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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

#411

Post by teruakohatu »

IMTDb wrote: post #406
teruakohatu wrote: post #400

Earlier quoted context omitted.

> 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 g…

Thank you for the explanation.

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

#412

Post by dpc050505 »

ETH_start wrote: post #410
pnt12 wrote: post #399

Earlier quoted context omitted.

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.

that's a cute hypothesis where's the proof

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

#413

Post by foo-bar-bat »

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…

Car sales in the US is not a useable example for any microeconomics discussion, let alone (notionally) generalized principles. Car dealers are one of a handful of infustries with an explicit exemption from federal antitrust law prohibiting price fixing and collusive monopolies. So, they made those, decades ago. And abuse them constantly.

The way you can tell this is true is price any car or truck in the US for sale from dealer X. Then attempt to shop around for a better price from set of dealers Y-Z. You will find that within a convenient-to-you radius the same regional dealership operating co owns all of the dealerships for your preferred make/model.

Then if you expand your search radius you will find that opco is owed by a larger holdco, which "oversees" supply and demand so your price. Not a free market. And not the manufacturers' doing, or their input suppliers, or inflation. It's a gov policy choice as abused by nearly a century of lobbying which some might call bribes.

As I recall the other US industries with explicit antitrust exemptions are Major League Baseball... and domestic shipbuilding vis-a-vis domestic maritime commerce. This is famously why the Love Boat *had* to go to Mexico, because it was (presumably) foreign flagged and couldn't move between US poets without calling at a foreign port.

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

#414

Post by sznio »

abeppu wrote: post #220
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…

Just because firms don't prefer to think about pricing in terms of cost-plus doesn't mean that their actual costs are "irrelevant". If people feel that a company is pricing their goods unfairly, shouldn't they move their spending elsewhere? If companies with healthy and growing margins fire people with memos citing challenging economic headwinds, shouldn't people call BS? If companies raising their prices dramaticall…

>the fact that profits are so high indicates that consumers have been overly-credulous and ought to be more price sensitive.

How do I become more price sensitive to food prices? I already had to start eating less and worse.

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

#415

Post by cool_dude85 »

dpc050505 wrote: post #412
ETH_start wrote: post #410

Earlier quoted context omitted.

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

that's a cute hypothesis where's the proof

Well, you see, A = A, and from there the rest follows.

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

#416

Post by mbar84 »

This article offers an incorrect causal explanation. Profits don't account for anything. Profits are the result of other effects. Corporations always try to maximise profits. If their profits are higher than previously, the question is, why can they get away with it? Why is competition not eliminating the profits? Why is the price for labour not rising together with other prices?

The explanation is: When the quantity of money is expanded, prices don't all rise equally fast. There is a lag for certain adjustments, depending on how often a price is renegotiated and how distant the parties are from the financial system.

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

#417

Post by [deleted] »

roenxi wrote: post #394
sofixa wrote: post #383

Earlier quoted context omitted.

If anyone is still claiming the main or only reason for inflation is "money printing", they really haven't being paying attention to the world for the past 3 years and it's a terrible idea to listen to them. Why are you ignoring a pandemic with associated measures such as lockdowns (although funnily, Sweden is very useful - they didn't lock down, they didn't print a ton of money, yet they're experiencing similar infl…

> Do you really think none of this matters... All those issues will be resolved and the effects will disappear in time. The war will end. Supply chains will realign. And if those things matter, then at that point we would expect prices to come down. You'd have to be naive to believe prices will come down. They aren't going to. This is not the first crisis in the last century and yet inflation is almost uniformly posi…

[deleted]

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

#418

Post by ClumsyPilot »

revelio wrote: post #387
sofixa wrote: post #383

Earlier quoted context omitted.

If anyone is still claiming the main or only reason for inflation is "money printing", they really haven't being paying attention to the world for the past 3 years and it's a terrible idea to listen to them. Why are you ignoring a pandemic with associated measures such as lockdowns (although funnily, Sweden is very useful - they didn't lock down, they didn't print a ton of money, yet they're experiencing similar infl…

He labelled the cause as government policy, which clearly includes pandemic measures. Sweden didn't lock down but they did print a ton of money. Compare money supply growth for UK vs Sweden. It's the same and occurred at the same time. Lockdowns weren't the only pandemic spending measures unfortunately. All governments everywhere massively pumped the money supply to pay for "whatever it takes" and now the bill has co…

> In theory inflation cannot occur without money printing, because a rise in prices of something like oil or food must be compensated by a fall in prices elsewhere as demand for that less essential thing disappears.

This is silly, inflation existed before "money printing" existed as a concept. We had inflation when we had gold standard. Inflation existed even when we used physical gold coins to pay.

More plainly, the most important factor in the economy is velocity of money and you completely ignore that it exists. Higher velocity of money can allow inflation to rise, with a fixed supply.

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

#419

Post by juve1996 »

autoexec wrote: post #397
juve1996 wrote: post #335

Earlier quoted context omitted.

> 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.

Historically, that hasn't happened when worker's wages increased. Prices do tend to go up (they always do) but not to the degree that it makes the wage increases worthless. When minimum wages go up, workers lives improve. Also, when companies don't have an excuse, consumers simply won't pay $12 for a dozen eggs. Every consumer has some idea of what things are worth and if a company tries to jack prices up for no reas…

You make an assumptions that is false. 1. Minimum wage increases != wage increases. It's a small subset. The poorest of the poor is never the problem.

> Every consumer has some idea of what things are worth and if a company tries to jack prices up for no reason consumers feel cheated and stop paying.

The recent inflation proves otherwise. Many costs have remained sticky for no added benefit. If this was true then we would never have inflation - because the inflation the last 2 years has been so extreme that your belief should have come to pass without any help and much earlier when the supply shocks subsided.

> Then as the supply of goods came back they started using the inflation narrative (complete with "printed money" excuse) to justify further increasing prices,

This just proves the point further - consumers continued spending despite the rising costs. But now you'll say they're only now started to feel ripped off? Seems awfully convenient for your argument, but isn't consistent. What is consistent is that raising interest rates have helped somewhat.

The fed is doing the right thing and yes it impacts wages as it impacts other asset classes. Again, if your eggs cost 300% more but your wages increased, it doesn't matter, in the end you're still likely losing.

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

#420

Post by horsawlarway »

the_gastropod wrote: post #338
LudwigNagasena wrote: post #312

Earlier quoted context omitted.

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.

No comment in this chain implied the fed printed money except yours. So lets cut the crap - you are engaging in reductive malarkey right now.

It's a complete non-sequitur to the conversation at hand (that printing money causes inflation) and frankly, based on your comments - I'm fairly certain you have no clue what you're talking about at this point.

Does the fed directly print money - no, the treasury does. Does the fed control the supply of money? Yes, yes they fucking do. The fed is the one placing orders for the money that the treasury prints, and they control how that money enters the market (honestly - not so much through physical supply anymore, it's mostly digital these days).

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