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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

#241

Post by marcosdumay »

kibwen wrote: post #92

Remember: 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…

Well, yes, but not only inefficiency.

Profit is an aggregate that adds the remuneration of capital (closely related to savings), risk-taking, technological development, initiative (close to efficiency), all kinds of corruption and coercion, and a lot of other things.

We have no viable way to run through a market and classify "well this company is profitable because it's innovative; this other one is profitable because a law requires that everybody buys something it makes", so we can only speculate on what is important at each time.

All that because I'm not sure I agree. I see all kinds of rent seeking and artificial barriers linked to the current environment, and those are not exactly measures of inefficiency, they are something else.

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

#242

Post by skippyboxedhero »

JustBreath wrote: post #46
pessimizer wrote: post #26

Danone, Kellogg among 75 companies France has asked for price cuts https://www.reuters.com/business/retail-consumer/danone-kell... ----- Meanwhile, in the US: Car Dealer Markups Helped Drive Inflation, Study Finds: The money dealers charged over makers’ suggested prices factored into a nearly 16% rise in the consumer-price index in recent years https://www.wsj.com/articles/car-dealer-markups-helped-drive...

I thought auto sales was a result of the downward/upward demand wave the pandemic drove? Basically fewer people bought cars, then lots more people bought cars and meanwhile there was a shortage of chips.

Correct. Shortage of supply due to supply chain disruption. Increase in demand because of high savings rates. Value of used cars has increased globally because people are buying used instead of new.

I am not sure what people want used car dealers to do, if they could sell more cars they would but they can't make cars appear from nowhere.

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

#243

Post by hayst4ck »

abeppu wrote: post #104

Does this make anyone else spitefully want to spend less, even though they don't have to? My econ training is very limited, and perhaps this is a pointless idea, but - the central bank approach to curbing inflation seems to assume that actors in the economy won't change their spending patterns (and decrease firms' price-setting power) until they're unable to continue (i.e. are laid off, can't access financing, etc) o…

> Does this make anyone else spitefully want to spend less, even though they don't have to?

You are trying to exercise individual market power, when there are other "scabs" who will go and spend that money keeping prices inflated anyway.

Your action alone will not produce any value, it requires collusion with other market participants.

If you want to make a change you need to exercise power and that means unionizing.

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

#244

Post by skippyboxedhero »

coding123 wrote: post #11

So, for the United States - we should be pointing fingers at one or two things... Is it a) the FTC has not stopped bad mergers. Too much power over the price of food/gas/etc... in control by 1 company. Or b) actual price collusion. From my personal research price collusion has become "legalized" through a cottage industry of "price analyst" companies that provide "good guestimates" of what gas, food, etc... should be…

There are no conclusions for the US. The EU isn't the US, the state of competition in each region is unrelated.

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

#245

Post by asdff »

badpun wrote: post #217
comboy wrote: post #108

Earlier quoted context omitted.

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.

Who do you think makes the store brand and prints the label for Kroger?

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

#246

Post by throwawaymaths »

rthrfrd wrote: post #211
throwawaymaths wrote: post #194

Earlier quoted context omitted.

> 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.

I guess you've forgotten then. I'm not here to help you learn, I'm here to help other readers of these threads avoid trying to parse that word salad sophistry

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

#247

Post by asdff »

mjburgess wrote: post #129
kibwen wrote: post #92

Remember: 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…

I think what people operating from vauely "austrian premeses" miss is: the pandemic. We have no model of how a pandemic is going to "correlate" economic markets typically under competition. I think it's highly likely that "supra-economic" shocks of the kind we've experienced have handed a strange unexpected market power that the usual (free market) suspects have yet to parse.

>We have no model of how a pandemic is going to "correlate" economic markets typically under competition.

Most crashes are correlated without needing a pandemic thanks to how leveraged the world is globally.

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

#248

Post by ClumsyPilot »

ta8645 wrote: post #214

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.

The system that gave us wealth is not the system we have now

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

#249

Post by evancox100 »

jameshart wrote: post #197
legitster wrote: post #139

Earlier quoted context omitted.

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".

The BoE has been banging the wage restraint drum for a while. Bailey on the Today Program in February: “I’m not saying nobody gets a pay rise, don’t get me wrong. But what I am saying is, we do need to see restraint in pay bargaining, otherwise it will get out of control.” Back in May, his Chief Economist Huw Pill got in trouble for expressing the sentiment thusly: “Somehow in the UK, someone needs to accept that the…

This is probably the closest example, and he is toeing the line there on a direct appeal to workers. But it also seems like broad expectation setting to both workers and employers that high inflation will not continue, so you don't need to price that in. It is a bluff on his part, but one that (in theory) works out if everyone believes it.

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

#250

Post by Abroszka »

ccorcos wrote: post #234
talkingtab wrote: post #210

The terminology we use is important. We call this "inflation" - things cost more. But it is not "things costing more" it is corporations extracting the wealth of the citizens. The cost of gas did go up, but the profits that gas companies went up at least as much. Money is like water, you need it to flow to do good. When it is dammed up by corporations it does no good. We will not survive if we allow corporation to co…

Another angle on a solution: start your own gas company with competitive margins. Easier said than done, obviously. But maybe we should try to make it easier? I can imagine a downward spiral of government regulation creating moats for companies that take advantage of the lack of competition, leading to ever more government interventions that further entrench the status quo.

> start your own gas company with competitive margins

Are you serious? Why would existing large companies allow this? And even if you succeed they are just going to buy up the company.

Beautiful example of this is large IT companies buying startups and stopping competition.

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