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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

#401

Post by ChuckNorris89 »

ricardobeat wrote: post #320
ChuckNorris89 wrote: post #313

Earlier quoted context omitted.

>We have a labor shortage instead. Not from the Netherlands, but the labor shortage I see Austria is mostly companies still trying to pay 2020 wages rather than a lack of people motivated toi switch jobs/immigrate. Labor shortage here is just propaganda for "we can't find people willing to work at the salaries we want to pay". In similar fashion I have a constant Ferrari shortage because I can't seem to find these ca…

The minimum wage in the Netherlands rose over 20% since 2020, while in Austria it apparently hasn't moved. Though I have a hard time believing the "people don't want to work" theme, when the alternative is having no income at all?

How many people work for minimum wage? Austria or Netherlands.

If minimum wage goes up 20%, because of government regulation or union negociations, doesn't mean every other wage also goes up 20%. People on minimum wage are usually subsidized in most of Europe.

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

#402

Post by pnt12 »

NoboruWataya wrote: post #166
abeppu wrote: post #104

Does this make anyone else spitefully want to spend less, even though they don't have to? My econ training is very limited, and perhaps this is a pointless idea, but - the central bank approach to curbing inflation seems to assume that actors in the economy won't change their spending patterns (and decrease firms' price-setting power) until they're unable to continue (i.e. are laid off, can't access financing, etc) o…

If you want to boycott every corporation that is trying to increase profits, you will lead a highly ascetic life. That said, what you are saying isn't entirely untrue, and in fact is considered conventional wisdom by many. If everyone was a lot more price sensitive and more willing to forego discretionary spending, then yes, profit margins and prices would probably be lower. When boomers talk about millennials and th…

Older generations always critize younger, that has little to do with inflation and price sensitivity.

The boomer doesn't like avocado toast, so they don't understand how someone would pay money for it. But it's likely they are also buying stuff milenials have no interest in.

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

#403

Post by [deleted] »

neximo64 wrote: post #395
truckerbill wrote: post #141

Earlier quoted context omitted.

Yes. But importantly its not the printing of money that was the problem either. If you think about the path money takes especially the furlough: government -> consumer -> big capital (Petro/chemicals, Pharmaceuticals, Food Conglomerates, Landlords, Tech...). And that's where it stays. How do you get it back? Well aimed taxes. Otherwise big capital buys all the assets as in investment with their new found pile.

And the tax -> government spend. Which again stokes inflation so not sure thats a good argument. The government has to cut spending and build a surplus for taxes to be disinflatory

[deleted]

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

#404

Post by truckerbill »

qeternity wrote: post #377
truckerbill wrote: post #141

Earlier quoted context omitted.

Yes. But importantly its not the printing of money that was the problem either. If you think about the path money takes especially the furlough: government -> consumer -> big capital (Petro/chemicals, Pharmaceuticals, Food Conglomerates, Landlords, Tech...). And that's where it stays. How do you get it back? Well aimed taxes. Otherwise big capital buys all the assets as in investment with their new found pile.

> How do you get it back? What in the world? I get that “Big Capital” is an easy boogeyman but how do you think this works? If you print money, so you can exchange that for someone else’s goods, what entitles you to “get it back”??

It's not really ideological but practical. If you don't want accrual of resources into small pockets of people, it needs to be mixed around.

The "entitlement" the government has is their transitory monopoly on violence. And in a functioning democracy that monopoly is exercised according to how society at large believes it will benefit them.

It's important to remember money arises naturally but the dynamics of how its used and its value is partly a top-down decision. It's really a tool of persuasion not some universal marker of value. The stock market wouldn't fluctuate wildly around meme stocks etc if that were true. Argentinians can tell you that the underlying economy might not always reflect the market value of money itself.

I'm not villifying big capital , it's just prudent to be wary of it as a phenomenon. Big capital allowed for huge distributed tech/infrastructure creation like computers (with a nudge from the gov). All the actors within those organisations are just acting 'rationally' within the contraints that have been set for them. But these current constraints might not be what's best for society in the long term.

The reason you would need it back is to preserve the system (for those who are being taxed also)- as money accrues, the ability to rent-seek rises which raises costs for all of society and reduces productivity and more importantly the well-being of the population. Past a point workers won't feel invested in working, elites will start infighting to get a foot in the shrinking doorway.

