this. We used to ask the benevolent dictator question, but that’s making Goldie queasy now. He thinks we should ask the magic wand question. I don’t know why. But if you-
Goldy:
Well, I’ll tell you why. Because I used to joke about how if he made me benevolent dictator, I would not put too many of my enemies in camps. And I can’t make that promise anymore. I’ve been radicalized. And if you make me benevolent dictator, I won’t be benevolent. I’m going to exact some retribution because I think that retributive justice is what’s going to be necessary if we ever come out of this regime.
Nick Hanauer:
Yeah,
Hal Singer:
I’m with you. I’m with you too. I think you need enemies. I don’t know why Democrats can’t have enemies. You got to have enemies. Name your enemies and explain what you’re going to do. Someone called me the other day and was asking me if they were going to support their campaign. I won’t say for what or where. And I said, “What are you going to do to Elon? How are you going to punish Elon?” And he didn’t have the answers at the time. And I said, “Work on that. I want that to be part of your pitch.”
Goldy:
He was here illegally on a student visa. I say we revoke his citizenship and deport him back to South Africa. If he’s lucky, South Africa. It could be El Salvador.
Nick Hanauer:
El Salvador would be fine.
Goldy:
Yeah.
Nick Hanauer:
We’re sending people to Libya now. Okay, but-
Hal Singer:
Sounds nice. Is there Four Seasons there?
Nick Hanauer:
But we digress. Hal, if you were in charge, tell us what you would do. Just recap the-
Hal Singer:
Yeah, so I think these are the ones. Automatic investigations if you’re exceeding average inflation, automatic from the DOJ. It shouldn’t require the president making a phone call to the DOJ and then it sounds like intimidation at that point. Just automatic. I want to see more bans.
Nick Hanauer:
In times of crisis or just anytime?
Hal Singer:
Well, now I feel like we can’t get out of crises. I mean, when were we not in a crisis. It just seems like we’re lurching from one to the next. But I feel like if we got another chance in, I guess ’28, I’d want all these things in place. I’d want to have a whole array of tools that would prevent anything from ever happening like what it did under Biden again.
Yeah. And so bans, I want to see bans. Antitrust is there.
Nick Hanauer:
Bans on what? Bans on what?
Hal Singer:
Oh, I want to see it outlawed, ideally at a federal level, the use of an agent, whether an algorithm or a human being, to set your prices where that agent is also setting the prices of your rivals. We should not litigate these cases for five years under the antitrust law. To me, there’s no plausible, we use this fancy word, deficiency base. There’s no good story as to why you’d want to turn over your pricing to an agent. Now, if that agent [inaudible 00:28:33].
Nick Hanauer:
Other than to collude.
Hal Singer:
Right, to cheat. Yes, yes. So I don’t know why it’s happening, why we even tolerate it. And these pricing consultants are bold. They’re going into the media and they’re talking about the techniques that they’re using to advise firms in the same industry. They’re talking about taking price. Oh, they even use this great phrase. They said tariffs were a “golden opportunity.” DealBook thought it was doing a good by these guys they interviewed, but every time they open up their mouth, they say something that implicates their scheme, that reveals their scheme, which is basically to figure out a way to screw the public. So I wouldn’t even tolerate these guys. It’s beyond me why they get to employ these sorts of businesses. And I just fear that coming after them with antitrust, which is a statement against my own economic interest, that’s what I do, is the way to proceed.
Nick Hanauer:
Yeah. Anything else?
Hal Singer:
Well, we talked about bully pulpit, automatic investigations. I feel like we’ve ticked through the big ones when you asked me the first time, I can’t think of any other ones that I could come up with.
Nick Hanauer:
Great. That’s great.
Goldy:
How about rewrite the economic textbooks?
Hal Singer:
I mean, would that solve things? I think our economic textbooks are going to be rewritten in light of what happened. We did not have a paradigm that was up to speed to understand what was happening in 2020. And then when the people who came out and started suggesting it, they were largely ostracized. I don’t know if you remember what Isabella Weber went through. Paul Krugman, God bless him, wrote a piece in The New York Times defending higher rents. The story was that we needed more space in our homes because more of us were now working from home. And if everybody needs a little more space, that shifts up the demand curve. And that’s going to cause rents to go up. I mean, this is a leading liberal economist who was peddling a demand side story to millions of readers of The New York Times deflecting what was really going on.
Anyway, so yeah, I do feel like we need a new textbook, need a new paradigm.
Goldy:
Right. Just for other purposes, I’ve been reading through Mankiw’s Principles of Economics, the introductory textbook, and he literally says that because buyers and sellers consider price in a market, prices reflect both the value of a good and the cost of making it. So if the price goes up, the cost has automatically gone up. And that’s what you’re teaching. And that is the only econ class that if you take an econ class, that’s the only one most people take. They don’t get beyond that level of teaching. And these are the people who are our politicians and our policy makers and our journalists and our pundits and so forth. They’re not economists who have gone on to higher levels. So I think there’s a real corruption of our nation’s youth in our introductory-
Hal Singer:
The big takeaway that you get in an economics course, undergrad, is that the market forces will work these things out. If there’s a bad actor, he will be stamped out through competition. And we don’t need an intervention by the government because the market forces are just going to take care of things. I think that’s the takeaway from an undergraduate economics course.
