711–720 of 1001 posts
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Well, if the one measure you point out as what the government could do today led to worse outcomes, then I do think they should abstain from that kind of interference in the future. I don't think price controls have worked anywhere.
So what's the plan now? Let this thing run its course until there are food riots in the USA?
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The rises are due to a power dynamic: the companies raising the prices can basically get away with it ("whatever the market will bear"). Why can they do this? One reason is monopoly power- monopolies must be broken up. But what else can be done (besides central bank driven demand destruction)? So instead of price controls, a more palatable solution is collective buying. This gives buyers more clout, allows them to ba…
Target has a NET 2.6% profit margin, Walmart has 1.9%, which are on the low side of what you'd expect for a sustainable commodity business. Tesco appears to have a GROSS (not net: this is after cost of goods but before salaries, etc.) margin of 6.5% and Sainsbury's has 7.6%. [1] Obviously their net profit margin is going to be less. This is hardly a company with a huge pricing power dynamic. If you want to see that, look at Apple (24.5% NET margin), Coca-Cola (22.2% NET margin), Visa (50.3% NET margin). (Note however that Coca-Cola's customers are its bottlers and Visa's customers are merchants so their pricing power might be invisible to end consumers)
Demand for food is inelastic, so it makes sense that companies are raising prices as high as possible since people still have to eat. Generally this leads to price competition from other food brands, but when single companies own dozens/hundreds of food brands it’s easy to act like a cartel and keep prices high.
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Prices lower than the market-clearing price necessarily mean rationing or empty shelves. If you have a hundred potatoes and two hundred people, lowering prices just mean some people won't be able to buy at the low price.
If you have a hundred potatoes increasing the prices means many people won't be able to afford them and those potatoes will be wasted. Increasing the cost of potato supply, with - for example - extortionate energy and fuel prices means the potatoes don't get grown in the first place. This is exactly what's been happening in the UK. Literally. Not I-read-this-in-an-econ-textbook hypothetically. But for real in the sto…
This means that the normal way of controlling inflation (e.g. taking money away from people so they can't spend it) is not going to work. And in many ways is probably counter productive as it is making supplying goods more difficult.
As a person living in the UK, I have definitely noticed a considerable rise in unit prices. One of many examples is that a loaf of my favourite bread increased from £3 to £4 recently, which was a shocker. Toilet roll prices, as ever what the news loves to talk about, has exploded, increasing by around 70% since 2020 by my anecdotal observation. A sad thought I have about inflation is the fact that it is, wittingly or…
I just want to point out that pretty much every natural economic condition is beneficial for the rich. The thing about money is it’s very flexible. You can hoard it in deflationary cycles, spend it on assets in inflationary cycles, grow it in economically good times and buy cheap property and goods in economically bad times.
As a person living in the UK, I have definitely noticed a considerable rise in unit prices. One of many examples is that a loaf of my favourite bread increased from £3 to £4 recently, which was a shocker. Toilet roll prices, as ever what the news loves to talk about, has exploded, increasing by around 70% since 2020 by my anecdotal observation. A sad thought I have about inflation is the fact that it is, wittingly or…
The lower class does suffer the most, but unfortunately it is the policies intended to help them which actually cause most of the problem. By giving money to people without producing more stuff - or even making it harder to produce the same - you MUST have inflation, rationing, or empty shelves - and often all three. The solution to allowing lower classes to have more stuff is to make it easier for everybody to produ…
Which specific policies of this Conservative government amount to a change in the direction of giving more money to more nonproductive people? If anything, exactly the opposite has been happening, and yet inflation has been getting worse.
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This seems to come from the same place as the argument of "trickle down economics". Yea no, I've seen similar things done in Japan with abenomics (with one of the targeted goal even being more inflation; without achieving it) and studies show it doesn't work. Those spending never reaches the "lower classes", and seldom even reach places where it would have the potential to increase productivity. It's a tired, old arg…
His argument is that the government can do 2 things: 1. Interest-free money for businesses to launch, grow, and advance. This leads to more goods in the market and thus lower prices 2. Free money straight to the people which means more money in the market and thus, inflation, empty shelves, etc. His general point is that having interest-free money keeps existing players honest since newcomers can come in and start a…
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> property prices and rental yields are extremely precarious I noticed you didn't say "declining" because that wouldn't be true.
Over what period? 1 Feb Guardian - house prices fall for fifth month in a row 1 March Guardian - house prices fall at fastest annual rate since 2012
The price-to-earnings ratio is 9X in London and around 5X in the rest of the UK.
Property speculation is always ten steps forward and one step back. Prices in the UK would have to crash by at least 50% to return to any kind of widespread affordability.
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The consumer decides what they are prepared to pay for a product, unless the demand is inelastic. And for food overall, the demand is inelastic. Consumers cannot just say "food is too expensive for me, so I think I'm going to to go without it this month". They can choose between the individual products they buy, so it wouldn't be a problem if just some food items got expensive. But the price of food overall is inflat…
Why do people keep using the term "inelastic", why not just say 'rigid', 'stiff', 'fixed', - I assume they are trying to state they dont ebb/flow?
Elastic demand is the opposite. Some products have elastic demand, like luxuries and durables. An expensive car trim might be very price-sensitive because it is a luxury product. People will buy much fewer of those in austere times. They may buy fewer washing machines, too, because these products are durables. They are often bought "as an upgrade" or when one broke but could be repaired for cheaper.
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People don’t decide to raise prices out of the blue… it isn’t quite this simple, but for the purpose of understanding the basic concept, you can think of it as the price goes up when you can easily sell your inventory at the current price… if your product sells out quickly, and you still have people eager to buy your product, you raise prices, and you keep raising them until you can just barely sell all your product…
Supermarkets earn a lot on eggs, always have.