In my area salaries vary wildly for similar positions at similar companies. And even worse, I have been in bizarre situations like being offered less than what I'm making for a higher level role, at much richer companies. Corporate greed is rampant.
Why is inflation so sticky? It could be corporate profits
101–110 of 324 posts
Re: Why is inflation so sticky? It could be corporate profits
#102In the UK there's a company called Virgin Media (broadband, TV, phone provider) which has been completely blatant about it. They recently informed all customers that going forward they will annually be increasing prices by RPI + 3.9%. https://www.virginmedia.com/mobile/annual-rpi-price-increase https://www.ispreview.co.uk/index.php/2023/01/virgin-mobile-...
I could understand something smaller like RPI+1.5%
Ultimately I think the private sector pay has risen by about 4-5% annualised so maybe that's where they got that pricing.
Companies always prefer to offer sales and discounts rather than lower prices.
Same with antivirus companies who's model runs on let's hope they forgot renewal will be 10x the price!
This all relies on consumers not switching accounts constantly to the cheaper good-enough good.
Re: Why is inflation so sticky? It could be corporate profits
#103In the past 15 years we engaged in unprecedented fiscal and monetary stimulus, which saw US Govt debt triple to $30T and the Fed balance sheet increasing 8 fold to $9T. But yeah, I'm sure it's corporate profits.
And yet despite 15 years of stimulus we have had persistently low inflation for all except the last 2 years or so, the first half of which was very clearly driven by supply chain issues. It’s almost like even if stimulus has had an impact it’s not the only, or even the primary driver.
No, we have had lower „inflation“ according to the CPI which is a single number for a multi-dimensional and connected phenomenon. The real impact can be seen in the price of large city real estate, tech stocks or luxury goods. Those certainly didn’t have low price increases.
The extra money largely ended up there because a side effect of the stimulus was that safe investments had negative real yields. In response people chased any positive real yield. This is why Pension funds invested in crypto, they could not guarantee their promised growth with just treasuries and aaa bonds.
Re: Why is inflation so sticky? It could be corporate profits
#104Their argument is basically that while normally a company raising prices would mean that some of their customers move to a competitor, in today's environment there is an implicit agreement that every company will keep prices high. So are they saying that the free market is basically not a thing anymore because of covid, and no company wants to get an edge over its competitors by undercutting on price despite having r…
Things I pay a lot for: * Rent (they're all high; and can't afford to buy anywhere near where I work) * Food (prices are pretty much the same everywhere) * Internet (Cable's the only modern-speed option where I currently rent) * Energy / Gas - either utilities or again, the same everywhere I think most everyone else is in the same boat. I can scale down some of these a little bit, but they're all fairly __inelastic__…
A good where consumers have inelastic demand does not mean that individual companies face inelastic demand curves - that's the whole point of competition. ie. It doesn't matter if you're willing to pay a lot to avoid starvation since no individual company is making profits off of having some market power to starve you.
The thought that food providers are colluding to raise prices is absurd and should serve as a reductio ad absurdum in these arguments, not a fundamental explanation for "greedflation".
Re: Why is inflation so sticky? It could be corporate profits
#105Earlier quoted context omitted.
Don't forget supply and demand works on the capital side of the equation too, higher inflation means shareholders push for higher profits in the same way that high inflation causes workers to push for higher wages. There's increasing supply of investments at higher rate of return, bond yields are close to 4% which means riskier investments need to pay more to compete.
Absolutely. But for competitors to raise margins bilaterally requires cooperation, because each side can take market share by keeping prices low. I just wonder if the cooperation might come in the form of, say, one powerful shareholder of both competitors making calls to the boards of directors of both competing companies. Unexpected consequence of passive investing?
Only if the competition thinks the increase in share is worth more than the increase in per unit profit.
And depending on the industry, there might not be much more to be gained by scaling up. Going from 45% to 60% of the market might not be more profitable than an extra few percent per unit.
Re: Why is inflation so sticky? It could be corporate profits
#106In the UK there's a company called Virgin Media (broadband, TV, phone provider) which has been completely blatant about it. They recently informed all customers that going forward they will annually be increasing prices by RPI + 3.9%. https://www.virginmedia.com/mobile/annual-rpi-price-increase https://www.ispreview.co.uk/index.php/2023/01/virgin-mobile-...
Side note: if you are an O2 customer and a Virgin Media customer you can get your speed bumped up to the next tier for free
Re: Why is inflation so sticky? It could be corporate profits
#107Earlier quoted context omitted.
