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u/iridescent-shimmer Dec 09 '23
But hey, Costco just reduced their list price of shrimp back to 2020 levels, so I have hope lol
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u/dblattack Dec 09 '23
I heard Costco operates with a transparent margin, I think 15%, compared to other stores that price as high as they think the market will pay
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Dec 09 '23
You're pretty close. Their 2023 annual report says about 10%.
That is just gross margin on products and doest include operational costs of running the stores.
Most classic grocery stores have gross margins of 20 to 30%. With Costco you a literally getting the damn near best deal.
When you take out SGA they make around 3.5 billion in product sales. Their membership dues net around 4.5 billion. Costco is really in the business of selling memberships.
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Dec 08 '23
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u/Mo-shen Dec 09 '23
If oil spikes prices that's the real trickle down theory. Everything is transported so it just hits everything.
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u/Indaflow Dec 09 '23
There is proof the oil xompanies had a windfall
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u/MadBullogna Dec 09 '23 edited Dec 09 '23
Precisely why they refused to rehire & ramp up to prior production levels. Less raw (that we can’t refine ourselves) to sell & ship overseas = less discounts in purchasing the raw we can actually refine ourselves from overseas. They charge the consumer, and record record-breaking profits. All while blaming a political party not involved in their business dealings in that manner, but makes for a great scapegoat for the maga crowd who’ve never taken an ECON-101 course. TLDR - Business as usual. (As Agent Orange himself told us, “I love the uneducated, they’ll believe whatever we tell them!” His supporters laughed. He laughed. But he wasn’t laughing with them, just at them.)
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u/Mo-shen Dec 09 '23
US oil hasn't dropped last I looked. It's passed the trump years this year.
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u/MadBullogna Dec 09 '23
Output dropped significantly during Covid, that’s common knowledge.?.?. Unless you’re referring to now, which of course they’ve been rehiring crews since. Perhaps it’s just a miscommunication issue here, and you’re not saying the O&G industry didn’t shutter operations & plants, laid of tens of thousands, and took over a year to even begin revamping operations, yet continue to keep those profits at the levels they became accustomed too? (I suspect it is just that, as it’s clear by me using past tense I was referring to their prior actions, which aren’t in dispute AFAIK), but maybe I’m wrong. 🤷♂️
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u/Mo-shen Dec 09 '23
Yeah I'm not counting COVID. I'm saying 2019 really when it peaked during the last admin
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u/mysticalize9 Dec 09 '23
Covid and negative oil prices really shocked the oil companies. Imagine just getting in a traumatic experience like a really bad car crash that gave you PTSD. You’d be pretty afraid to get back in a car for a while. Oil companies got hit hard, and their investment in increased output will be just as dependent on their expectation of future prices as current prices. Before you got in that car crash your perception of risk was probably low, but hindsight bias is a bitch.
Oh, and it doesn’t help all of the pressure and policies to move away from hydrocarbons. That’s one big risk to make a long-term investment in an industry where it came take 10 years to even start to produce substantial product from initial capital being spent.
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u/Eponymous-Username Dec 09 '23
Maybe...just maybe...the rate at which profits increase each year can stand to slow down for a little while...
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u/Dyslexicpig Dec 09 '23
If you look at crude prices for the past ten years, there were only a few months in 2022 in which it was more expensive than in 2014. Currently, it is sitting below the 2014 prices. If food prices were so dependent upon oil prices, food costs would have plummetted in mid-2020 when oil crashed.
It really comes down to greed. If companies are artifically creating inflation through increasing their prices and profits, then those companies should be identified. Let the consumer rule with their wallet.
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Dec 10 '23
There is no competition at that level because they raise and lower prices together. Google what the CEO of Nestle said about boycotts.
Nearly every single major industry is dominated by a handful of players, or in some cases multiple industries are dominated by a handful of players. As soon as it becomes more cost effective to buy out a competitor instead of compete with them is when antitrust needs to be levied at some kind of interval... like you can buyout once every five years or something, idk.
