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Corporate profits account for almost half the increase in Europe’s inflation

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Re: Corporate profits account for almost half the increase in Europe’s inflation

#61

Post by mypastself »

bedobi wrote: post #35
monero-xmr wrote: post #18

Ah yes ignore the money printing, certainly all of this inflation is the private sector! Where are the price caps?!?

how do you explain the fact that gazillions were printed for decades without much meaningful inflation? japan being the printiest of them all having had the least inflation of all crickets huh

The same way supporters of the greedflation hypothesis defend their position on corporate greed: by claiming it increased substantially in recent years. Except the money printing hypothesis champions have more convincing data.

Re: Corporate profits account for almost half the increase in Europe’s inflation

#62

Post by space_fountain »

bedobi wrote: post #35
monero-xmr wrote: post #18

Ah yes ignore the money printing, certainly all of this inflation is the private sector! Where are the price caps?!?

how do you explain the fact that gazillions were printed for decades without much meaningful inflation? japan being the printiest of them all having had the least inflation of all crickets huh

I mean something unusual definitely happened in the US https://fred.stlouisfed.org/series/M1SL. Is the alternative that companies suddenly discovered they were greedy?

edit: though I do want to add the m2 supply might be more important here, and it doesn't show anything as dramatic https://fred.stlouisfed.org/series/M2SL. https://fredblog.stlouisfed.org/2021/01/whats-behind-the-rec...

Re: Corporate profits account for almost half the increase in Europe’s inflation

#63

Post by 1980phipsi »

smt88 wrote: post #7
narcraft wrote: post #4

The cause of rain is the ground getting wet

This kind of reply is uninteresting and unhelpful. These statements about inflation drivers are surprising (to some) and highly relevant because they counter corporate and conservative propaganda. We now know that government assistance isn't the main villain in the brutal inflation spikes of the last few years, and we need voters to understand that too.

In textbook macro, if you have a shock to aggregate demand, then (ceteris paribus) the result is an increase in inflation and an increase in profits. That doesn't mean that profits are the cause.

So it may be an uninteresting or unhelpful way to put it, but I think he accurately summarizes how many people who have studied economics would think about it.

Re: Corporate profits account for almost half the increase in Europe’s inflation

#64

Post by Barrin92 »

alexaholic wrote: post #19

I find it hilarious when companies are following their stated goal of making profits, while everybody else is rushing to explaining rising prices by factoring in everything but profits.

Because the basic economic argument against this theory is pretty sound. Companies can't arbitrarily raise prices because market competition drives profits down. It's why highly competitive industries like the restaurant sector aren't profitable, everyone competes for the same consumers, and the lowest cost provider will win.

Inflation doesn't actually change anything about this so if companies can just collude and make up prices the question is why did they only start doing it three years ago

Re: Corporate profits account for almost half the increase in Europe’s inflation

#65

Post by narcraft »

smt88 wrote: post #7
narcraft wrote: post #4

The cause of rain is the ground getting wet

This kind of reply is uninteresting and unhelpful. These statements about inflation drivers are surprising (to some) and highly relevant because they counter corporate and conservative propaganda. We now know that government assistance isn't the main villain in the brutal inflation spikes of the last few years, and we need voters to understand that too.

I think it's fair to call my comment unhelpful because my point wasn't to suggest that the article's contents were unsurprising, but rather to criticize the HN title and provoke further reflection on causation. The article doesn't explicitly suggest that profits are the largest driver (which I interpret as cause) of inflation, but it does use the word drivers for categories in a graph, which I think is unfortunate wording. The data are consistent with corporate profits being the largest category of the bunch where inflation is realized rather than necessarily suggesting that it's the largest cause of inflation. An explanation citing corporate profits as the root cause of inflation would lose the ability to predict when inflation is most likely to occur (e.g. after periods of loose monetary policy combined with large fiscal stimulus)

Re: Corporate profits account for almost half the increase in Europe’s inflation

#66

Post by gsatic »

rgbrenner wrote: post #33

I think this talk about costs vs profits sounds important to lay people, but is completely irrelevant. Companies do not price goods based on the goodness of their hearts. They price it at the point that maximizes volume*(unit price-COGS). Companies are constantly testing this price point. For example, a promotion may produce data that can indicate how consumers will respond to a price change. In an inflationary perio…

Consumers have 3 inch chimp brains. Even the Kardashians have worked out how to exploit those brains.

Don't live in some day dream about what modern marketing can make the chimp brain do.

Re: Corporate profits account for almost half the increase in Europe’s inflation

#68

Post by einpoklum »

Why, I am shocked - shocked and chagrined - to learn that inflation is caused by capitalists raising prices to increase profits. I might even end up believing that the market system does not ensure fair distribution of resources and products in society. Perish the thought.

Re: Corporate profits account for almost half the increase in Europe’s inflation

#69

Post by mkl95 »

Recently, I was approached by the biggest non-big-tech company I've ever talked to. They are a big EU startup and they have raised 1bn+ in the last few years. So I had a look at their Glassdoor reviews. Apparently they are extremely cheap, to the point that they make employees share a room when they attend corporate events.

Other than that, I have noticed a trend where recruiters reach out on LinkedIn with what I call "Hail Mary offers". They are way below market average job postings, that in some cases offer me half my current salary, for more complex work.

Re: Corporate profits account for almost half the increase in Europe’s inflation

#70

Post by hnboredhn »

alexaholic wrote: post #19

I find it hilarious when companies are following their stated goal of making profits, while everybody else is rushing to explaining rising prices by factoring in everything but profits.

I still don't find the argument persuasive. Companies have always tried to maximize profits, as you said.

To me this highlights more companies realizing they have pricing power similar to monopoly power or cartel power. A company that has lots of competition can't raise its profit margins. But a company with a moat, where no competitors are able to fund the capital needed to compete, can raise profits.

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