Photo by Daniel Jensen on Unsplash
Hey there everyone—
Today I decided to share some information I gathered this week—much of it in very mainstream places—on the impact of inflation on ordinary people and the ways corporations are trying to use “inflation” as a way to continue to increase their prices and maintain their profits, even as inflation is said to be going down.
I’m going to summarize this information because I think it’s a perfect representation of the ways late stage capitalism is bumping up against limits and fighting with everything its got to extract the last possible bits of money, time, attention, resources and profit from an ever-shrinking source.
Sometimes conversations about growth and limits appear abstract and conceptual; they seem like things affluent people have time to consider and discuss; they seem like problems for the future, leading people to murmur their hopes at gatherings about Gen Z saving the day, when they grow up and take power, as if it’s their heritage, their problem to solve.
The focus on the future is a strategy to dissipate anxiety and terror in the Global North. It’s a fantasy, a wish fulfillment, a way of evading a deep conversation about the fact that the folks and the corporations that want to make money are concentrating their attention and their energy on an ever-shrinking pool of incredibly rich people, which is already having a profound impact on the lives of the middle and working classes.
My wish is that we would all look at this information, this ordinary reporting from an ordinary week, and say: this was the moment when it was absolutely fundamentally clear that there is no farther for late stage capitalism to go. That the collective psychosis of believing we can continue to consume and thrive; that the working class and the poor and the starving will find a way to continue to scrounge and work hard and get by; that the growth mindset will save us all—this was the point where its own absurdity reached such heights than even its purveyors could no longer believe it. This was the point where the constant exposure to the suffering of humans and the more than human world hit its own emotional wall.
I’m going to summarize three pieces. I’ve picked them because they came across the transom of an average news feed; I picked them because they aren’t attached to a crisis or a protest; I picked them because they are just daily, unremarkable news. The first piece is about something called “premiumization.” The second is about credit card points and the ways rewarding the middle and upper classes with perks is directly impacting the working class. The third is a piece from an independent news organization in Iowa about what inflation is doing to ordinary people, even as it is supposedly starting to “go down.”
Premiumization
What it is:
A strategy to allow companies to continue to charge the prices they have been charging at the height of inflation, even as inflation “cools” and prices are supposed to go down. Or, as the authors note: “It could be a sign that companies are making last-ditch efforts to justify higher prices and cling to fat profits as the economic outlook darkens.” In the last three weeks, the word “premiumization” was mentioned sixty times in investor calls as a strategy that will allow corporations to continue to ensure that their investors will profit from stock market returns.
The justification:
Corporations argue that the middle and upper classes are seeking more “premium” products, or services, or fancy extras, that add special things to the products they want to buy. This allows companies to continue to produce the same products, with a little flair, and then say that these products should continue to be expensive, regardless of inflation, because of the flair.
They can then float the justification that they are only responding to customer need and desire—hey don’t blame me, this is what the rich folks want, in order to feel special and attended to, so we’re gonna make this stuff, instead of the ordinary stuff we’ve been selling for years.
Here’s some examples of premiumization, so you can start spotting it yourself:
Higher prices for special seats on airplanes
Limiting the number of people who can qualify for American Express cards, so that only those who are going to remain insulated from economic downturns will be included in the company’s pool of customers
Holiday themed Krispy Kreme donuts, sold at a higher price
A “smart straw” attached to a can of WD40, that lets your spray in two directions
The reduction of “budget” car models (25K and under) from thirty six models to ten models, and the increase in models of luxury cars
Credit Card Points
What it is:
Middle and upper class people are increasingly inclined to use credit cards that have “rewards” or “points” programs. If you have a card with a rewards program and you gather enough points, you can get discounts at fancy restaurants or hotels, free airline tickets, and reduced costs on products and services.
The justification:
Middle and upper class people, it is said, love perks. They love posting pictures of themselves on Instagram in luxury hotels, at beautiful beaches, all “free” because they spent money using their credit cards. When happy consumers advertise what they got from their perks, they give free advertising to the credit card companies, drive interest in the cards, and more people join the programs. The points keep customers loyal, they drive soft advertising, and they increase the amount of service charges companies receive from vendors each time a person makes a purchase.The companies also make money off the annual fees, which can be as high as $500 a year or more.
The problem:
Middle and upper class people know that the way these companies try to make money is via compound interest. The credit card companies offer more and more rewards, trying to get their customers to take on more debt than they can handle.
If the companies win, the people who bought all the stuff to qualify for the perks will not be able to afford it, and will have to pay interest fees while they try to pay off the debt. Meanwhile, they’ll keep getting offers in their inboxes for great deals they could get with more points, if they would only go shopping.
But rich people have the money to pay for all the stuff they buy. They pay their cards off at the end of the month, to avoid the interest payments. That’s a problem. So these companies have to find a way to get that interest somewhere else. Enter the working class, most of whom can’t qualify for these rewards programs because the annual fees are too high, and because the credit score restrictions are also so high that most poor and working class people can’t qualify for them.
