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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

#211

Post by rthrfrd »

throwawaymaths wrote: post #194
rthrfrd wrote: post #164

Earlier quoted context omitted.

Innovation gives you a valuable competitive advantage - that doesn’t mean it lasts forever - that’s why companies have to constantly develop to stay competitive. Or, they gain enough power to create a failed market, in which it is practically impossible for new entrants to compete and eliminate the incumbent’s rent-seeking. This is what we so often see now, particular in markets with strong economies of scale. An “ef…

> An “efficient market” does not mean it is at its optimal efficiency all the time, but that there is an efficient equilibrium it is capable of tending towards This is a word salad of nonsense. Please familiarize yourself with the definitions of market efficiency and market equilibrium. Its premise may even be flawed: I also recommend looking up resources which show evidence that concept of market equilibria is itsel…

> Please familiarize yourself with the definitions of market efficiency and market equilibrium.

Yes I did that once during my economics degree. It’s a bastard science and can be debated no end, but those debates are a lot more valuable when the participants actually explain any of their conjectures.

But I sense you are more in it for the argument than to help either of us learn.

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

#212

Post by hayst4ck »

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…

We are experiencing tacit collusion: https://en.wikipedia.org/wiki/Tacit_collusion

Economic power, and therefore political power, is concentrating in fewer and fewer hands which allows them to exercise force over competition rather than to compete with competition.

Competition is the back pressure on "greedflation" which is a name that implies greed (which is good in capitalism) is the root cause of increasing prices rather than lack of competition (regulatory capture/citizens united).

It boils down to consumer/labor power.

Labor power represents the ability to make companies compete through regulation or to put the profit these companies reap into labors pockets instead of owners pockets, which is not just a shift of economic power, but of political power. Wages have nothing to do with your labor and everything to do with your market power. Companies collude behind the scene to suppress wages: https://news.ycombinator.com/item?id=29834753 There are companies that sell "market data" which tells companies how much labor should cost.

Unions are the answer to oligopolies and oligarchy. Unions are what you can do, not what somebody else needs to do, or what the government needs to do. Unions are a vehicle of force. Unions are like the 2nd amendment. You can use both to fight tyranny, and in the process put yourself at risk. Trying to make the powerful less powerful requires risk because the powerful will use their power to keep their power.

These oligopolists (https://en.wikipedia.org/wiki/Oligopoly) are exercising tacit "collective bargaining" but people who earn money in proportion to time seem unable to do their own collective bargaining.

Until there is back pressure on corruption, which requires exercises of power against the corrupt, we can expect things to get worse and worse and those with power to be able to leverage the rules of society to grant themselves more power.

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

#213

Post by ClumsyPilot »

truckerbill wrote: post #122
kortilla wrote: post #105

Earlier quoted context omitted.

Well it can’t be just profit seeking, companies have been doing that forever. Something has enabled them to raise prices without impacting sales.

It's tragedy of the commons. A series of events that have happened which has misaligned the market into an unspoken cartel. An opportunity (or temporary need) arose to raise prices and now they don't want to lower them. They are looking over their shoulder and their friendly rivals aren't doing so either.

> misaligned the market into an unspoken cartel.

We are assuming its unspoken. What if its spoken? how would you know

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

#214

Post by ta8645 »

Call me a conspiracy nut, but there appears to be a coordinated effort to destroy faith in the system that gave us all the wealth we currently enjoy. I can only assume that this is being done in the service of replacing it with... something.

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

#215

Post by evancox100 »

jjoonathan wrote: post #111
cortesoft wrote: post #71

Earlier quoted context omitted.

This is exactly my reaction whenever I see things like this. Profit margins are not the DRIVER for any of these market changes, they are the end result of all the various factors at play.

The profit motive & margins fund lobbyists and political campaigns to change policies that absolutely drive these market changes. We could choose to have anti-trust measures with teeth. We could choose to tax assets. We could have progressive corporate taxes to encourage smaller company sizes and more public transparency. There are so many things we could choose, but the ones that we do choose are the ones that share…

All of those things are independent from nominal price/wage increases. If higher pay was such an unalloyed good, why doesn't the government just pass a law saying "Whatever amount you were getting paid on 6/26/23, now you're getting paid double that, and you have twice as much money in your bank account."?

