Truth-in-labeling laws should apply to politics!

 Weekly Opinion Editorial

CHIPS!

by Steve Fair

 

     President Biden delivered his fourth State of the Union (SOTU) address to a joint session of Congress Thursday evening.  The discourse was more appropriate for a campaign rally than a SOTU. Conveyed in a rapid fire, angry, irate manner, the speech lasted 67 minutes.  Biden’s message reassured the Democrat base he is up to the task for a long general election campaign.  In Biden’s oration he never mentioned President Trump, but called him ‘his predecessor’ thirteen times.  Biden was definitive in his support for abortion on demand and gun control.  He blamed the border crisis on Republicans.  Biden stated he wanted to increase taxes on corporations and the rich, stating they don’t pay their fair share.  Three observations:

     First, corporations don’t pay taxes, people do.  Companies consider taxes a cost of doing business and simply pass the tax along to the consumer in the form of a price increase.   Companies are not sponges.  They don’t ‘absorb’ costs.  They pass through increases to stay in business.  It is fundamental economics.  The current tax code benefits some large corporations, but taxing them more will result in higher prices for consumers. 

     Second, shrinkflation is not the fault of manufacturers.   Shrinkflation is the practice of reducing a product’s amount or volume per unit while maintaining the same price.  Biden used potato chip companies downsizing of their products (9.75z to 9.25z) as an illustration in the SOTU.  It’s highly doubtful Biden has seen the inside of a supermarket in years.  His implication was the manufacturer’s motivation behind the downsizing was greed.  He insinuated the consumer was being deceived.  Downsizing is lazy marketing, but it is not dishonest.  With government mandated truth-in-labeling laws, American consumers have more information on size, ingredient and nutrition than ever before.  Consumers have no excuse to not know they are getting less for the same money.

     Americans are paying +21% more for groceries than they were in 2021.  Since 2021, Biden has tried to blame shrinkflation and food processors, but according to the Bureau of Labor Statistics, product downsizing plays only a minor role in food prices.  Increases in ingredients, labor, and freight have created the high shelf prices and placed a strain on food processors.  According to the Wall Street Journal (WSJ), publicly traded packaged food companies were among the most notable underperforming stocks of 2023.  The volatility of their costs to produce and the delay in getting those costs passed on have hurt profitability in the industry.   The result has been less processors and a strain on overall capacity.

     Third, the economy is not performing well.  In the SOTU, President Biden touted his economic record (jobs, unemployment), but the fact is Americans are paying higher prices at the grocery shelf (+21%) and gas pump (+38%) than they were four years ago.  Wages have lagged behind inflation, which is at a 40 year high.  Americans have lost money in their retirement accounts since Biden has been in office.  Credit card debt is at an all-time high.  Interest rates are high.  Most Americans don’t agree with Biden.  82% of Americans believe the country is economically headed in the wrong direction.

     It’s too bad the truth-in-labeling laws food processors must abide by doesn’t apply to politics.  If candidates had to disclose the truth like chip manufacturers, Americans could see what was really inside.