Why is inflation so sticky? It could be corporate profits • Hacker News Board

Re: Why is inflation so sticky? It could be corporate profits

#201

Post by prepend » Wed, May 03, 2023, 10:50 AM UTC

BirdieNZ wrote: post #144

gfdsgfsdgfs wrote: post #121

Earlier quoted context omitted.

Taxing land would increase rent and therefore increase food prices.

Taxing land doesn't increase rent; it's an inelastic good with greater demand than supply. See Ricardo's Law of Rent, Henry George, or basically any analysis of land tax (or indeed, taxing any monopoly good). The incidence of land tax is well known to not fall on the tenant.

That’s interesting. Why is land tax not a cost that’s passed on to the consumer while all other costs do?

Typically inelastic goods mean that prices can increase because demand will not drop as prices go up.

Re: Why is inflation so sticky? It could be corporate profits

#202

Post by autoexec » Wed, May 03, 2023, 10:52 AM UTC

andrekandre wrote: post #153

autoexec wrote: post #25

Earlier quoted context omitted.

> Basic issue is shortage in supply. What's the supply issue that's impacting normal grocery store items? Is there a ship full of peanut butter ground beef and breakfast cereal stuck in a canal somewhere? Why would we have a shortage of things like cheese and pasta? For a short time there were real issues with things like toilet paper, but even that has been resolved (unless you're in the EU maybe). What's driving sh…

> What's the supply issue that's impacting normal grocery store items? well, for eggs, just to take 1 example: bird flu * * https://www.nerdwallet.com/article/finance/why-are-eggs-so-e...

The largest egg producer in the country wasn't impacted by the bird flu at all, but they still jacked up their prices like crazy and pulled in a 718% increase in profit over last quarter because they thought people would bend over and accept it since they had that flu outbreak excuse.

I'm not saying bird flu played zero role in the price increases seen in stores, many producers were legitimately impacted, but that doesn't mean that people, already suffering from high prices, weren't being taken advantage of at every opportunity because of simple avarice.

"Cal-Maine Foods, the nation’s largest producer of eggs, reported this week that its revenues doubled and its profit surged by 718% in the last quarter as a nationwide egg shortage has sent prices soaring...Cal-Maine, which controls about 20% of the national egg market, reported a net income of $323.2 million, a seven-fold rise from the same quarter last year...The company has said that its egg production facilities have been spared the wrath of avian flu, the contagion that has forced farms to cull more than 58 million chickens and turkeys since the outbreak spread in early of last year." (https://nypost.com/2023/03/30/cal-maine-foods-profits-surge-...)

Re: Why is inflation so sticky? It could be corporate profits

#203

Post by ThunderSizzle » Wed, May 03, 2023, 10:53 AM UTC

BirdieNZ wrote: post #144

gfdsgfsdgfs wrote: post #121

Earlier quoted context omitted.

Taxing land would increase rent and therefore increase food prices.

Taxing land doesn't increase rent; it's an inelastic good with greater demand than supply. See Ricardo's Law of Rent, Henry George, or basically any analysis of land tax (or indeed, taxing any monopoly good). The incidence of land tax is well known to not fall on the tenant.

My property taxes currently falls on my tenant. And my rent currently pays for my landlord's property taxes

Re: Why is inflation so sticky? It could be corporate profits

#204

Post by pessus » Wed, May 03, 2023, 10:54 AM UTC

Honestly we should pass a law that all investments are locked for 2 years. Stock market should be used for raising money not speculative thing it is now.

wallstreet is forcing companies to show 20% yoy increase so companies will do anything to achieve that number as otherwise everyones money gets slashed by large percentage.

Re: Why is inflation so sticky? It could be corporate profits

#205

Post by permo-w » Wed, May 03, 2023, 10:55 AM UTC

DrNosferatu wrote: post #198

No shit, Sherlock: In Portugal, for most of 2022 to this day, the price of 1L own/white brand of semi-skimmed milk (one of the most basic and essential staple foods) has been the exact same - to the cent - on all different supermarket chains (Lidl, Audi, Auchan, Jerónimo Martins, Intermarché, Sonae, Dia, etc.) operating here. And, it has risen in steady small increments at exactly the same time in all of them, multip…

are you sure that’s not just the result of public price controls on basic products?

