Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Labor costs point to corporate profit as main inflation driver

thehill.com

Post reply on HN
Print view View original

21–30 of 30 posts

Re: Labor costs point to corporate profit as main inflation driver

#21

Post by gfdgfdsgfds »

rhaway84773 wrote: post #12
anonreeeeplor wrote: post #8

This line of argument is utter nonsense and propaganda. Review the history of what happened. Covid landed. Then the federal reserve printed tons of money (shows up clearly in the percentage of government spending as share of US GDP and M2 money supply). Then there was a delay and then inflation began to increase. Inflation is always and everywhere a result of printing.

And yet the dollar is stronger than its ever been. And the inflation is global. In fact? The U.S. is faring better than most other countries. And inflation is even worse if you were using a deflationary currency like Bitcoin. The fact that someone can go through the last few years and see inflation clearly driven by war, inflation clearly driven by supply chain problems due to COVID, inflation clearly driven by Brexi…

The “inflation is always and everywhere a result of printing” line is from a Nobel laureate in economics.

Re: Labor costs point to corporate profit as main inflation driver

#22

Post by vineyardmike »

finspeech wrote: post #18
ydlr wrote: post #10

Earlier quoted context omitted.

All of this is true is a company rises prices without affecting the behavior of others. When suppliers notice their customers raising prices, they raise prices to capture some of that increase. Likewise, workers will try to increase wages. The result is a profit-price spiral that gets misdiagnosed as wage-price spiral.

I’ll grant this, but no matter what it’s called, ultimately no group (consumer vs. business) is better or worse off. In such a spiral it’s just the nominal numbers that are changing and not the ‘real’ numbers What keeps this from happening, I think, is the presence of competition which would stop both cohorts, workers and businesses, from increasing their prices indefinitely

> ultimately no group is better or worse off. In such a spiral it’s just the nominal numbers that are changing and not the ‘real’ numbers

Except that wages tend to change less fluidly than prices so there’s usually a lag resulting in less purchasing power for consumers.

Re: Labor costs point to corporate profit as main inflation driver

#23

Post by pasabagi »

gfdgfdsgfds wrote: post #21
rhaway84773 wrote: post #12

Earlier quoted context omitted.

And yet the dollar is stronger than its ever been. And the inflation is global. In fact? The U.S. is faring better than most other countries. And inflation is even worse if you were using a deflationary currency like Bitcoin. The fact that someone can go through the last few years and see inflation clearly driven by war, inflation clearly driven by supply chain problems due to COVID, inflation clearly driven by Brexi…

The “inflation is always and everywhere a result of printing” line is from a Nobel laureate in economics.

That is by no means incompatible with ideological blinkerism.

Re: Labor costs point to corporate profit as main inflation driver

#24

Post by vineyardmike »

finspeech wrote: post #17
vineyardmike wrote: post #15

Earlier quoted context omitted.

> Setting aside the almost impossible feat that every business could collude to arbitrarily double their profit margins, 1. It doesn’t have to be collusion. They could even raise margins ahead of expected downturns to prep for savings. There could even be a global pandemic that reduces supply, leading businesses to raise prices in relation to demand and shortages, but those same companies not reducing prices when sup…

> It doesn’t have to be collision It does have to be collusion, otherwise competition to keep prices low > don’t deny it is a possibility while witnessing it as a reality I’m not denying that profit margins (of some companies) are higher. I’m claiming that it is not to the detriment of the consumer at large. Also for every company that is seeing increased profits, there’s another one that is seeing a decrease > Why d…

> It does have to be collusion, otherwise competition to keep prices low

Competition works half as well as people think it does. It’s long shown that companies will see collective price rises for products even in the absence of direct collusion. Most products don’t trend to being sold at-cost, which is what you’d expect in this case. Why do any products have any product margin? Isn’t every product margin an opportunity for competition?

> I’m claiming that it is not to the detriment of the consumer at large.

I don’t know. I personally haven’t noticed inflation much but we’re talking about it an awful lot for nobody to be affected. The people affected the most are the people who can least afford it.

> Even if it goes to “shareholders” or “executives”, or “private equity”, either they are hoarding it (increasing everyone elses purchasing power) or they are investing it (spending it on someone elses wages).

Trickle down isn’t real. Lots of money gets spent in ways that doesn’t effectively help wages. Money does get hoarded, but it’s not enough to be meaningfully helpful at purchasing power.

Re: Labor costs point to corporate profit as main inflation driver

#25

Post by vineyardmike »

finspeech wrote: post #19
klyrs wrote: post #13

Earlier quoted context omitted.

Don't assume that this would happen overnight. Real wages have been essentially flat for median workers since the early 70s, while CEOs have greatly increased their own real salaries and companies have made a greater focus on short term profits and dividends for their stockholders. The common justification I see for 100:1 CEO to median income gaps is that "CEOs provide value to the shareholders." They do that specifi…

> Real wages have been flat for median workers since the 70s Real wages for workers in what context? The US? The industrialized nations? Perhaps the better explanation for this (assuming it’s true) is that the median worker in industrialized nations has had productivity that has grown at a slower rate than the median worker in developing markets. Would be interesting to see what the worldwide statistics are for CEO t…

> Can’t “workers” also be shareholders? If not in their own companies, then at least in any publicly traded company. The world isn’t cleanly divided into “worker” and “owner”. People can be both.

Yea but most people aren’t. Lower-income people barely have retirement accounts with index funds in it. The people that are “owners” in a meaningful sense are not workers.

Re: Labor costs point to corporate profit as main inflation driver

#26

Post by ydlr »

finspeech wrote: post #18
ydlr wrote: post #10

Earlier quoted context omitted.