The high service charges mean that merchants raise prices on ordinary goods and pass those along to everyone, even though the rewards programs only benefit the rich. And because poor and working class people usually use debit cards and cash to pay for their stuff, and only qualify for cards with low limits, because of their debt-to-income ratio, they are likely to have to rely on payday loans and other high interest short term loan options if they get into a financial crisis.
The Current Impacts of Inflation
The U.S. Census Bureau, since April of 2020, has been regularly collecting data on households to determine the impact of the pandemic. It has continued to conduct these surveys, and is now mapping the impact of inflation. Their most recent survey was conducted from Feb 1st through the 13th, 2023. It found:
25 million people do not have enough money to buy adequate amounts of food.
40 million people are struggling to pay for their household expenses.
16% of the people who were surveyed said it was “likely” they would be evicted from their homes in the next two months, and 23.7% said is was “somewhat likely” they would be evicted.
Between January 14, 2023 and February 14, 2023 the price of eggs went up 8.5%.
On March 1, 2023 the increase in SNAP benefits that was granted during the pandemic expired, leading to an average loss of $90 per month for beneficiaries.
Because unemployment benefits from the pandemic are also expiring, people are no longer able to rely on unemployment money to buy food.
The lack of medicaid expansion in many Southern states means that the number of people suffering from economic distress, food and housing scarcity is highest in the South.
What’s clear is that an ever-increasing number of people in the United States are suffering. They cannot meet their basic needs. They lack universal healthcare and childcare. The prices of food and services are high, and going up, week by week.
What’s notable about the frantic effort on the part of corporations to make as much money as they can, in such gross ways, is that they are making less and less of an attempt to rationalize their focus only on the very rich. As the advantages, the resources, the profits get increasingly concentrated in the very highest echelon of the country, this introduces an interesting question about how the middle class will respond.
Since Edward Bernays, Freud’s nephew, used his expertise in mass psychology and crowd theory to help create mass market advertising and a consumer society in the 1920s, the middle class has been told that if they just work hard enough and conform to the rules of the culture, they’ll eventually be rewarded with wealth and status. I’m wondering if that promise, always illusory, is no longer as persuasive as in the past. I wonder if the exclusion of the middle class from the realm of promised affluence is going to lead to outrage and resentment, or if instead, the vast majority of Americans will start to work together to meet their needs, turning away from and no longer pandering to the few who are consuming the vast majority of the world’s resources.
The population is confronting the very real facts of limits: the limits of our economy; the limits of the human body to work so hard without sustenance or healthcare; the limits of the planet’s resources, like healthy soil, minerals, and wood; the limits of the amount of luxury even rich people can consume; the limits of the environment to suck up our pollution and the earth to absorb our toxic chemicals; the limits of how much streaming content we can watch; the limits of how much longer people can buy into the idea that material things are adequate proxies for love, and meaning, and communion with one another, with spirit, with whatever your version is of what binds together the more than human world, and all of us, into a whole.
The white middle class has been encouraged to believe in the fiction of independence. They have been encouraged to meet their needs themselves, or inside their families, and if they can’t do that, to hire people to meet their needs—to spend money on goods and services. Other communities have relied on interdependence, on mutual aid, on sharing economies, on tool libraries, on showing up in a crisis and devising creative strategies to solve problems.
As the access to money and resources continues to be pushed higher and higher up the chain, with greater numbers of people suffering from poverty and economic distress, I wonder what the middle class will do in response? I wonder about all the people who are already engaged in social change work, in the Just Transition, in efforts to dream a new way of being that depends on reciprocity and staying within our planetary limits. I wonder what percentage of the people in the United States are longing for a completely different way of living, and think they’re alone in that desire, and aren’t sure how to get there.
Most of the people I’m talking to these days are splitting their time between trying to stave off the violence of our current social order and trying to enact and envision the conditions that will allow for our collective creativity, imagination, and innovation to thrive. I think the folks who are working specifically in the arena of mental health have access to a lot of tools, strategies, and ways of understanding suffering that we can bring into the spaces outside the field and institutions of mental health.
But we also have something else: we have, daily, access to stories of pain. We know how it is refracting through relationships, organizations, and institutions. We listen to people tell us they are broken, they are alone, they are too much, their suffering is more than other people can stand. We know in our bodies how much this suffering is widespread, and usual, and should not be a source of shame or self-exile.
I don’t think we are suffering from a “mental health crisis” that needs a medicalized response. I think we are responding, collectively, accurately, to global suffering and to a yearning for change. I think people working in mental health can play an important role in normalizing and affirming that to be grieving right now, to feel lost right now, is not unusual, nor is it a barrier to claiming power, or to engaging in action. I know it’s happening already, all over the world.
Take good care of yourselves this week, and I’ll see you soon.
xo
Rebecca
What is the diagnosis code for extractive capitalism?