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

Analysis finds Australia’s inflation being driven by company profits, not wages

theguardian.com

Post reply on HN
Print view View original

181–190 of 316 posts

Re: Analysis finds Australia’s inflation being driven by company profits, not wages

#181

Post by kaushikc »

telchar wrote: post #118
Khaine wrote: post #112

This is absolutely garbage, and doesn't belong on HN. From their 'analysis': "Record profits on petroleum and mining activities (reinforced by a spike in global oil and gas prices following the invasion of Ukraine) led this surge, but the overall corporate sector experienced the most rapid growth in profits of any comparable period in 35 years." So because of global shortages, commodity prices reached record highs, a…

It’s so wrong to pretend that sellers don’t have a say in how much they ask for their goods that it borders on disingenuous. To blame the market (as if that existed apart from buyers and sellers) is to ascribe agency to something which is wholly responsive in fact. If buyers are willing to pay $80 for a barrel of oil, must BP ask for $80 and not a cent less? Of course not. You may claim they are right to do so, but d…

During drought, I can sell a glass of water to people dying of thirst for a bag of gold.

Re: Analysis finds Australia’s inflation being driven by company profits, not wages

#182

Post by kaushikc »

tianqi wrote: post #177

So the key question is what allows Australian companies to raise prices and improve profit margins in this situation? It could be monopoly or insufficient competition.

Monopoly/Duopoly is a natural result of competitive advantage.

Re: Analysis finds Australia’s inflation being driven by company profits, not wages

#183

Post by megablast »

Aunche wrote: post #115
zmmmmm wrote: post #21

It's yet another example of the gap that always exists between economic theory and economic practice. In this case, what we have is that every player in the food chain has taken advantage of supply shortage to eke out additional margin along the way. And why not? Your products are in demand and there are buyers who are willing to pay more than the theoretical market price. The actual situation is that even if competi…

>Most of it goes to the lie that is the premise that interest rates are really the optimal way to control inflation There are only 3 ways to decrease inflation: - Interest rates - Price controls. This tends to have a lot of harmful side effects, such as the necessity of rationing and discentivizing the production of whatever you're price controlling. You only really do this for a few goods, so this doesn't help overa…

> ot really. The problem is that not the people can take advantage of an inflation-induced wage increase

Sure, but inflation doesn't affect everyone equally. Rent increases or mortgages increases are part of inflation, but do not affect everyone. Nor is the price of many goods if you don't buy them.

Re: Analysis finds Australia’s inflation being driven by company profits, not wages

#184

Post by pmontra »

WalterBright wrote: post #175
pmontra wrote: post #6

Earlier quoted context omitted.

Central banks have been printing money for years (quantitative easing, "whatever it takes" , etc) and there was no inflation.

No inflation? https://www.in2013dollars.com/current-inflation-rate Chart sez you're mistaken.

It seems that the chart proves my point: years of quantitative easing and inflation around our below 2% and economists complaining that they were failing to foster inflation and could not explain why.

Re: Analysis finds Australia’s inflation being driven by company profits, not wages

#186

Post by tallytarik »

Khaine wrote: post #108
firecall wrote: post #36

Earlier quoted context omitted.

All very good points! We've had wage stagnation for ~15 years. I've long wondered what it is about our job market that keeps wages down whilst company profits continue to grow. Perhaps an unspoken collusion around wages, or maybe lack of salary growth in government jobs that in turn pushes the private sector. Lack of competition and choices is another issue, as is Australia's dispersion of cities. It's not straight f…

Immigration is keeping wages down, and continues to do so. It is also putting immense pressure on the rental market. Want to improve the lives of ordinary Australians? Reduce immigration levels.

Can you explain how you arrived at that conclusion?

Re: Analysis finds Australia’s inflation being driven by company profits, not wages

#187

Post by Khaine »

tallytarik wrote: post #186
Khaine wrote: post #108

Earlier quoted context omitted.

Immigration is keeping wages down, and continues to do so. It is also putting immense pressure on the rental market. Want to improve the lives of ordinary Australians? Reduce immigration levels.

Can you explain how you arrived at that conclusion?

Common sense.

Employees can import foreign labour which has the effect of putting downward pressure on wages. Hence why wage inflation has stalled since COVID restrictions have been eased.

And in terms of rental market, it has been widely reported.

Westpac has forecast that Australian rents will continue to hyper inflate until mid-2024 because of soaring international migration.

Westpac Business and St George senior economist Pat Bustamante warned the current rental inflation was likely to be longer and more severe than the prior cycles because demand via immigration was vastly outpacing supply.

“Given the current supply and demand dynamics, and the lag in supply, the peak would likely take longer than people expect”, Bustamante told The AFR.

“The return of migrants and international students… [is] putting a further strain on the rental market”. [1]

People don't dare say reduce immigration because then you get called racist.

[1] https://www.macrobusiness.com.au/2023/02/westpac-migration-s...

Re: Analysis finds Australia’s inflation being driven by company profits, not wages

#188

Post by theonlybutlet »

abigail95 wrote: post #54
zmmmmm wrote: post #21

It's yet another example of the gap that always exists between economic theory and economic practice. In this case, what we have is that every player in the food chain has taken advantage of supply shortage to eke out additional margin along the way. And why not? Your products are in demand and there are buyers who are willing to pay more than the theoretical market price. The actual situation is that even if competi…

If you're going to say there's a gap in theory, could you at least explain which economic theory is showing the opposite result here?

Once again information assymetry rears its head. Many people continued buying under the assumption it was cost inflation, they definitely would've purchased less if they knew they were merely being milked for profit. The article even addresses this.

Re: Analysis finds Australia’s inflation being driven by company profits, not wages

#189

Post by refurb »

Nursie wrote: post #159
refurb wrote: post #154

Earlier quoted context omitted.

The wage-price spiral is a mechanism for inflation. But the cause of inflation in the first place is the monetary expansion. You can't have a wage-price spiral without excess money to drive the higher prices and wages. It's the difference between the source of the fire (fuel + ignition source) versus the propagation of the fire (combination of oxygen + fuel).

Yeah nah, there’s that alt economics we were talking about. There are multiple causes, money supply is only one of the factors at play. Using your fire example, there are three factors, miss any one of them, no fire. Choosing then to blame a single factor is … well it’s just wrong. And that’s if we grant your fire analogy as valid in the first place. Regardless of the above - conflating monetary supply inflation with…

Ok, please suggest how else you can get inflation (sustained, across the board price increases, i.e. devaluation of money) without an increase in money supply (either through new money or increased debt).

You claim its wrong but offered no explanation.

Re: Analysis finds Australia’s inflation being driven by company profits, not wages

#190

Post by refurb »

hgomersall wrote: post #176
SamPatt wrote: post #168

Earlier quoted context omitted.

What is this nonsense? Inflation is always due to a lack of competition? Where on earth is the evidence for such an assertion (I didn't see anything in the linked article)? Inflation is a monetary phenomenon, it's not a mystery at all. Governments print too much money and then it's worth less. History is full of examples.

Except that the evidence shows that money supply increase doesn't necessarily lead to inflation. Countries that go through hyperinflation always have a systematic underlying problem that they use money creation to try to fix. "Ah ha!" declare the monetarists, "evidence for our assertion that money supply is the cause of inflation", conveniently ignoring all the counter examples. The point of the GP post is that compe…

Thats a terrible article.

The example of oranges going up in price and apples down is not inflation.

Inflation is an overall erosion of buying power.

When oil prices rise that’s not inflation, although prices might rise.

Post reply on HN