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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

#331

Post by galaxyLogic »

How about government taxing workers less, providing more support for education and healthcare and transportation? Then workers wouldn't have to demand higher wages because they could get by with the subsidies they get from government.

The remaining question of course is how could the government provide these extra benefits without increasing the taxes on the workers? The answer of course is raise taxes on the rich, the companies, and the super-rich. The wage-inflation problem solved.

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

#332

Post by lend000 »

If anyone read the paper, you would see this is a sensationalist headline that bundles the rising price of imports (global inflation) with domestic profits, which makes no sense.

When a narrative defies logic like "corporations suddenly all became greedy and colluded to raise prices, causing inflation," it should raise alarm bells in your head. Especially if it ignores the parts where central bank governments increased their respective circulating money supplies by 20-30% in 3 months, while simultaneously flooring interest rates.

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

#333

Post by brutusborn »

We need more land value taxes. Companies can’t hide land offshore and often use the most valuable land in inner cities.

It also isn’t distortionary - shifting company tax to land taxes doesn’t disincentivise investment the way naive increases in company tax do.

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

#334

Post by jldugger »

asdff wrote: post #229
jldugger wrote: post #72

Earlier quoted context omitted.

Well, you have to come up with a reason for why now -- the profit motive has been there forever. There's also a question of why high margins don't induce new entrants to these markets, or why consumers responding too cleanly to higher prices by buying less. There's been a variety of factors at play and I think if you want to pin it on profits you gotta put in the legwork to rule out or at least quantify the dozens of…

Its hard to enter a market as a truly novel competitor. Chances are on your way up you run into some essential sources that are controlled by a competitor. Imagine starting a Peach computer company in your garage today. You think Broadcom will want to potentially sour their relationship with Apple by offering you good terms? There's a reason why a lot of these "pulled myself up by the bootstraps" stories happened in…

> There's a reason why a lot of these "pulled myself up by the bootstraps" stories happened in eras where you could comfortably rent a workshop with little means and do things like solder your circuitry for a desktop computer by hand and ship it to clients yourself.

If only there was a discussion forum that could match up founders with venture capitalists ready to take on big challenges!

You have picked perhaps the worst example industry, on perhaps the worst venue to write it.

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

#335

Post by juve1996 »

evancox100 wrote: post #215
jjoonathan wrote: post #111

Earlier quoted context omitted.

The profit motive & margins fund lobbyists and political campaigns to change policies that absolutely drive these market changes. We could choose to have anti-trust measures with teeth. We could choose to tax assets. We could have progressive corporate taxes to encourage smaller company sizes and more public transparency. There are so many things we could choose, but the ones that we do choose are the ones that share…

All of those things are independent from nominal price/wage increases. If higher pay was such an unalloyed good, why doesn't the government just pass a law saying "Whatever amount you were getting paid on 6/26/23, now you're getting paid double that, and you have twice as much money in your bank account."? Because no one would actually be better off. Prices would instantly double. It's just a change of units, like go…

> Because no one would actually be better off. Prices would instantly double. It's just a change of units, like going from getting paid in $ to getting paid the same amount in ¢.

This is so basic but so many people miss it. I have continually explained this to my parents. It doesn't matter how good your 401k is doing if it leads to eggs being $12 a dozen in your retirement.

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

#336

Post by ars »

Abroszka wrote: post #250
ccorcos wrote: post #234

Earlier quoted context omitted.

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.

> And even if you succeed they are just going to buy up the company.

Wonderful! Easy money. Then you go and start another company. Keep doing that and enjoy the profits.

Your large competitor can't afford to keep buying you out forever.

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

#337

Post by bumby »

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…

One point is that they “argue” through their policies. It seems like there is much more government tolerance for “stimulating” the economy when it most benefits corporations (lower rates and/or bailouts) than it does when it disproportionately goes straight to citizens (stimulus checks)

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

#338

Post by the_gastropod »

LudwigNagasena wrote: post #312
the_gastropod wrote: post #151

Earlier quoted context omitted.

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.

Ah, the ol’ good tactic of taking a straightforward statement, calling it a dog whistle and dismissing it.

As a straight forward statement, it’s reductive malarkey. The Fed, in no way, prints money. When people use that phrase, it’s almost always a good sign they have no idea how money works.

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

#340

Post by clysm »

whimsicalism wrote: post #282
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.

New entrants into hard to enter markets that require tons of capital, resources, and time to spin up manufacturing on?

Yea, just tell everyone to hold on and wait for good times to come when they can’t afford cars or food.

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