Chicago Opera Theater is trying out a new opera at the Athenaeum next week. Titled The Cook-Off, it’s about a televised contest in which three young chefs face off over the same meal. The exotic dish they’ll be cooking? Mac and cheese—the mainstay of American tables during the Great Depression.
It’s an apt choice at a time when we’re faced with grocery store sticker shock unlike any most of us can remember.
In the last two years, the price of bread rose about 20 percent; milk is up 16 percent or so; butter increased nearly 27 percent; and eggs (blame bird flu) are up 68 percent. It’s not only the 41 million Americans already receiving federal food subsidies (SNAP benefits) that are getting burned by grocery prices.
What’s up with that? I put the question to three people who know something about overcooked economies. Here’s what I learned:
The U.S. has a great ag supply chain
Craig Gundersen, who used to be downstate at U of I, now heads the Collaborative on Hunger and Poverty at Baylor University, where he’s a professor of economics. He says there are a couple of basic points to make. First, although there’s geographic variation, “overall, the U.S. has much less expensive food than other countries, especially other high-income countries. That’s testimony to our amazing agricultural supply chain.”
But, when food prices rise, the greatest impact falls on low-income families. That’s because they’re already spending a larger portion of their budgets on groceries. In an attempt to address this, SNAP benefits have increased about 35 percent since 2019. Did that fuel food inflation by creating more demand? Gundersen doesn’t think so—it’s too small a factor, he says. Stimulus checks, on the other hand—maybe.
And working poor
“There are millions of Americans who are working jobs but not making enough money to afford food,” says University of Illinois agricultural law and policy professor Jonathan Coppess. “This raises a huge question about the state of our economy, where we can be at near-historic levels of [low] unemployment but high levels of poverty that are driving participation in programs like SNAP.”
As for inflation—it has multiple causes, which make it hard to tackle, Coppess says. “In an ideal political scenario, we’d have Congress working on this, not just the Federal Reserve pushing up interest rates to force a cooling of the economy, which is going to hit poor people, push up unemployment, and risk a recession.”
Plus corporate opportunism
Businesses are raising prices now because “inflation creates a great opportunity,” says marketing professor Jean-Pierre Dubé of the Booth School of Business at the University of Chicago. “If costs go up and it’s in the news, then a company can say, ‘Sorry, I have no choice but to raise my prices,’ even when their costs are not what’s driving the increase. People want a narrative around price increases, and inflation provides it.”
These higher prices will be sticky, Dubé says: “Prices rise more quickly than they fall,” and a price-increase-because-of-inflation announcement can serve as a “tacit way to collude,” signaling rivals that they can also boost. In fairness, he adds, costs are going up, and during the pandemic many states had antigouging laws in effect that kept a damper on prices. Still, this is “a very opportune moment.”
While food prices might not go down, the rate of inflation will likely slow. Grocers not wanting to permanently decrease prices will do what they did in the Great Recession, Dubé says: they’ll offer a lot of promotional discounts.
That was already in evidence last week at Jewel where, in spite of multiple sale signs, the price of ingredients for a dinner for four of hamburgers, salad, corn on the cob, fruit, milk, and cookies, plus a few staples, topped $80. Profit margins at Albertsons, which owns Jewel, and which Kroger is slated to purchase, have tracked upward since 2019; objectors have noted that a Kroger-Albertsons merger will further reduce competition in an already heavily consolidated industry.
Last year, former Secretary of Labor Robert Reich testified before a Senate budget committee that “corporations with near-record profits are raising prices because they don’t face meaningful competition.” Congress and the administration have the power to stop this, Reich said, and they should, with stronger antitrust enforcement, a windfall profits tax, and price controls.
More recently on Twitter, he put it like this: “The underlying problem is not wage-price inflation. It’s profit-price inflation being driven by corporations.”
He also quotes MLK: “The problem is that we all too often have socialism for the rich and rugged free enterprise capitalism for the poor.”
See you at the opera.
The Cook-Off will be presented in a semi-staged concert performance Thu 5/11, 7:30 PM, Athenaeum Center for Thought and Culture, 2936 N. Southport, chicagooperatheater.org, $50
