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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

#81

Post by ajsnigrutin »

rightbyte wrote: post #56
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…

> Companies do not price goods based on the goodness of their hearts. Governments etc. argue that employees should not demand higher pay to match inflation to avoid a "spiral" out of the goodness of their hearts. If employers catch the absolute currency value increase of inflation the employee employer balance is shifting.

Governments can argue whatever they want, workers still demand more pay and (more often) change jobs to where they get paid more. The last years has been massive for worker movements, atleast here in my region.

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

#82

Post by Titanicpryk »

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

https://www.weforum.org/agenda/2022/10/why-japan-low-inflati...

According to this Japan has more price controls. Also seeing that an aging populace has lowered demand.

Do recessions tend to drive inflation? Do you print more money hoping to stimulate out of a recession?

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

#83

Post by pmontra »

gsatic wrote: post #66
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.

I'm not sure about that. It's more likely that each of us has a lot of different stuff to care about, more and more as we transition to adulthood, families, etc, and it's not economical (as in time+energy) to care too much about prices and wages as long as we can get what we care about. When the money run short, it changes.

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

#84

Post by mrchucklepants »

soperj wrote: post #58
hartator wrote: post #30

Earlier quoted context omitted.

This. If govs can print out 2x the money supply in a few years, you want to “cash out” profits as fast as possible instead of reinvesting them.

Federal reserve is independent of government.

In name only.

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

#85

Post by dantheman »

coliveira wrote: post #76
zozbot234 wrote: post #43

Earlier quoted context omitted.

> And this permits companies to increase prices, and produce higher profits. It's worth noting that this mostly reflects short-term pricing power. It takes a lot of time for new competitors to enter any industry. So we should expect these price increases to occur rarely and be somewhat time-limited as competition ultimately reestablishes itself.

Competition doesn't work correctly in modern economies because companies are allowed to buy their competitors. If you start competing with another company, they can essentially raise money to buy you and stop what would be the "normal" process. As a result, all theories that people have about how competition works don't apply as they think it should.

That can only go on for so long; if people see companies buying out competitors people will jump to create more and more competitors for the easy exit.

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

#86

Post by froidpink »

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…

> Some of these higher profits will be passed on upstream

Profits by definition are not passed upstream, as profits are what remains after you take out costs from revenue. Anything that gets passed upstream comes from costs

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

#88

Post by coliveira »

hnboredhn wrote: post #70
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.

They always want to maximize profits, but they don't have this opportunity every day. They will increase their profits if there is a convenient reason like "inflation".

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

#89

Post by zozbot234 »

dauertewigkeit wrote: post #50
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 people expect that in a functioning competitive market, simpily raising prices won't work because your competitors would out bid you.

That really isn't how it works. Most real-world competition by far happens in a context of product differentiation where suppliers are only imperfect substitutes for each other's products. So you can raise prices and not be "outbid" in such a way anytime soon. Your market share would only suffer gradually over time if you kept your prices higher than the market.

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

#90

Post by jaredklewis »

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.

How could desire for profits possibly be an explanation for _rising prices_? Were companies not seeking profits in the 2010s? Did they only become greedy in recent years?

It seems obvious to me that if companies could have raised prices more previously they would have. Therefore companies pushing price is just a proximate cause of inflation, not a root cause.

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