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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

#281

Post by z3t4 »

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…

A huge problem are the cartels that are usually 2-3 companies that has almost all the market share. They increase the prices, which reduce demand, then they tell the producers to lower the production in order to keep the prices artificially high. If we want to keep the capitalist system governments need to address corruption, monopolies and cartels, and allow free trade between countries. Anything that hinders competition should be illegal. If you own a platform or network you must allow competitors to operate for a reasonable cost. Any mergers that would allow one player to grow beyond 5% market share should not be allowed. (in order to make sure that in any market there are at least 20 competitors). Anything that is anti-competitive should not be allowed. Only way to compete should be to make either a better, or a cheaper product. Our governments are a joke, they are charades and full of corruption.

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

#282

Post by whimsicalism »

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…

The point is that if the market is inefficient, profits rise to encourage new entrants into the market to bring it back closer to efficiency. Get rid of the profit rising mechanism and you're stuck with a broken market that nobody wants to enter and fix.

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

#283

Post by mattgreenrocks »

HumblyTossed wrote: post #120
legitster wrote: post #109

Earlier 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?

Isnt this what Powell keeps saying?

Yes, he’s been whining about this since late last year.

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

#284

Post by harvey9 »

evancox100 wrote: post #253
giobox wrote: post #230

Earlier quoted context omitted.

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.)

The thread is about exactly that: an appeal to the employer in the form of advocating lower wages as a means to combat inflation.

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

#286

Post by whimsicalism »

Lots of blaming of 'greedflation' as the cause of inflation in the comments here, which is definitely an outside of the economic mainstream view.

If you want to hold heterodox beliefs, I think it is at least worth understanding the conventional wisdom on why inflation sees larger corporate profits: It's like Uber surge pricing, if you want more companies on the market making things people want, profits of the incumbents will rise temporarily to entice those new entrants.

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

#287

Post by bugglebeetle »

hayst4ck wrote: post #257
sdenton4 wrote: post #223

Earlier quoted context omitted.

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 ba…

>Laborers don't know how to exercise power and laborers don't know how to provide consequences when our aristocracy takes advantage of us.

The US specifically structured its labor laws to prevent sectorial bargaining and the kind of labor power that exists in Europe. That’s why we have company-level unions. Our country will also quite violently suppresses all protest movements and empower those on the right to maim/kill those who oppose elite economic interests. While we certainly need more unions, this in itself will not resolve these problems any more than more unionization in Russia would overthrow their oligarch class.

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

#288

Post by whimsicalism »

miohtama wrote: post #142

The IMF article, probably due to political reasons, does not touch the monetary policy, or "the money printer goes brr" as it is known in Internet memes. While energy prices and poor labour productivity contribute to the inflation, the past monetary policy decisions are a major factor. The increase in money supply created for COVID-19 response, "stimulus", goes to the prices. Furthermore the ECB cannot tame the infla…

M * V = PL * Output is the key equation. V dropped massively during the pandemic, M went up massively, output decreased and as a result PL went up.

Talking about supply without velocity is not very useful I don't think.

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

#289

Post by asdff »

badpun wrote: post #261
asdff wrote: post #245

Earlier quoted context omitted.

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

In my country (Poland), it's various local suppliers. Some large, some mid-sized. Basically, whoever agrees to do the job for the least amount of money, it seems.

In the US its often just the brand name slapping a label on for the store. There aren't any local suppliers for things like paprika when McCormick already cornered the market 100 years ago.

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

#290

Post by gigel82 »

whimsicalism wrote: post #286

Lots of blaming of 'greedflation' as the cause of inflation in the comments here, which is definitely an outside of the economic mainstream view. If you want to hold heterodox beliefs, I think it is at least worth understanding the conventional wisdom on why inflation sees larger corporate profits: It's like Uber surge pricing, if you want more companies on the market making things people want, profits of the incumbe…

Greedflation absolutely is a cause of inflation; maybe you highlighted the wrong word there. It is a cause, it may not be the (only) cause.
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