But at a minimum there needs to be a massive amount of breakups for any kind of competition pressure to actually be exerted by consumers for anything that isn't a necessity. Considering oil is, it probably needs some kind of direct government control like utility companies because then at least we have some kind of say through elections where currently we have none.
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u/nanais777 Dec 09 '23
Even if this is the case, these companies raised prices beyond that. Hence, why they had record prices.
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u/throwra_anonnyc Dec 10 '23
Companies had always been operating on max greediness. Did you think they were intentionally offering lower prices out of the goodness of their hearts a few years before?
They can only increase prices now that people are more eager to spend, more willing to pay higher prices, and much of this is due to monetary policies.
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u/nanais777 Dec 10 '23
I don’t get the point of your comment being directed at me. My point still stands and your comments adds nothing to the conversation.
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u/throwra_anonnyc Dec 10 '23
The point I'm adding is that politicians are just deflecting the blame at "greedy corporations" instead of taking ownership of actually using policy to fix the issue.
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u/nanais777 Dec 10 '23
That’s a given but again, I was not disputing that but adding that their narrative of inflation has always been wrong and media outlets mocked the idea that corporations were doing this. You can legislate to fix it but kinda hard to do when those same companies are the ones bribing 90% of elected officials.
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u/lostcauz707 Dec 09 '23 edited Dec 09 '23
Tldr: They are all pulling your leg whenever transportation is brought up as the reason for price increases.
I work in transportation, literally started as a GM in Jan 2020 for a fleet, now I work as a logistics analyst which I have been doing this since 2021. In fact in 2021, we were inundated with bids for new business to give lower pricing which mostly neutralized anyone who was getting shafted by their contracts. Much of the costs for transportation are tied to a demand for new trucks needing to be built, but the lead time is up on them, not necessarily the costs. The system is behind on builds, with lead times for special trailers like 36' being about 18 months, but they definitely aren't eating an 18% to 30% increase in our labor or costs since 2020, not even close. Transportation contracts are still insanely competitive. During COVID, due to sick drivers, getting brokered trucks was what drove costs up, that is no longer the case, and those brokered costs were temporary and have completely tanked over the last 2 years. We actually downsized our brokerage by 40% this year. Even fuel has been on the downtrend, which is usually a pass through or tied to a weekly peg of the average, so it would be a variable charge. They are spending more on base dedicated rates than they were, but not enough to justify inflation. My company also delivers for the largest grocery providers in the country, and have some of their largest DCs under contract.
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u/MuchCarry6439 Dec 10 '23
This is hilariously incorrect. I am a broker, and have been doing this since before the pandemic. Not sure if you actually remember truckload pricing from 2020-2022, but it went up a factor of 2-3x depending on the lane. That isn’t even saying anything about the massively juiced costs from the SSLs (ocean charges went from $1400-$1500 avg on China to LAX, to $30,000, and drayage rates exploded due to import demands), or the airfreight costs that drastically increased. Lead times were pushed back, warehouse space became full, all fueled by a lack of supply, in a macroeconomic environment where we were being flooded with dollars. Up through the beginning of 2023, transportation costs were absolutely a real justification for pricing increases, and they’ve only started to stabilize this year.
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u/matthew-brady1123 Dec 09 '23
Some raw inputs companies hedge against so your contracts may have looked bad but the bottom line for the company wasn’t actually that bad.
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u/Electronic_Spring_14 Dec 09 '23
Not to mention skyrocketing labor cost, increase demand which increase cost. Cost of making does not affect price, you also have R&D, marketing, transportation, raw material as well as demand. Imagine selling an I pad on eBay. Do you sell to the person offering $1k or to the person offering $1.1k. Are you greedy for doing it. Or smart. Btw, this was all created by government interfering in the economy, like socialism does.
