321–330 of 476 posts
Yes, corporations are greedy, but that's not new. What's new is money printers working even faster.
Earlier quoted context omitted.
> 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.
Price controls have a bad reputation from there enforcement by corrupt and reactionary governments of the past, but there's a very strong case being made by mainstream economists that there's a path to doing it properly: https://www.project-syndicate.org/magazine/inflation-targete...
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 compet…
I think this is a core part of the anti-competitive problem, though. Economies of scale mean that a company with a 50% market share is going to make the cheaper good, all else equal.
We would effectively need to increase competition at the cost of increasing efficiency to make that work (e.g. by banning mergers of larger players).
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…
> 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 will blame businesses, consumers, employees, foreigners and bad weather. The only option ruled out is all the money printing going on and a good decade of regulators encouraging that and high-risk financial behaviour.
If inflation is high, it is a bad time to listen to governments.
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…
UK govt spokespeople have regularly argued that employers and employees, both public and private, should limit wage rises or accept lower rises to avoid inflation. It’s mad, but that’s actually what they say. Ironically, they are most vehement when claiming wage rises in the public sector cause inflation, despite ethe evidence there being much weaker (or non existent according to many economists).
Telling workers to accept lower pay makes about as much sense as asking companies to accept lower profits. Yes you can ask but they will not obey.
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...
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 have a cynical knack of identifying every possible cause of inflation, no matter how tenuous, except the obvious one - government policy. Governments will blame businesses, consumers, employees, foreigners and bad weather. The only option ruled out is all the money printing going on and a good decade of regulators encouraging that and high-risk financial behaviour. If inflation is high, it is a bad time t…
Why complicate matters? I suggest we change it into: "It is bad to listen to governments"
Earlier quoted context omitted.
>Governments etc. argue As they should. that's how it works and they are correct. Employees should argue against that and demand more if they dare. The job of Central bank is to increase interest rates until unemployment rate increases to the level where employees don't dare ask more. Unemployment reduces both demand and wage growth. That will slow down inflation but it also baits recession. Economy is a dynamic syst…
> Central bank is to increase interest rates until unemployment rate increases I might be old fashioned, but last time I checked, government's job was not to drive down living standards. Maybe their job is to ensure that a resource-show like rising energy prices does not hit, by majing economy rsillient and relying on diverse suppliers
thats because you have been reading the government marketing materials instead of looking at what they do
The interesting thing about the graph is, as far back as it goes, the contributors fluctuate but seem not unusual or unexpected. So companies are not extraordinarily greedy right now, they act the same as ever, just more do so. My personal, uneducated, unverified hypothesis was that companies overcompensate price increases for three main reasons: * They assume consumers dislike many small price increases. The current…
> My personal, uneducated, unverified hypothesis was that companies overcompensate price increases for three main reasons: profit-maximizing sellers can only increase prices if demand rises, otherwise they will sell fewer units at the higher price (and if they could've made more money selling fewer units at a higher price then we can assume that they were already doing that because they are profit maximizing) the onl…
No, this is not a joke. I wipe the same as pre 2020. I had a couple of pay raises since then, but I still buy the same amount of TP, and the price is still 50% higher than before.
Earlier quoted context omitted.
>Governments etc. argue As they should. that's how it works and they are correct. Employees should argue against that and demand more if they dare. The job of Central bank is to increase interest rates until unemployment rate increases to the level where employees don't dare ask more. Unemployment reduces both demand and wage growth. That will slow down inflation but it also baits recession. Economy is a dynamic syst…
> Central bank is to increase interest rates until unemployment rate increases I might be old fashioned, but last time I checked, government's job was not to drive down living standards. Maybe their job is to ensure that a resource-show like rising energy prices does not hit, by majing economy rsillient and relying on diverse suppliers
Central Banks are generally tasked with setting one single, but very powerful, variable: interest rates. There's thought to be a pretty strong causal relationship between interest rates and unemployment.
The central bank absolutely knows that jacking up interest rates will, in the short term, drive down living standards. The trade-off is that it will also drive down inflation, which causes much bigger drops in living standards in the long term.
... Or so the theory goes.