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Why is inflation so sticky? It could be corporate profits

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Re: Why is inflation so sticky? It could be corporate profits

#171

Post by pydry »

dragonwriter wrote: post #135
digitaltrees wrote: post #126

Earlier quoted context omitted.

Not if you tax low use more heavily than higher density uses and encourage building more housing supply.

> Not if you tax low use more heavily than higher density uses and encourage building more housing supply. If you tax land with higher taxes for lower density, then, yes, you’ll radically increase food costs.

A land value tax wouldnt tax density it would just tax the value of the land.

This would encourage property density in high value locations like inner cities but wouldn't enforce it.

In terms of farmland it would just mean that farmers rent the land from the government rather than, say, blackrock or bill gates (two of the biggest owners of farmland right now).

This would not affect food prices by much it would just mean that when you buy food from those farms, instead of ~15% of the price flowing into bill gates' pocket it would flow into government coffers. Bad luck Bill Gates. Bad luck Blackrock.

Re: Why is inflation so sticky? It could be corporate profits

#172

Post by bell-cot »

windex wrote: post #147
mjevans wrote: post #97

Earlier quoted context omitted.

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__…

All of them were sorted during WFH. I moved out to remote places and paid far less. I saved quite a bit on all of the above remote other than Internet of course. The economy is setup to extract your money from you once you've earned it.

> The economy is setup to extract your money...

Well, yes. How else can the rich keep getting richer? And the umpteen million individuals assuming "stocks will return 10% over the long term" in their retirement planning actually manage to retire as they planned?

And as long as the culture wars can be kept burning fairly hot, the line-ups of new movies and video drama compelling, and the web addictive - the poor working masses won't put up too much of a fuss over all that extraction.

Re: Why is inflation so sticky? It could be corporate profits

#173

Post by spaceman_2020 »

paxys wrote: post #58

Their 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…

The last two years has been such a clear downgrade in standards and quality across the board.

One product I've bought for 20 years used to be sold in clear glass bottles. Last year, they replaced it with cheap plastic bottles. Then they reduced the quantity by 20% while keeping the same price.

That's just one example, but practically everything I used to buy has either increased in price, decreased in quality/quantity, or often, both together.

Re: Why is inflation so sticky? It could be corporate profits

#174

Post by smeagull »

gfdsgfsdgfs wrote: post #121
pydry wrote: post #120

Earlier quoted context omitted.

Unless you tax land. Nobody manufactures that for profit but profit handsomely from it they do.

Taxing land would increase rent and therefore increase food prices.

Only technically. Relatively speaking, they would go down.

Re: Why is inflation so sticky? It could be corporate profits

#175

Post by bell-cot »

makomk wrote: post #150
neilwilson wrote: post #139

Earlier quoted context omitted.

Why are prices controlled at all? Because as a consumer you can go somewhere else. If there is insufficient excess supply capacity we can't do that in aggregate and prices can be hiked with impunity. Inflation is always, everywhere, a lack of effective competition.

For almost all goods, price increases will decrease the amount purchased. If there's still insufficient excess supply capacity after substantial price increase and decreases in people's purchasing power and consumption, then the reason competition isn't lowering prices is because that's the actual market-clearing price where demand is equal to the amount that can be produced. This can't be fixed by forcing companies…

> For almost all goods, price increases will decrease the amount purchased...

Except that housing, at least in America, has dynamics which are nothing like that. And housing is by far the largest living expense for a very large fraction of Americans.

Re: Why is inflation so sticky? It could be corporate profits

#176

Post by CTDOCodebases »

Why is it sticky? Because it isn't just a mathematical equation. Human psycology comes into play and people (those setting prices and those buying) begin to expect prices to increase. Inertial inflation is the term used to describe it.[0]

[0] - https://en.wikipedia.org/wiki/Inertial_inflation

Re: Why is inflation so sticky? It could be corporate profits

#177

Post by jfabre »

senectus1 wrote: post #64

oh come on! Corp profits dont help, but they're about as consequential as wage increases. Its sticky because of the money printing done in the past, and still happening. They printed a TON of money, its devalued our $$$'s. This is the direct consequence.

I honestly can't believe you're being downvoted when you have the most sensible answer here. The government here in Canada created MASSIVE supply of money out of thin air to keep up with the US and put almost 1/3 of the population on social welfare and everyone is pointing fingers to find who's the most greedy. It's the dumbest thing ever.

https://www.youtube.com/watch?v=GJ4TTNeSUdQ

Re: Why is inflation so sticky? It could be corporate profits

#178

Post by codeflo »

willis936 wrote: post #156
shoubidouwah wrote: post #136

Earlier quoted context omitted.

the rent, as always: https://en.wikipedia.org/wiki/Law_of_rent and the companies do not want to compete: most modern large companies only exist as a _vehicle for investment_, and as such compete for shareholders, not consumers. Due to this, short-termism dominates: average CEO stays 4 years at a given company, and performance of the company after they leave is largely uncorrelated with their carreer success, while sh…

I'm not familiar with the law of rent, but it does not seem accurate. Right now blue collar workers can't afford to rent within a 60 minute commute to Boston, where they are not paid a wage that justifies that commute. Why would you cook or clean in Boston when you could do it literally anywhere else in MA without the commute? I guess my point is that markets continually prove to not be rational. Maybe a philosopher…

Why do you believe this to be a market failure?

Re: Why is inflation so sticky? It could be corporate profits

#179

Post by HPsquared »

willis936 wrote: post #156
shoubidouwah wrote: post #136

Earlier quoted context omitted.

the rent, as always: https://en.wikipedia.org/wiki/Law_of_rent and the companies do not want to compete: most modern large companies only exist as a _vehicle for investment_, and as such compete for shareholders, not consumers. Due to this, short-termism dominates: average CEO stays 4 years at a given company, and performance of the company after they leave is largely uncorrelated with their carreer success, while sh…

I'm not familiar with the law of rent, but it does not seem accurate. Right now blue collar workers can't afford to rent within a 60 minute commute to Boston, where they are not paid a wage that justifies that commute. Why would you cook or clean in Boston when you could do it literally anywhere else in MA without the commute? I guess my point is that markets continually prove to not be rational. Maybe a philosopher…

In the case of the Boston cleaner, that seems to indicate the living costs can also drive salary. If nobody applies to work somewhere, the wages either go up or the job goes unfilled.
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