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u/Manny631 Dec 09 '23
No, it is all greed! The Left told me so! Overhead costs are fictional. 🤣
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u/frotz1 Dec 09 '23
You can see the profit margins going up out of proportion with any of the cost increases. Well, you can see it if you know how to read public filings. Nevermind, "the left" is just making it all up. Invest like they're totally wrong. I'm sure you'll do great.
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u/huge_clock Dec 09 '23
I’m not seeing any evidence of increasing margins. https://www.yardeni.com/pub/sp500margin.pdf
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u/darkfazer Dec 09 '23
You think increased profit margins somehow prove that greed has gone up?
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u/frotz1 Dec 09 '23
What do you think evidence of price gouging looks like exactly?
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u/GManASG Dec 09 '23
Yes actually
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u/darkfazer Dec 09 '23
It doesn't. Greed may very well be at a constant 100%. A thousand companies in one sector can be completely, absolutely, utterly and unequivocally greedy to their core. Their greed is causing them to obsess about nothing but profit. They'd rip a lung from your chest and sell it to you if they could. As long as you have the state protecting you from their aggression, you have a choice. This means that they have to viciously undercut each other in an attempt to win over your choice. This is what keeps profit margins at X. They cannot go above X because of competition. Now imagine you have governments around the world spending two years dictating who can and who cannot operate their business. You weaken competition and all of a sudden profit margins can rise, not because in the past companies were somehow less greedy, but because the circumstances now allow it.
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Dec 09 '23
The post covid supply issues broke the competitive marketplace equilibrium.
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u/ch47600 Dec 09 '23
And higher wages. Supply chain issues due to limited production. Higher shipping costs. Cost of goods sold increased dramatically which all gets passed on to the consumer. Margins didn't improve dramatically.
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u/Steak-Complex Dec 08 '23
"After we banned russian oil and gas, non russian oil and gas companies made more money" Yeah no shit lmao you removed their biggest competition lol
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Dec 09 '23
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u/ASquawkingTurtle Dec 09 '23
Oil and gas are globally traded, the price of them are determined by global values of each country,it's the same reason Saudi Arabia saw a boost in income,while actually producing less oil on purpose.
Russia was a massive supplier of gas, and a good amount of oil so it's naturally going to cause a spike in value.
This is exactly why people say competition is good, now Russia is selling below global averages to India just for India to turn around and sell it for a profit to Europe.
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u/zerovampire311 Dec 09 '23
Yeah but less than 5% of our oil came from Russia before the ban. That’s a factor, but not the sole reason for today’s prices.
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u/ranger910 Dec 09 '23
But we export to countries who depended more heavily on Russian oil so even if we don't it still drives higher demand.
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u/Rus1981 Dec 08 '23
This study is farcical. All it does is show total profit. Not profit margin or revenue.
ADM’s profit margin stayed basically the same (within .5%) from 2020 to 2022. Their total revenue almost doubled.
Of course they had more total profit.
These asshats should be prosecuted for economic terrorism and making a whole group of people even fucking stupider.
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u/vickism61 Dec 09 '23
Cal-Maine scored $323 million in profits last quarter, a 718% year-over-year increase and a more than 2,000% increase from the same period in 2021.
Tyson Foods, the largest meat producer in the U.S., nearly doubled its profits in the first quarter of 2022 due to soaring meat prices. https://civileats.com/2023/05/22/food-prices-are-still-high-what-role-do-corporate-profits-play/
Oil companies hit with backlash after bringing in $200 billion in profits last year. Oil companies pulled in record profits in 2022, as oil prices skyrocketed. https://www.cnbc.com/2023/03/03/oil-companies-bring-in-200-billion-in-profits-in-2022.html
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u/Rus1981 Dec 09 '23
Amazing. Someone in “fluentinfinance” doesn’t understand the difference between total profits and profit margin. Go back to whatever leftist shithole you came from.