All of this is true is a company rises prices without affecting the behavior of others. When suppliers notice their customers raising prices, they raise prices to capture some of that increase. Likewise, workers will try to increase wages. The result is a profit-price spiral that gets misdiagnosed as wage-price spiral.

I’ll grant this, but no matter what it’s called, ultimately no group (consumer vs. business) is better or worse off. In such a spiral it’s just the nominal numbers that are changing and not the ‘real’ numbers What keeps this from happening, I think, is the presence of competition which would stop both cohorts, workers and businesses, from increasing their prices indefinitely

> I’ll grant this, but no matter what it’s called, ultimately no group (consumer vs. business) is better or worse off. In such a spiral it’s just the nominal numbers that are changing and not the ‘real’ numbers

In the long-term, yes. In the moment, the experience of rapidly rising prices really sucks. It doesn't occur smoothly or evenly.

> What keeps this from happening, I think, is the presence of competition which would stop both cohorts, workers and businesses, from increasing their prices indefinitely

You are absolutely right. And inadequate competition in many sectors is definitely a contributor to current inflation.

Re: Labor costs point to corporate profit as main inflation driver

#27

Post by mountainriver »

rhaway84773 wrote: post #12
anonreeeeplor wrote: post #8

This line of argument is utter nonsense and propaganda. Review the history of what happened. Covid landed. Then the federal reserve printed tons of money (shows up clearly in the percentage of government spending as share of US GDP and M2 money supply). Then there was a delay and then inflation began to increase. Inflation is always and everywhere a result of printing.

And yet the dollar is stronger than its ever been. And the inflation is global. In fact? The U.S. is faring better than most other countries. And inflation is even worse if you were using a deflationary currency like Bitcoin. The fact that someone can go through the last few years and see inflation clearly driven by war, inflation clearly driven by supply chain problems due to COVID, inflation clearly driven by Brexi…

The big issue is that we significantly expanded the monetary supply while we had a supply chain shortages due to war/covid

They aren’t in isolation, printing money when the supply chain is constrained is going to sky rocket demand, and send inflation through the roof

Re: Labor costs point to corporate profit as main inflation driver

#28

Post by finspeech »

vineyardmike wrote: post #25
finspeech wrote: post #19

Earlier quoted context omitted.

> Real wages have been flat for median workers since the 70s Real wages for workers in what context? The US? The industrialized nations? Perhaps the better explanation for this (assuming it’s true) is that the median worker in industrialized nations has had productivity that has grown at a slower rate than the median worker in developing markets. Would be interesting to see what the worldwide statistics are for CEO t…

> Can’t “workers” also be shareholders? If not in their own companies, then at least in any publicly traded company. The world isn’t cleanly divided into “worker” and “owner”. People can be both. Yea but most people aren’t. Lower-income people barely have retirement accounts with index funds in it. The people that are “owners” in a meaningful sense are not workers.

Yeah, but there are plenty of people who do own assets. It’s not just the 1% that owns all the assets.

Plus, the market, and peoples’ places in it are not static. Many lower income people are lower income due to the fact that they are young and don’t have the knowledge/experience of their older peers. They don’t stay that way. They are able to earn more and save/invest more as they level up their skills

Re: Labor costs point to corporate profit as main inflation driver

#29

Post by finspeech »

vineyardmike wrote: post #22
finspeech wrote: post #18

Earlier quoted context omitted.

I’ll grant this, but no matter what it’s called, ultimately no group (consumer vs. business) is better or worse off. In such a spiral it’s just the nominal numbers that are changing and not the ‘real’ numbers What keeps this from happening, I think, is the presence of competition which would stop both cohorts, workers and businesses, from increasing their prices indefinitely

> ultimately no group is better or worse off. In such a spiral it’s just the nominal numbers that are changing and not the ‘real’ numbers Except that wages tend to change less fluidly than prices so there’s usually a lag resulting in less purchasing power for consumers.

Yes that is true, but under the assumption that prices are only raising due to corporations increasing them, then my original post comes into play where for everyone that is worse off, there is someone necessarily better off. Thus the consumer as a whole is unaffected. Because again, if that money is hoarded then that means the hoarder is consuming less and thus supplies are increased for everyone else. Or they are investing and just spending that money into the hands of a different group

Re: Labor costs point to corporate profit as main inflation driver

#30

Post by finspeech »

vineyardmike wrote: post #24
finspeech wrote: post #17

Earlier quoted context omitted.

> It doesn’t have to be collision It does have to be collusion, otherwise competition to keep prices low > don’t deny it is a possibility while witnessing it as a reality I’m not denying that profit margins (of some companies) are higher. I’m claiming that it is not to the detriment of the consumer at large. Also for every company that is seeing increased profits, there’s another one that is seeing a decrease > Why d…

> It does have to be collusion, otherwise competition to keep prices low Competition works half as well as people think it does. It’s long shown that companies will see collective price rises for products even in the absence of direct collusion. Most products don’t trend to being sold at-cost, which is what you’d expect in this case. Why do any products have any product margin? Isn’t every product margin an opportuni…

> Isn’t every product margin an opportunity for competition?

Yes. Which is why marginal revenue does trend towards marginal cost, contrary to what you’re claiming. High margins are a signal to the market that more supply is needed

> Trickle down isn’t real.

Trickle down is a misnomer. It’s actually more like trickle up as all it means is that people who make the money get to decide how to spend it vs. having a centralized, top-down organization (the government) decide how to spend it

> Money does get hoarded, but it’s not enough to be meaningfully helpful at purchasing power.

If hoarded money is not enough to meaningfully help purchasing power then the other side of that coin is that the increased profits of these companies is necessarily not enough to meaningfully effect purchasing power in a negative way. In both cases, it’s the same amount of money, just on different sides of the ledger

Post reply on HN