Goldy:
And that means these higher prices are-
Hal Singer:
Are justified.
Goldy:
Right, they’re the equilibrium
Nick Hanauer:
The definition.
Hal Singer:
Yes.
Goldy:
Yeah. And so we shouldn’t do anything to mess with it. And I think a lot of the reluctance you see from mainstream Democrats is that this is how they learned economics, and they’re not sufficiently schooled to question these basic principles.
Hal Singer:
Yeah. Well also when they say something, like it was a big deal for Kamala to say something about price gouging, but did you see how she was immediately hit by the neoliberals? I mean, Trump called her a communist. You’d expect that. But Catherine Rampell called her a communist in The Washington Post. And so this is the reaction. And so what happens is if you take an aggressive posture, God forbid, is against corporations, it’s going to be really hard for you to raise funding in a campaign. I feel like the whole rules are rigged to produce neoliberal candidates who are corporate apologists, because that’s the easiest way to get into office.
Nick Hanauer:
Yeah, for sure. Hal, one final question. Why do you do this work?
Hal Singer:
Oh, yeah. Well, when you say this work, so I do antitrust litigation, that’s my bread and butter, but I also do some consumer protection stuff. And I don’t do that for free, you should know. We get paid by the hour. We don’t get a percentage of the settlement. So it’s not like I’m doing it purely out of love. But of course, the defense guys are getting paid some multiple of what I’m getting.
But I do like to dabble in the policy space as well. As part of my gig at Utah, I was asked to run a center called the Utah Project, straddles the law school and the economics department. And I put on something for conferences while I was there highlighting the regulatory, and yes, interventionist efforts of the Biden administration. We had Lina Khan and Joey Chopra, Alvaro Bedoya, Jonathan Kanter. And I’m hoping that we can do that as well under the Trump enforcers. I’m hearing something, I don’t know if you read a speech that the new FTC commissioner gave about the conservative case for antitrust. But there’s been a big sea change, I mean with the head of the DOJ antitrust right now. But also you heat it in JD Vance, you here in Josh Hawley. But there is a different attitude, at least among some Republicans, about the role of antitrust enforcement now. And so I hope I could use my platform to promote those guys as well. So we’ll see. I enjoy doing that.
Nick Hanauer:
That’s great.
Goldy:
I’m sure they’ll do a very good job breaking up woke industries.
Hal Singer:
They have supported a lot of causes that are surprising. DOJ has made appearances in cases, including one of my own, so I won’t even mention it, on the plaintiff’s side, which was interesting. And they upheld the those cases against the big tech firms, the DOJ and the FTC. So it’s not just going after wokeness. They do seem to recognize that concentration of economic power is a threat, in their mind, to liberty. I think to progressives is a threat to things like equality and opportunity. But it’s fine. I mean, so long as we all get to the same place, they should be welcomed.
Nick Hanauer:
Yeah, for sure.
Hal Singer:
One big happy camp. They’re rejecting the libertarians in their party, not just on free trade, but also on antitrust. You got to find your wins. And this is-
Nick Hanauer:
Yeah, yeah, yeah. No, no, no. For sure. For sure.
Goldy:
I think Nick and I agree that the neoliberal era is over. They have some neoliberal policies, but this is not an administration driven by neoliberal ideology.
Hal Singer:
From your words to God’s ears. But the problem is that the neoliberals are so well-funded, this whole abundance agenda. And there’s a huge camp, and they’re powerful. They’re at The Times and Vox I mentioned before, and Matt Yglesias has a big following. He had a big influence, by the way, in the Biden White House. So I wouldn’t count them out just yet. Where there’s money, there’s a way,
Nick Hanauer:
For sure. Well, it was great to have you on the podcast. Really nice to meet.
Hal Singer:
Yeah, it was fun. We should do it again sometime.
Nick Hanauer:
Absolutely.
Well, Goldy, that was a fascinating conversation. And I must say that I was really struck by a couple of things that Hal told us. The first is this incredibly obvious point that you’ve got the enormous economic power of corporate America on one side, and you have these two puny tools on the side of consumers, which is the FTC and the Fed. And the Fed, really, the Fed has only one tool, which is to increase interest rates, which can push the economy into a recession. But that is no good way to get higher prices.
Goldy:
To get them down. And let’s be clear, a lot of pundits gave the Fed credit for the so-called soft landing.
Nick Hanauer:
Which I think was nonsense.
Goldy:
And understand that their ultimate goal was to get inflation down. But their approximate goal, the tool they were using was they were raising interest rates in order to slow growth, in order to cause layoffs to increase unemployment. Their approximate goal was to push up unemployment so as to push down the power of labor to demand higher wages. That is why you raise interest rates in the face of inflation. And they failed at the proximate goal. We did not get that one year of 10% unemployment or two years of 7% unemployment that Larry Summers said we needed to get inflation under control. We had near record low 4% unemployment throughout, and it still came down. So that one tool they had, it didn’t work at its proximate goal.