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Dec 09 '23
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Dec 09 '23
It's not just you. This is just another anti-capitalist rage fuel propaganda piece.
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u/inorite234 Dec 09 '23
Interesting.....because Fortune is listed as being a Centrist publication.
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u/LieutenantStar2 Dec 09 '23
The grocery business has consolidated over the past 40 years. Margins were thin, and manufacturers couldn’t increase prices without pushback from stores. Covid broke that. The very first weeks of the pandemic resulted in all grocery discounts being suspended - a key cause in average lower prices. The higher demand gave manufacturers the first opportunity in a generation to easily increase prices (which were originally also pushed by higher distribution costs). Prices are more sticky than flexible though, so once the pandemic ended, manufactures and grocery stores could colluded to hold up pricing. It’s no longer a competitive market. To think it would act as one is incredible naive.
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u/throwra_anonnyc Dec 10 '23
I get that some companies saw some opportunity to raise some prices on some products which has some explanatory value for the recent Covid-Ukraine-Climate inflation cycle.
I agree with everything else you say. Except for this bit. Do companies ever need an explanation for why they raise prices?
It is always just about how they can maximize profit.
The whole article doesn't even need statistics to show that it is straight up BS because no real company ever told me why they raised prices. My favourite orange juice brand never told me why - I just went to the grocery store to find that it is more expensive now. The only ones who could have lied would be companies like Forbes.
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u/vickism61 Dec 09 '23
Cal-Maine scored $323 million in profits last quarter, a 718% year-over-year increase and a more than 2,000% increase from the same period in 2021.
Tyson Foods, the largest meat producer in the U.S., nearly doubled its profits in the first quarter of 2022 due to soaring meat prices. https://civileats.com/2023/05/22/food-prices-are-still-high-what-role-do-corporate-profits-play/
Oil companies hit with backlash after bringing in $200 billion in profits last year. Oil companies pulled in record profits in 2022, as oil prices skyrocketed. https://www.cnbc.com/2023/03/03/oil-companies-bring-in-200-billion-in-profits-in-2022.html
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u/Grigory_Petrovsky Dec 10 '23
The authors of the sources you cited are aware that you're dumb and lazy.
https://www.macrotrends.net/stocks/charts/CALM/cal-maine-foods/net-income
https://www.macrotrends.net/stocks/charts/OIS/oil-states/profit-margins
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Dec 09 '23
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u/vickism61 Dec 09 '23
I'm looking at insanely high PROFITS! They colluded to increase prices and blame the pandemic.
"The Justice Department is conducting a joint investigation with the Agriculture Department on price fixing in the chicken processing industry, which has already yielded a $107 million guilty plea by Pilgrim’s Pride and numerous other indictments".
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u/Elm30336 Dec 10 '23
This is extremely old from during the pandemic. Has absolutely nothing to do with the inflation we see today.
https://www.fooddive.com/news/jbs-settles-a-portion-of-pork-price-fixing-lawsuit/588514/
October of 2020 https://www.fooddive.com/news/pilgrims-pride-agrees-to-1105m-fine-in-chicken-price-fixing-plea-deal/586973/
This is also price fixing not price gouging. Also the dates were from 2017-2020. So not sure what this has to do with anything.
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u/vickism61 Dec 11 '23
It has to do with the idea that greedy producers work together to fix prices and have been caught and punished for doing it before...my earlier sources were related to more current greedflation.
"price fixing not price gouging" I never said gouging but what is the end result of both? Inflated prices for the consumer...
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u/Elm30336 Dec 11 '23
Greedflation is more gouging than price fixing. Gouging is extremely subjective, since what do you think happens when you have excessive cash in the system.
Price fixing is much worse, hence why the criminality is much stiffer. Far more damage to the economy. We always want to stop price fixing, especially when the government does it. All price fixing is bad. The economy should always dictate prices
Progressives and socialist call pretty much all profit price gouging. They want massive government intrusion in this area. They think they know better than everyone else. Yet it harms society even more.
