In my area of the woods, prices are increasing because the boomer retirement is causing lots of skilled labor to leave the workforce.
Corporate profits account for almost half the increase in Europe’s inflation
131–140 of 476 posts
Re: Corporate profits account for almost half the increase in Europe’s inflation
#132Huh, ok then, I guess inflation has nothing to do with the fact that they are printing currency nonstop. I guess things just randomly increase in price. Thank you IMF, very informative, I'll promise I'll even forget you have a printer.
Re: Corporate profits account for almost half the increase in Europe’s inflation
#133I 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 m…
> Companies can't arbitrarily raise prices
The article suggests this is false
Re: Corporate profits account for almost half the increase in Europe’s inflation
#134Remember: profits are a direct measure of the inefficiency of a given market. In a functioning market, the existence of profits either drives businesses to reduce their own profits by competing on price (problem: cartels) or else drives new businesses to emerge in order to seize some of those profits (problem: barriers to entry). To have record-breaking profits means that are markets are record-breakingly inefficient…
And the EU is an extremely heavily regulated market, with almost no real innovation, just check how many startup unicorns there are vs any other part of the world.
Re: Corporate profits account for almost half the increase in Europe’s inflation
#135Earlier quoted context omitted.
> 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.
What government is arguing that employee wages should be lower/stagnant in order to fight inflation? EDIT: I mean advocating not just that we should avoid a wage/price spiral through other means, but specifically that individual workers should accept/volunteer for lower wages than they could otherwise get? Edit 2: seeing several cases of "$Reserve_Bank_Person says wage increases are too high and need to come down", n…
The UK government has done this various times in the last couple of years to argue against (high) pay rises for the National Health Service and other government institutions.
One of the more recent articles: https://www.reuters.com/world/uk/uk-annual-wage-growth-72-ex... Or here: https://www.theguardian.com/business/2022/jun/20/would-a-wag...
Re: Corporate profits account for almost half the increase in Europe’s inflation
#136Earlier quoted context omitted.
> Companies do not price goods based on the goodness of their hearts. Governments etc. argue that employees should not demand higher pay to match inflation to avoid a "spiral" out of the goodness of their hearts. If employers catch the absolute currency value increase of inflation the employee employer balance is shifting.
What government is arguing that employee wages should be lower/stagnant in order to fight inflation? EDIT: I mean advocating not just that we should avoid a wage/price spiral through other means, but specifically that individual workers should accept/volunteer for lower wages than they could otherwise get? Edit 2: seeing several cases of "$Reserve_Bank_Person says wage increases are too high and need to come down", n…
The incompetent morons in the Danish government does.
Re: Corporate profits account for almost half the increase in Europe’s inflation
#137Remember: profits are a direct measure of the inefficiency of a given market. In a functioning market, the existence of profits either drives businesses to reduce their own profits by competing on price (problem: cartels) or else drives new businesses to emerge in order to seize some of those profits (problem: barriers to entry). To have record-breaking profits means that are markets are record-breakingly inefficient…
Bad take. If the market "functions" according to your definition, then what is the incentive to innovate? (besides shits and giggles, which is not sustainable).
No markets are efficient. While it's probably a bad idea to worship at the altar of profit: A profit of zero for most productive pursuits is not ideal.
Re: Corporate profits account for almost half the increase in Europe’s inflation
#138I 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…
I find this an extremely odd and uninterpretable article for this reason. When people say that "x drives y" they usually mean that "x causes y". And inflation is by definition price hikes. So article seems to be saying that "corporate profits causes price hikes", which is meaningless since the causal direction should be in the reverse (price changes cause profit changes).
The fact that labor costs (which are part of a company's profit calculation) are considered a separate "driver" makes this even more confusing.
Re: Corporate profits account for almost half the increase in Europe’s inflation
#139Earlier quoted context omitted.
> Governments etc. argue that employees should not demand higher pay to match inflation to avoid a "spiral" out of the goodness of their hearts. Source?
> While Bank of England Governor Andrew Bailey sparked a minor firestorm when he suggested workers shouldn’t ask for big wage increases…[1] [1] https://www.bloomberg.com/news/articles/2022-03-17/powell-tr...
He's diagnosing runaway inflation. At no point is actually chastising workers directly.
Bailey's comments were squarely aimed at blaming Brexit and energy markets, people intentionally took his words out of context to bake up a "gaff".
Re: Corporate profits account for almost half the increase in Europe’s inflation
#140Earlier quoted context omitted.
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...
They changed the definition of m1 which is the cause of that spike. M2 is definitely the better metric.