Because no one would actually be better off. Prices would instantly double. It's just a change of units, like going from getting paid in $ to getting paid the same amount in ¢.

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

#216

Post by ke88y »

JKCalhoun wrote: post #201
ke88y wrote: post #171

Earlier quoted context omitted.

From a textbook economic perspective you are, of course, correct. And your conclusion that we shouldn't hate the player is also correct! But that doesn't mean that we can't hate the game. Capital-isms and market competition are two very different things. Currently we have A LOT of capitalism AND very uncompetitive markets. What we need are competitive markets, and the -isms hawked by the multi-generational holders of…

> Currently we have A LOT of capitalism AND very uncompetitive markets. I've been bemoaning lately the degree to which we ('ordinary folks' as they say) are essentially shut out of whole industries. Want to open a grocery store and go against the local Kroger? A drug store and go against the local CVS? A hardware store and go against the local Lowe's? I think the only way I can get into the new-car dealership aristoc…

Normally technology, wars, and revolutions are the only ways that these massive aristocracies are disrupted. And even then, many hold on.

I do not see a path toward technological upheaval. If anything, exactly the opposite. E-commerce proved to be winner-take-most, and for anything in the real economy it's yet another significant capital input required to compete.

I think the next 100 years will prove to be a real stress test of the "elections not revolutions" hypothesis regarding representative democracy. Both Europe and the USA failed the last several attempts at peaceful major social upheaval, so I'm unfortunately not holding my breath...

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

#217

Post by badpun »

comboy wrote: post #108
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.

In ideal world. Stuff like groceries are such a rigged market that (well I'm sure somebody already wrote a book about it, recommendations?) it puts financial institutions to shame. Just a few brands own most of the stuff you buy [1] and then supermarkets have deals with those. Both protect each other. I mean market finds its way, people can move to small stores and non-branded products if it gets bad enough, but to p…

> Just a few brands own most of the stuff you buy [1] and then supermarkets have deals with those. Both protect each other.

I buy almost exclusively store brands. Probably less than 5% of my grocery spending goes to name brands.

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

#218

Post by perlgeek »

legitster wrote: post #127

Example: I used to sell 100 hammers a year for $5 profit per hammer. My supplier says "There is a hammer shortage I can only give you 50 this year". Okay, so I raise the prices to the point that I know hammers are always on the shelf. And everyone else is short on hammers too, so no risk of losing sales. I'm paying only a fraction more per hammer. Any my revenue is down. But my profit margins are through the roof. Su…

> Supply side issues will show up as profits purely as an accounting figment.

Supply side issues will show up as profit margins, by your explanation, not necessarily as greater total profits.

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

#219

Post by ClumsyPilot »

surement wrote: post #198
alexaholic wrote: post #133

Earlier quoted context omitted.

> Companies can't arbitrarily raise prices The article suggests this is false

then you know it's not a great article.

I know you are not critically engaging with it.

You know how you think the world should work and you reject evidence in front of you. You do not liok for counter-evidence, or find faults in the evidence presented - you just reject it outright, like how flat earther rejects physics

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

#220

Post by abeppu »

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…

Just because firms don't prefer to think about pricing in terms of cost-plus doesn't mean that their actual costs are "irrelevant". If people feel that a company is pricing their goods unfairly, shouldn't they move their spending elsewhere? If companies with healthy and growing margins fire people with memos citing challenging economic headwinds, shouldn't people call BS? If companies raising their prices dramatically for the same goods, and perhaps for products which were developed decades ago and simultaneously lobby against regulations which they say risk stifling "innovation", shouldn't people tell their representatives exactly why those corporations are not credible?

The idea that discussing widening margins is "irrelevant" because companies adjust prices based on consumers' price sensitivity seems exactly backwards to me: the fact that profits are so high indicates that consumers have been overly-credulous and ought to be more price sensitive. And zooming out, the accelerated transfer of wealth from consumers to shareholders happens because we consumers collectively allow it. Reporting which highlights the rising profits relative to other factors can be part of what enables a course-correction.

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