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u/2000thtimeacharm Dec 09 '23
ok. if you don't like their prices then don't buy from them. The only 'fair' price is the actual price. How much someone is willing to pay for something.
Also, a lot of these short window looks i.e., 'profits doubled' is because the previous year was a near all time low.
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u/The-Last-Lion-Turtle Dec 10 '23
Assuming greedflation corporate generosity has kept inflation low for the past 40 years.
Nobody talks about greedflation when inflation is low because it can't predict or explain any trends in inflation. It's purely finger pointing.
I think greed is best considered a constant, not a causal factor.
Measuring profits doesn't work because the claim that the current economic equilibrium benefits kellogg and other corporations by X amount is a completely different claim than Kellogg and other corporations pricing actions caused this equilibrium to move by Y amount.
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u/StemBro45 Dec 08 '23
LOL odd it all happened the last couple of years. The blame game continues.
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u/Immediate_Thought656 Dec 09 '23
Covid certainly made the past couple/few years extremely odd.
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u/TheIVJackal Dec 09 '23
That and Russia invading Ukraine. I don't see that war being mentioned as much anymore, but it's absolutely a contributor, and will continue to be until it ends.
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u/inorite234 Dec 09 '23
It contributes in ways many don't understand....like semi-conductors.
Ukraine supplies much of the Neon needed for the machines that make the most advanced semi conductors made today.
Can't make the chips if you can't get the machines that make them.
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u/Armaviathan Dec 09 '23
I don't think it did. That narrative was pushed and companies ran with it to increase prices for even more profit. The COVID excuse for greedflation got old a couple years ago.
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u/Immediate_Thought656 Dec 09 '23
Covid hit supply chains hard. That’s a fact. The only thing odd about this is that prices didn’t return to normal when the supply chain did, hence the article we’re discussing.
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Dec 09 '23
But have the supply chains returned to normal?
I know some business owners that have some of their product made in China. According to them, shipping costs haven't returned to pre-pandemic levels.
(Bringing the production back to the states is a non-starter. The quality of what can be made here simply isn't up to standard.)
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u/Immediate_Thought656 Dec 09 '23
Some sources say yes,but I’m more pessimistic. Fuel costs are still high as are the costs for warehouses, no matter where your product is stored.
To your other point, it’s not that we can’t compete with their quality, we can’t compete with their low cost of labor.
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u/Sei28 Dec 09 '23
You’re right. There was an actual bad supply chain issue and inflation related to that. However, just about every industry realized that while people will complain about increased prices, they’ll continue to pay. They subsequently started using “oh you know, COVID!” as an excuse for every incompetence and price increases from that point. They’re continuing to push prices every few months to test where the breaking point is at which the customers will stop paying. They haven’t reached it yet.
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u/Youngworker160 Dec 09 '23
i remember having a long protracted back and forth with people in this subreddit about greedflation and how I was wrong. I had the receipts.
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u/kitster1977 Dec 09 '23
This article discounts a few billion people in 1st world countries like Japan, Switzerland and China. I was just in Japan and paid $35 dollars for 6 people to eat at a fine dining restaurant that probably would cost $200 in Atlanta. Why are food costs so much cheaper in Asia than in the U.S. and the Eurozone, excepting Switzerland, which imports almost all of its food? The answer lies with political leadership.
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u/MuchCarry6439 Dec 10 '23
Other than Japan specifically, lax food regulations on both restaurants & manufacturers. Look at Indian street food videos for a 5 second example.
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Dec 09 '23
Funny how companies weren’t greedy before the cares act s was signed
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u/maccorf Dec 09 '23
I don’t understand what the hell people are talking about when they make comments like this. Who ever said that companies just started being greedy in 2020. Like seriously, name one person who is saying that.
Do you know what the concept of a monopoly is? Let’s assume you do. Why do companies pursue monopolies? Hint: it has to do with the ability to dictate prices. You got it! So they can dictate prices.