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

#405

Post by truckerbill »

neximo64 wrote: post #395
truckerbill wrote: post #141

Earlier quoted context omitted.

Yes. But importantly its not the printing of money that was the problem either. If you think about the path money takes especially the furlough: government -> consumer -> big capital (Petro/chemicals, Pharmaceuticals, Food Conglomerates, Landlords, Tech...). And that's where it stays. How do you get it back? Well aimed taxes. Otherwise big capital buys all the assets as in investment with their new found pile.

And the tax -> government spend. Which again stokes inflation so not sure thats a good argument. The government has to cut spending and build a surplus for taxes to be disinflatory

I think it probably depends on how they spend it. Investments that increase efficiency would be long-term deflationary. Infrastructure, education, research etc. All the obvious stuff we all know we need more of.

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

#406

Post by IMTDb »

teruakohatu wrote: post #400
IMTDb wrote: post #398

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. Meanwhile, my government mandates that ALL employees automatically get a raise matching inflation. No negotiation possible/needed; employers cannot refuse. Belgium. Sounds great in theory; in practice Belgium competitiveness index and innovation index is lower than all its n…

> Meanwhile, my government mandates that ALL employees automatically get a raise matching inflation How does this work in practice? It is your wage is reviewed annually and adjusted, or more frequently? Do employers give raises for good performance or do you expect to just get a raise based on inflation?

Every Jan 1st the government produces an "inflation index" and all gross salaries are multiplied by that number. Employers are free to give more; but if your January gross salaries is lower than your dec salary * the index you have a legal case.

Employers typically take this into account and reduce the performance based raise they give by the amount. It's great for the low performer or easily replaceable people who get a raise they otherwise would not have gotten and bad for the top performer / more sought after profiles because employer look at the total costs and thus have less legroom for individual increases. It acts as an equaliser in that sense; but the best and brightest are getting way more few kilometres away (it's not like Belgium is a huge country; almost every lives less than 1.5 hour away from the border).

For the companies that are less able to pay that automatic inflation; it can be pretty hard/expensive to fire, because the employment laws are quite protective. So the usual solution is to just not hire. Big companies are also finding ways to reduce their headcount and transfer the risk on smaller structure; such as using sub companies and franchising models. Thos inherently reduce employee job security and stability. Unions are fighting this as much as they can; without any success.

Companies that need local workforce (retail, ...) adjust their prices accordingly. As an example the same pack of pasta costs ~40% more in Belgium than in France. Many people take their car and drive significant distances to cross the border buy food.

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

#407

Post by LatteLazy »

rightbyte wrote: post #56
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…

> 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 etc. argue that employees should not demand higher pay to match inflation to avoid a "spiral" out of the goodness of their hearts.

Anyone stupid enough to listen deserves all they get...

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

#408

Post by Kbelicius »

s1artibartfast wrote: post #344
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?

If a company can win a market, that begs the question why. Are there regulatory barriers preventing competition? Can competitors not compete on price? The answer is the former then we should remove governmental barriers to competition. If competitors can't theoretically undercut the price, then it's hard to see how more competition would favor the buyers. Surely they're not better off with 10 competitors at Double th…

> If a company can win a market, that begs the question why. Are there regulatory barriers preventing competition? Can competitors not compete on price?

A reason why a new competitor might not be able to compete on price is because of capital disparity. The winner can lower prices, buyout the competitor or if that fails they can always turn to buying out distributors/suppliers/key employees of their competitor

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

#409

Post by Kbelicius »

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…

> Then when they jack up prices, it creates an incentive for new companies to enter that field and make the same item for less.

And then the winner just lowers them, now what?

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

#410

Post by ETH_start »

pnt12 wrote: post #399
IMTDb wrote: post #398

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. Meanwhile, my government mandates that ALL employees automatically get a raise matching inflation. No negotiation possible/needed; employers cannot refuse. Belgium. Sounds great in theory; in practice Belgium competitiveness index and innovation index is lower than all its n…

But does it result in better quality of life? Maybe competitiveness is not the best target to optimize for.

Broadly speaking, competitiveness is the source of quality of life improvements, through its effect of expanding capital and thereby raising productivity.
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