Nick Hanauer:
Yeah, exactly. So anyway, here we are. And I think it is really interesting that there are other tools available. I think certainly he’s right about banning this price coordination industry, whether it’s people or technology. And I also think he’s almost certainly right about triggering price fixing investigations automatically if a company’s profits rise faster than inflation, that there has to be a way to begin to get to this stuff. I mean, I think at the end of the day, corporate consolidation is the biggest enemy that we face and it’s just going to be so hard to wrestle that to the ground. And it can’t happen or unlikely to happen very quickly.
Goldy:
I think the big takeaway for me, Nick, is that these episodes are starting to blow a hole in the consensus, the common belief that somehow prices are connected with cost. That it’s the market that is setting these prices higher, when in fact it is corporate executives making explicit decisions to take advantage of an opportunity when people are expecting higher prices in order to raise prices. And remember, these prices are sticky. They don’t come down for the most part. Once you set that expectation higher, they’re stuck higher, and those margins remain higher, which is what we have been seeing for 40 years is the shift of GDP from wages to profits.
Nick Hanauer:
Right. Absolutely.
Goldy:
And it’s been going on. And this may seem like a weird little tangent, but I’m curious, are you a condiments guy, Nick? Do you like condiments?
Nick Hanauer:
Very much?
Goldy:
Okay. Do you have a favorite or perhaps only brand of ketchup?
Nick Hanauer:
Of course.
Goldy:
And it’s Heinz?
Nick Hanauer:
Of course. Of course it is. Of course it is.
Goldy:
It doesn’t matter the price difference between Heinz and Hunt’s or the store brand, I’m always going to buy Heinz, right?
Nick Hanauer:
Correct.
Heinz is a very unique example. It’s same with Tabasco.
Goldy:
No, it’s not.
Nick Hanauer:
Oh, come on, it is.
Goldy:
What’s your favorite brand of mayonnaise?
Nick Hanauer:
It doesn’t matter.
Goldy:
Oh, to you. It does to me. On the East Coast it’s Hellmann’s, on the West Coast its best foods.
Nick Hanauer:
Whatever.
Goldy:
It’s the same mayonnaise.
Nick Hanauer:
I’m only buying that brand because that’s what mayonnaise tastes like to me because that’s what I was raised with. And there were other things. There are some people who are Coke, not Pepsi or Pepsi, not Coke. The point being that there’s a lot of things in the market that there isn’t that much elasticity.
No. I mean, I guess if ketchup was $100 a bottle, you wouldn’t buy it.
Goldy:
Yeah. Right.
Nick Hanauer:
But I mean, we could do a whole podcast on Heinz ketchup and the astonishingly perfect formulation that that represents. There have been academic studies on it about-
Goldy:
The history of it is amazing.
Nick Hanauer:
Did you know that?
Goldy:
No.
Nick Hanauer:
It’s amazing. I mean, are you familiar with the academic studies on Heinz Ketchup?
Goldy:
No, but I am familiar with the history of Heinz and how they were instrumental in getting the Pure and Food and Drug Act passed.
Nick Hanauer:
Okay. I don’t know anything about that. But there’s a whole nother podcast to be done on ketchup. But I definitely think that stronger, bigger, better, different, more tools need to be used to try to rest some of this stuff. And the political point he made, I think was very profound, which is in a world where during an administration, half of the price increases were corporate profit-taking, basically taking off the table any of the tools that would enable you to push back on that is just terrible politics. And put aside everything else.
Goldy:
Right. And almost certainly inflation is what cost the Democrats the election.
Nick Hanauer:
Yeah, 100%.
Goldy:
And I got to say, I don’t want to be too paranoid. We know that they are colluding on price. It wouldn’t surprise me if corporate America didn’t know that in pushing inflation higher, they were pushing the Democrats out of power.
Nick Hanauer:
Yeah, yeah, for sure.
Goldy:
That that wasn’t part of the intent because they wanted their tax cuts.
Nick Hanauer:
I guess so. Maybe. I think people are greedier than they are smart, but that’s another subject.
Goldy:
Yeah, I’m just saying it wouldn’t surprise me. I’m not saying it happened. I’m just saying people are saying, Nick, and that’s enough these days saying.
Nick Hanauer:
People are saying. Okay, that’s true.
Goldy:
If you want to read more from Hal Singer, we will provide a link in the show notes to both his Twitter thread and his article, How Corporations “Get Away With Murder” to Inflate Prices on Rent, Food, and Electricity.
Speaker 5:
Pitchfork Economics is produced by Civic Ventures. If you like the show, make sure to follow, rate and review us wherever you get your podcasts. Find us on other platforms like Twitter, Facebook, Instagram and Threads at Pitchfork economics. Nick’s on Twitter and Facebook as well at NickHanauer. For more content from us, you can subscribe to our weekly newsletter, The Pitch, over on Sub Stack. And for links to everything we just mentioned, plus transcripts and more, visit our website, PitchforkEconomics.com. As always, from our team at Civic Ventures. Thanks for listening. See you next week.