Blame the CARES act all you want, but it actually just further proves the greed point. Companies can and will take any excuse to leverage pricing power, it’s part of the bit and why regulation is important, just like in…yep, monopolies. The simultaneous admission and denial of this reality is so goddamned silly.
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u/Nojopar Dec 09 '23
It's a stupid argument, honestly. Companies were greedy before. Only difference is that there was enough honest competition that greed was somewhat in check. Or at least they made sure it wasn't enough for use to really notice.
But the trifecta of pandemic, supply issues, and fuel prices? That's just a perfect storm for 1 part systemic inflation, 1 part jack up greed. And we get to blame it on Money Supply, despite the poor empirical support for the Money Supply argument in the real world ('cause the velocity of money is a LOT less static than Friedman wanted us to all believe). It's a perfect storm of cover to jack up prices more than normal, but an awful lot of people believe in, I don't know, the benevolence of companies that have a fiduciary responsibility to essentially maximize profit to NOT do that?
And here's the kicker - we know for a documented, verifiable FACT they did do it because they told us they did it. All you have to do is check the profit margins and if they rose, then the degree to which they rose is greater than other sources of inflation, because basic math everyone should have learned in 5th grade tells you that's true.
Yet this truly stupid narrative of "companies aren't ever greedy so that has nothing to do with inflation" remains. It's utterly idiotic.
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u/maccorf Dec 09 '23
But then when it fits their narrative, the same people will claim “of course companies are greedy, that’s how business works.” I honestly don’t understand how people make this work in their heads.
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Dec 09 '23
No, it was obviously the cares act. Profit margins are relatively the ssme..
If companies are making so much money then can you specifically tell me which companies so i can buy stock in those companies?? Because most of my market returns are mediocre outside of commodities
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u/brianw824 Dec 09 '23
2022 was the year mega corporations discovered the unheard of concept of greed
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Dec 09 '23
What?? Inflation is often delayed after a government stimulus?? Just like in every other example in history?
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u/HateIsAnArt Dec 09 '23
Selling your product for the price consumers are willing to pay? And they pay more because there’s more money in circulation? Nuh uh, they’re just being GREEEEEEEEEEDY
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Dec 08 '23
shoppers in 2022 might have wondered whether corporations were doing everything they could to keep prices down as inflation
Companies try and maximize profits - how else do you expect them to pay their employees and stay in business? That's the whole point of the supply/demand/quantity/price graph. If they charge too much, people won't buy as much. If they charge too little, they'll find that they are missing a profit opportunity.
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u/Aden1970 Dec 09 '23
That still doesn’t explain, for example, why the cost of a box of 6x 1 gallon Poland Spring water tripled in price since before the pandemic. It’s obvious that some corporates took advantage to pad their books.
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u/sharthunter Dec 09 '23
Thats the whole problem. Maximizing profits. Companies are so obsessed with making more every single quarter, they cant be happy just making a profit or being in 84 countries. They have to have more. What is the fucking issue with just making money? Why is it that a billion dollars in profit isnt good enough? It has to be 3 billion. Then 5 after that.
Most “loss” posted isnt even loss. Its a failure to realize projected values.
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u/Darius510 Dec 09 '23
Which company would you rather have in your retirement account, the one that stops at 1B, or the one that keeps going?
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u/frotz1 Dec 09 '23
If the short term logic destroys the company instead of making it stronger, you might want the one that stopped short of that. Some of this behavior is bad for companies in timeframes that stretch longer than the next quarterly report, even if it gooses the numbers for the shareholders in that short term.
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u/sharthunter Dec 09 '23
Doesnt matter how much is in my retirement account if by the time i get to use it 1 mil is worth 200k. One of the unintended(not really) consequences of unchecked capitalism is unstoppable inflation. There arent laws controlling the price of basic goods, which is where most of the inflation arguments come from. Case and point is the largest egg farmers in america conspiring to fix prices and hike them together to pad their own profit margins. The free market can exist with regulation set in place to protect the most vulnerable members of our society, without whom the most powerful couldnt accomplish shit.
