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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

#251

Post by xyzelement »

zozbot234 wrote: post #43
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…

> 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.

I came here to make the same point - you are spot on.

Companies raise prices whenever they can and lower them whenever they have to. Which is true for everyone - we demand higher wage when we can get away with it and suck it up with lower comp when we can't.

To your point, companies can't max out the prices whenever they want (or an apple would cost a hundred dollars - why not?) They have to deal with a world of consumers and competitive response.

As a consumer, my response to a raised price could very often be to drop demand (I like apples but not at a $100 per) which then punishes the overall revenue of the supplier. It also draws competition (I wasn't gonna plant an apple orchard in my back yard but now that apples are super valuable, I will. And I am going to undercut your $100 apples to get the business.)

In general this process has worked to generate an affordable plenty for us. Lamenting something at a narrow point in time is myopic.

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

#252

Post by gotoeleven »

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…

So your contention is that corporations just suddenly got greedy and realized they could raise prices and keep the extra money? Why didn't they think of this sooner?

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

#253

Post by evancox100 »

giobox wrote: post #230
evancox100 wrote: post #165

Earlier quoted context omitted.

So the one exception that I considered putting in would be cases where the government is the employer and is negotiating with their employees. And yes of course, they will use whatever arguments they can to come out ahead in labor negotiations, like any employer. I didn't see any mention of calls for workers to accept lower wages in the first article. In the second article, such calls were mentioned but not explicitl…

Sunak regularly has called on UK private sector leaders to show "restraint" when deciding pay awards. One such example: https://www.bloomberg.com/news/articles/2022-11-15/uk-s-suna...

Sure but that's an appeal to the employer setting the wages, not the worker. (Or is he talking about executive pay for themselves? I couldn't read the article.)

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

#254

Post by marcosdumay »

victor22 wrote: post #128
nostromo wrote: post #52

Inflation is caused by monetary policy. Did profits increase? Potentially, yes. But they couldn't have increased without the enabling condition of massive money printing. Companies were trying to maximize profits before 2020. That hasn't changed. What changed was the monetary policy.

Yes. This is a gaslighting piece from gvmnt (as always). Here in south america they blame inflation on natural causes (ie. "rice and beans are 60% more expensive this year because of the dry winter"). Nothing but disinformation.

Oh, yeah, the old inversion of "inflation is high because the dollar price increased".

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

#256

Post by ChuckNorris89 »

evancox100 wrote: post #103
rightbyte wrote: post #56

Earlier 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…

>What government is arguing that employee wages should be lower/stagnant in order to fight inflation?

Austrian government for one because they're the pawns of the big industry. But I'm sure other governments too.

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

#257

Post by hayst4ck »

sdenton4 wrote: post #223
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…

Greedflation, in other words...

Greedflation frames the problem around greed. Greed is not the problem. Lack of competition is the problem. Robber barons are the problem. Citizens united legalizing bribery is the problem.

Ultimately it is deeper than that. Laborers don't know how to exercise power and laborers don't know how to provide consequences when our aristocracy takes advantage of us.

If banks can say "we'll trash the economy if you don't bail us out," but every day people say "we're going to suffer if you don't bail us out," the people in power have to account for these banks, but don't have to care about your suffering.

The banks had a credible threat of force against decision makers making a decision, while the people offered predatory lending had no credible threat of force.

Until laborers can provide a credible threat of force, we should expect to see a continuous decline in labor power, and therefore wages.

Greedflation means lack of unionization.

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

#258

Post by ChuckNorris89 »

ajsnigrutin wrote: post #81
rightbyte wrote: post #56

Earlier 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.

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.

It's difficult in Europe. Most companies aren't paying more, I've been interviewing for 3 months, so there's nowhere to go to for more money. If they can collectively jack up prices to bump the inflation, they can also collectively put a ceiling on wages.

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

#259

Post by horsawlarway »

the_gastropod wrote: post #151
horsawlarway wrote: post #100

Earlier quoted context omitted.

I know right - it's certainly not like that Paul Volcker fella has any fucking clue what he's talking about. --- To quote the man himself, when referring to how he was going to solve inflation: "But none of these policies, important as they are, can substitute for commitments to fiscal prudence and restraint on the money supply."

This isn't to suggest money supply has no impact on inflation—of course it does. There's a reason Powell increased interest rates, after all. But the simplistic "MONEY PRINTER GO BRRR INFLATION LUL" meme can generally be chalked up to belief in conspiracy-theory nonsense.

I think you're basically saying "yes - of course there's an elephant in the room, but if you just look past the elephant at the larger picture..."

And to be clear - I completely agree with you that there is a larger picture, and we had a very interesting test of what just-in-time supply chains looked like during global crisis, and we're now seeing all sorts of trends that we don't have good insight on.

But also... that elephant is still there. Running the money printer hot and heavy for a few years is almost certainly a major driver for inflation, even if the timing of that inflation can be very hard to predict (markets are absolutely not rational actors) and even if we know there are confounding factors.

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

#260

Post by hayst4ck »

gotoeleven wrote: post #252
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…

So your contention is that corporations just suddenly got greedy and realized they could raise prices and keep the extra money? Why didn't they think of this sooner?

Low rates and supply chain shock (Ever Given/port problems/COVID) created the opportunity for tacit collusion: https://en.wikipedia.org/wiki/Tacit_collusion
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