Our Economic House Is on Fire | Opinion

The following is a lightly edited transcript of remarks made by Veronika Dolar during a Newsweek episode of The Debate about the possibility of a looming economic recession. You can listen to the podcast here:

One of the reasons we are seeing higher prices is market concentration. The baby formula situation is one of the examples where we have a small handful of companies that are really serving the market. This kind of market concentration gives a lot of market power to producers to increase prices, not because of any kind of fundamental issues in terms of the demand or what the president or Federal Reserve is doing. The prices are higher simply because these companies can hike up the prices. Economists have been talking about the recession and the business cycles. These are all short-run problems that we are facing in the United States. Even if we fix this coming recession, the question is, are we in a good shape to be growing in the long run? We have companies that are profitable, so where is the money going? The money is going into their pockets, not into your pockets. The economy is not really growing that well. That to me is somewhat scary and nobody seems to be addressing it. We're so busy doing the dishes and cleaning the kitchen and cleaning the windows, but we forget the entire house is on fire.

Joe Biden Janet Yellen
U.S. President Joe Biden has faced mounting criticism over inflation rate rises throughout this presidency. The president met with Treasury Secretary Janet Yellen (pictured right) and Federal Reserve Chairman Jerome Powell on May 31, 2022 to discuss the Biden Administration's plan to combat record-high inflation. Kevin Dietsch/Getty Images

Another market that shows these fundamental issues in terms of structure is the energy sector — oil and gasoline. One of the interesting things that happened in the United States was when Russia invaded Ukraine and oil and gas prices went up. The Biden administration said we are not importing any more oil from Russia, which makes sense; now the supply is lower, the prices should be higher. It all makes perfect sense. However, the United States doesn't rely that much on Russian oil. There are many ways to compensate for it, and yet gasoline prices went up quite a bit. The question is why. A lot of companies in the United States are taking advantage of the situation and masking it under the disguise of the world coming to an end. That's why the prices are higher. They can do it now and nobody's going to notice.

Veronika Dolar, Assistant Professor of Politics, Economics and Law at SUNY Old Westbury.

The views expressed in this article are the writers' own.