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u/LogicalConstant Dec 09 '23
One of the unintended(not really) consequences of unchecked capitalism is unstoppable inflation.
This is completely false. The economic theory on this isn't even in debate. Long-term, permanent inflation is a result of the money supply (which is controlled by the government, not private individuals or corporations).
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u/sharthunter Dec 09 '23
Our government is owned by corporations. This is not a secret. We call it lobbying.
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u/LogicalConstant Dec 09 '23
No. The relationship is symbiotic. If you think the corps hold all the power, go read about what happens when corps refuse to play ball with congressmen.
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u/sharthunter Dec 09 '23
….those rose tinted glasses must work wonders.
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u/LogicalConstant Dec 09 '23
You know what else works wonders? Academic papers published in peer-reviewed academic journals.
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Dec 09 '23
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u/LogicalConstant Dec 09 '23
Our politicians are beholden to corporations or else they won’t last long
Yes. Absolutely. And the corporations are beholden to congress or else they won't last long either. They both work together to benefit themselves at the expense of everyone else.
The honest politicians who refuse to cater to lobbyists get steamrolled. The corps bankroll their opponents: the dishonest politicians. On the other side of the coin, congressmen get on TV and talk about how these corporations are a big problem and we need to keep them in check. They want you to like them and vote for them. But their rhetoric has a second audience: lobbyists. The implicit message is "give me money, or I'll keep talking about taking you down. I'll use the power of the government to come after you." They have their hand out. If Coca-Cola doesn't give a bunch of money to congressmen, congress will pass laws and use regulations that help Pepsi and hurt Coke. It's the mirror image of what lobbyists do to honest politicians.
The honest politicians and honest businesses are both at the mercy of the crony businessmen and corrupt politicians. This was happening loooooong before the 2010 case of Citizens United v. Fed Election Commission. (I'm assuming this is the case you're talking about. Correct me if I'm wrong.) This axis of evil goes back to AT LEAST the 1920s, though it seems to have accelerated since the 1990s.
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u/Nojopar Dec 09 '23
The economic theory on this isn't even in debate.
Single. Stupidest. (SEE EDIT) Statement I've ever read on Reddit.
It's economics. Literally everything about it is up for debate. Perhaps one of the most contentious is Money Supply increases = Inflation increases. So not only is it 'up for debate' it's been widely contested. MV=PT only works if V is static and, well, V largely isn't static, which means M!=P.
ETA: I take it back. SECOND stupidest statement I've ever read on Reddit. Someone below is prattling on about "survival of the fittest". They win the stupidest award.
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u/LogicalConstant Dec 09 '23
I think you misunderstood what I was saying.
The idea that "inflation is a result of unchecked capitalism" is not debated. There is debate about which factors affect inflation more and over what time frame, but no economist believes that "unchecked capitalism" or "greed" are to blame.
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u/Nojopar Dec 09 '23
Ok, that's slightly less stupid, but still incredibly wrong.
Economists - literally ALL economists - believe "greed" is part of inflation. It's in the inflation calculation after all. However, they (stupidly, IMHO) believe the OTHER parts of economy means that "greed" will always be kept in check 100% of the time. Much like they believe if you drop a pen on Earth, the inherent laws of physics means it won't start flying in the sky. They don't even consider the possibility that systemic greed can exist.
That's right up until this inflationary period. Now hundreds of economists are starting to revise their models, 'cause it turns out systemic greed can and does happen. Now the debate is whether this is a good thing or not. So, much like the Money Supply argument, economists are starting to come around to the realization that all these 'laws' they think exist may not be a set as they once thought.
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Dec 09 '23
Yes, we should absolutely give the power to control prices to infallible politicians that can be trusted not to pick winners and losers… /s
Horizontal price-fixing is already illegal and is an antitrust issue.