Inflation is never linear, and tends to over/under shoot. Under normal circumstances, supply chain issues (otherwise known as supply reduction) results in demand being priced out of the market. But we didn’t do that. We gave stimmie checks, and gas cards, and increased unemployment benefits, and paused loan repayments. When there’s not enough of thing X it means some people won’t get thing X. Giving people money to m…
Japan had the same monetary policy for the same period of time and saw zero inflation. It's not monetary policy. There's no reason to think that 15 years later some magical thing happened to flush all the pressure that had built up out of the pipes. It was due to a combination of fiscal stimulus, yes, to a degree - and also supply chain issues, a land war in Europe, shutdowns in China, and myriad other confounding fa…
Japan now has actual inflation and is going to be completely powerless to stop it.
Re: Why is inflation so sticky? It could be corporate profits
#108Their argument is basically that while normally a company raising prices would mean that some of their customers move to a competitor, in today's environment there is an implicit agreement that every company will keep prices high. So are they saying that the free market is basically not a thing anymore because of covid, and no company wants to get an edge over its competitors by undercutting on price despite having r…
Good Odd Lots episode goes into this theory. [1] Basically companies found that by raising prices, they were able to increase profits despite shipping fewer units - and they wanted to see how much they could do so. When Pepsi had to leave Russia, which accounted for 4% of revenue, they just increased the price in the rest of the world to compensate without issue. And seeing that, Coke followed suit. However at this p…
This story is not incompatible with a more-basic one where inflation debases the currency, so when a company starts exploring price hikes for whatever reason they unsurprisingly realize greater profits (since they were implicitly lowering the price by selling for the same quantity of a less-valuable currency). Imagine that Pepsi was selling for ETH in 2021, then "discovers" after the price of ETH halves in 2022 that they can get away with hiking the price - in this case the price hikes are the consequence of the currency devaluation, not the cause.
Re: Why is inflation so sticky? It could be corporate profits
#109It's a sad fact but prices will always remain sticky on the way down. Then again so do wages, while inflation was small and consistent it oiled that machine to keep from there being a big drop in purchasing power. But when inflation is in the double digits that all breaks down. It's also a clear reminder of how so much European utopian aspects (free healthcare, education etc) is run on pure goodwill. Just look at the…
> It's also a clear reminder of how so much European utopian aspects (free healthcare, education etc) is run on pure goodwill. Just look at the strike action in the UK with Nurses having seen 15% pay cut (being forced to accept a 5% pay "rise" after much negotiation) and doctors have seen a 21-26% paycut.
It's not run on pure goodwill, it's run on taxes. Taxing corporations has been against the zeitgeist of neoliberalism running since the 80s, the Third Way of social-democracy embedded itself with the neoliberal bullshit in the 90s, it's not a coincidence that since then there's been a steady decline in public services in Europe overall.
The absolutism of catering to business over the rest of society has eroded multiple layers of what holds a society together. Healthcare in the UK is just the latest and most visible stone to fall. Education and healthcare in Sweden has been slowly privatised since the early 2000s, with accompanying declining trends for quality of services (private schools are some of the worst performing, healthcare being public-private has made staff shortages worse), quality of employment (teachers are not so well paid, nurses either), and so on.
The extreme search for efficiency is creating holes that aren't easily priced, side-effects are delayed by years to decades from implementation of policies, it slowly degrades society.
Thatcher's "there is no such thing as society" and Reagan-economics bound us to this hellhole for the past 40 years, maybe some change is required for this bullshit to end.
Re: Why is inflation so sticky? It could be corporate profits
#110Their argument is basically that while normally a company raising prices would mean that some of their customers move to a competitor, in today's environment there is an implicit agreement that every company will keep prices high. So are they saying that the free market is basically not a thing anymore because of covid, and no company wants to get an edge over its competitors by undercutting on price despite having r…
Things I pay a lot for: * Rent (they're all high; and can't afford to buy anywhere near where I work) * Food (prices are pretty much the same everywhere) * Internet (Cable's the only modern-speed option where I currently rent) * Energy / Gas - either utilities or again, the same everywhere I think most everyone else is in the same boat. I can scale down some of these a little bit, but they're all fairly __inelastic__…
> Food (prices are pretty much the same everywhere)
I can't believe this is true. Either you're shopping for food at a subsistence level, in which case you know exactly what you're missing and how much easier it would be if you could afford a bit more, or you indulge yourself a bit and you're wilfully ignoring that you could pay less.