Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

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

imf.org

Post reply on HN
Print view View original

301–310 of 476 posts

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

#301

Post by frogperson »

beirut_bootleg wrote: post #298

There will come a moment in time when consumer wealth has been almost entirely absorbed, leaving businesses with no further profit to gain from traditional revenue streams. After years of relentless pursuit of profit, multinational corporations will have effectively captured a significant portion of the world's wealth, consolidating resources and power in the hands of a privileged few. Will the tipping point where no…

Businesses shouldn't be allowed to be one so large that healthy competition no longer exists. Right now our markets are sick, healthy competition should have driven prices back down, but that isn't what we see happening.

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

#302

Post by whimsicalism »

tootie wrote: post #267
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…

Prices going up and things costing more are synonymous. This is textbook inflation. Policy makers have to look at things from different angles. Central banks really can't do much of anything about structural problems. They can only raise or lower rates. They will put some weight on the distinction of core prices and volatile ones, but really they don't have any levers to affect profits or wages directly. That job goe…

> Windfall profits tax is a start, but what they do with the profits they collect is another. No one likes price controls, but taking short-term action or maybe enacting price stabilization could be very effective.

You are talking gravely serious interventions and I really think you are missing the knockoff incentive effects.

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

#303

Post by smt88 »

narcraft wrote: post #65
smt88 wrote: post #7

Earlier quoted context omitted.

This kind of reply is uninteresting and unhelpful. These statements about inflation drivers are surprising (to some) and highly relevant because they counter corporate and conservative propaganda. We now know that government assistance isn't the main villain in the brutal inflation spikes of the last few years, and we need voters to understand that too.

I think it's fair to call my comment unhelpful because my point wasn't to suggest that the article's contents were unsurprising, but rather to criticize the HN title and provoke further reflection on causation. The article doesn't explicitly suggest that profits are the largest driver (which I interpret as cause) of inflation, but it does use the word drivers for categories in a graph, which I think is unfortunate wo…

> my point wasn't to suggest that the article's contents were unsurprising, but rather to criticize the HN title and provoke further reflection on causation

If that's what you wanted to do, you should have done that. A single glib sentence with no content in it isn't enough to "provoke further reflection on causation".

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

#304

Post by makomk »

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.

The obvious answer here is probably that shutting down large chunks of the economy like that directly impacts its efficiency and ability to supply people with stuff, and there's probably no way of fully preventing that impact. There were a bunch of rapid demand shifts to different, non-shut-down sectors like home improvement and DIY followed by a huge spike in demand as people caught up on spending, there's not the capacity to satisfy any of that, and it makes no sense for anyone to build that capacity because by the time it was ready the demand likely wouldn't be there any more. (Look at all the big tech businesses that employed a bunch of people and then discovered the lockdown boom in demand didn't last, for example - and it's a lot more easier for them to scale up than a semiconductor fab or a car manufacturer or airlines or fossil fuel production or the entire wood harvesting and processing chain.)

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

#305

Post by smt88 »

1980phipsi wrote: post #63
smt88 wrote: post #7

Earlier quoted context omitted.

This kind of reply is uninteresting and unhelpful. These statements about inflation drivers are surprising (to some) and highly relevant because they counter corporate and conservative propaganda. We now know that government assistance isn't the main villain in the brutal inflation spikes of the last few years, and we need voters to understand that too.

In textbook macro, if you have a shock to aggregate demand, then (ceteris paribus) the result is an increase in inflation and an increase in profits. That doesn't mean that profits are the cause. So it may be an uninteresting or unhelpful way to put it, but I think he accurately summarizes how many people who have studied economics would think about it.

> So it may be an uninteresting or unhelpful way to put it, but I think he accurately summarizes how many people who have studied economics would think about it.

OK, but again: this is not the narrative that is being pushed by corporations and conservatives. You can say, "Oh, hey, this is just textbook economics," but the vast majority of people have never studied one sentence of economics and are being actively lied to.

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

#306

Post by smt88 »

sMarsIntruder wrote: post #145
smt88 wrote: post #7

Earlier quoted context omitted.

This kind of reply is uninteresting and unhelpful. These statements about inflation drivers are surprising (to some) and highly relevant because they counter corporate and conservative propaganda. We now know that government assistance isn't the main villain in the brutal inflation spikes of the last few years, and we need voters to understand that too.

> We now know that government assistance isn't the main villain in the brutal inflation spikes of the last few years, and we need voters to understand that too. This is terribly wrong since government spending is directly associated to money printing, and you know what? That causes inflation. You already know that since that’s basic economics, but simply your content is 100% politically biased therefore even more wro…

As the sibling pointed out, I very intentionally said government assistance and not government spending.

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

#307

Post by norrland4ever »

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…

Sweden

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

#308

Post by hartator »

cmdli wrote: post #40
hartator wrote: post #30

Earlier quoted context omitted.

This. If govs can print out 2x the money supply in a few years, you want to “cash out” profits as fast as possible instead of reinvesting them.

Huh? Wouldn’t you want to reinvest in a real asset like a business instead of holding cash that inflates away?

What is the point of sweating more in your business when just parking your money in real-estate and stocks will provide you more money?

Might as well as raise prices, work less, and extract more money to these passive assets.

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

#309

Post by kyrra »

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…

Record profits can also be a supply/demand mis-match. If production for a given good/service is low, companies can charge higher prices until demand is level with their supply level. That gap is profits as you say. How else do you balance who gets to buy/use a given good/service without prices (otherwise it's a lottery effectively).

Large profits does show an opportunity in a market for another player to come in and produce the same goods/services at a better price. If they are unable to produce it, we should be look into what's causing competition from appearing. Is it a natural resource? Is it regulator capture? Is it labor shortage?

There is going to be some cause for the mismatch, the question is, what is that cause?

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

#310

Post by AndrewKemendo »

hunson_abadeer wrote: post #293
vjk800 wrote: post #279

Earlier quoted context omitted.

The problem with competition is, what happens after someone wins it? This is essentially what has happened in many markets; lots of small companies have been killed by or conglomerated into giant ones that rule the market. Sometimes antitrust regulation can't even help with this; what if there are no acquisitions, just one company doing stuff better killing all competition?

Then when they jack up prices, it creates an incentive for new companies to enter that field and make the same item for less. A better question might be: what hinders this process today? Capital disparity plays a role (a wealthy company can perhaps make a competitor a buyout offer they can't refuse, or temporarily lower prices to try to kill them), but another major cause is excess regulation and the weaponization of…

What hinders the process is that the people holding the capital are the same ones that benefit from the new competition.

So they sell the stock of the company that is wringing out excess profits just as they are putting money into the “disruptor” that is going to capture all the consumers leaving company #1.

Now ensure that you push for a decade of overleveraged growth and regulatory capture (ensuring you don’t get diluted the same as the founders) and now you have shares of an entrenched quasi-monopoly - your task again now is to demand margin increases and stock buybacks in order to exit your position and buy your name on the local college library.

Wash rinse repeat all while taking money/risk off the table personally each round so when it collapses finally and the companies are finally ground into dust, you and your family have long exited and are onto the next thing.

Post reply on HN