Re: Why is inflation so sticky? It could be corporate profits

#206

Post by mordae » Wed, May 03, 2023, 10:55 AM UTC

silisili wrote: post #3

It's a likely theory. But economics teaches us when a player overcharges, others will step in to undercut and take all the market share. So, we're at a point where we need to admit that mantra isn't true in the modern age, or admit that we've done a terrible job at preventing effective monopolies/duopolies from forming.

> But economics teaches us when a player overcharges, others will step in to undercut and take all the market share.

1. They will all reluctantly increase the prices, testing waters.

2. And as long as their stuff sells, they will keep rising them.

3. Eventually consumers will get fed up with their preferred brands screwing them over and start switching.

4. Aggressive sales will start to pop up, making the consumers reconsider.

5. Eventually the sales will taper off with new prices established.

Most customers will stay loyal to their brand(s). Some will switch.

Re: Why is inflation so sticky? It could be corporate profits

#207

Post by DrNosferatu » Wed, May 03, 2023, 10:55 AM UTC

DrNosferatu wrote: post #198

No shit, Sherlock: In Portugal, for most of 2022 to this day, the price of 1L own/white brand of semi-skimmed milk (one of the most basic and essential staple foods) has been the exact same - to the cent - on all different supermarket chains (Lidl, Audi, Auchan, Jerónimo Martins, Intermarché, Sonae, Dia, etc.) operating here. And, it has risen in steady small increments at exactly the same time in all of them, multip…

Right on the money:

https://youtu.be/Bo2BxTcVp74

Mark Blyth is definitely one of the most clear-sighted economists of today.

Re: Why is inflation so sticky? It could be corporate profits

#208

Post by DrNosferatu » Wed, May 03, 2023, 10:57 AM UTC

permo-w wrote: post #205

DrNosferatu wrote: post #198

No shit, Sherlock: In Portugal, for most of 2022 to this day, the price of 1L own/white brand of semi-skimmed milk (one of the most basic and essential staple foods) has been the exact same - to the cent - on all different supermarket chains (Lidl, Audi, Auchan, Jerónimo Martins, Intermarché, Sonae, Dia, etc.) operating here. And, it has risen in steady small increments at exactly the same time in all of them, multip…

are you sure that’s not just the result of public price controls on basic products?

Nope. No price controls ever enacted. Only recently, a sales tax exemption on basic staple foods was put in place - just started May 2023. (which will be obviously absorbed into retailer's profits)

And I actually surveyed the price data in person.

Re: Why is inflation so sticky? It could be corporate profits

#209

Post by pydry » Wed, May 03, 2023, 10:58 AM UTC

prepend wrote: post #201

BirdieNZ wrote: post #144

Earlier quoted context omitted.

Taxing land doesn't increase rent; it's an inelastic good with greater demand than supply. See Ricardo's Law of Rent, Henry George, or basically any analysis of land tax (or indeed, taxing any monopoly good). The incidence of land tax is well known to not fall on the tenant.

That’s interesting. Why is land tax not a cost that’s passed on to the consumer while all other costs do? Typically inelastic goods mean that prices can increase because demand will not drop as prices go up.

It is passed on to the consumer but the consumer in this case is the landlord not the renter.

There are two markets with two types of consumer here:

1) The market for a roof over your head. This is highly (but not completely) inelastic. People need somewhere to live.

2) The market for property as an investment. Higher taxes on an asset disincentivizes ownership of that asset. This is elastic because there are tons of other asset classes you can pour surplus wealth into.

Effectively a land value tax already exists for renters - in demand locations have higher rents. The "tax receipts" just dont flow into government coffers.

Re: Why is inflation so sticky? It could be corporate profits

#210

Post by hello_computer » Wed, May 03, 2023, 11:06 AM UTC

Rest of the world has dollars lying around. Suddenly, several of their trading partners stop taking those dollars, throwing supply/demand for dollars out of whack. Execs would be foolish (and in breach of fiduciary duty) to not raise prices in such a scenario. After 78 years of pushing everyone around, it was bound to happen. Maybe transition from bully to neighbor, other countries will re-dollarize (it was a pain for them to de-dollarize in the first place), and things will come back into balance?

https://www.bloomberg.com/news/articles/2023-04-18/de-dollar...