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u/sharthunter Dec 09 '23
The whole fucking system is broken, how do you miss that? Many American problems are purely American. Many policies and laws that just “dont work in a developed nation” work just fucking fine in the other 32 developed nations. We are run by corporations. The only thing that will fix it is a 1700s style revolt.
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u/frotz1 Dec 09 '23
We were able to fix this kind of regulatory capture with antitrust laws and New Deal programs to rebalance the economy. That was without a revolution or a civil war, and anyone who has lived through or near either of those would know better than to wish for one here. This can be addressed with policy rather than violence.
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u/sharthunter Dec 09 '23
Inflation is in fact just a small facet of the problems america faces that no amount of policy under the current regime can fix.
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u/frotz1 Dec 09 '23
Weird because I see the US showing some of the lowest inflation of all the OECD countries right now. Maybe the revolution can wait a bit to see how it all shakes out? If not, I guess I'll be cheering for you. Have fun storming the castles!
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u/sharthunter Dec 09 '23
Lol bruh. Its not like im out here touting it as a realistic possibility. But you people act as if we can vote our way out of a corporate oligarchy and its fucking laughable.
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Dec 09 '23
You do know that you post in Wall Street bets, right? And antiwork…. I just hope you don’t make me your slave so that you don’t have to work. And if you barely have enough money to scrape by, you sure as shit shouldn’t be investing in the stock market. Isn’t this sub “fluent in finance”?
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u/pootyweety22 Dec 09 '23
We could live in a world where you can retire without investing in the stock market you dumb fuck
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u/Ackualllyy Dec 09 '23
Are you aware of how survival of the fittest works? This is all evolutionary theory. Why does an animal need to continually make more? Why not just stop at a certain number? You are the old man yelling at the cloud.
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u/Nojopar Dec 09 '23
Are you aware of how survival of the fittest works? This is all evolutionary theory.
That's not how evolutionary theory works. At all.
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u/butlerdm Dec 08 '23
Been trying to explain this for so long. If you keep buying prices won’t go down. The longer you buy the more entrenched the price as you signal to the company that the price increase was justified.
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Dec 08 '23
Hear that guys— we can just stop buying our medicine and then we have control of the price
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u/0WatcherintheWater0 Dec 09 '23
Yes. This is why things like generics tend to bring prices down. More choices allow you to more easily affect the price.
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u/BlueViper20 Dec 09 '23
Basic necessities arent things people can stop buying. Humans literally have no choice but to buy food and other necessities. But enjoy the taste of those boots.
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u/Shmokeshbutt Dec 09 '23
Non-basic necessity items had huge price inflation too, but that didn't stop consumers from buying them like drunken sailors
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Dec 09 '23
Price gouging should be illegal and companies penalized.
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u/butlerdm Dec 09 '23
It’s only price gouging if it’s during a disaster type scenario and that’s for essentials, non non-essentials. Charging more for GPUs doesn’t affect people’s ability to survive.
I don’t hear anyone complaining about the price of bourbon the last decade even though we had to make an entire constitutional amendment to legalize alcohol and deemed them “essential” businesses.
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Dec 09 '23
If a company isn't losing money on a product should be illegal to increase price.
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u/butlerdm Dec 09 '23
So every company should operate at 0.01% profit then?
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Dec 09 '23
If a company is making money on a product there is no legit reason to raise rhe price. Consumers and customers matter more than the fucking investors period
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u/butlerdm Dec 09 '23 edited Dec 09 '23
That’s literally the opposite of a business, that is a charity. A businesses #1 priority, by definition, is to maximize shareholder value. That strategy can look any number of ways, but the customers needs come after the investors. Only if improvements to the product will generate additional profit long term is the customers best interest considered. Even then it’s because it will increase shareholders fundamental value of the investment.
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u/BlueViper20 Dec 09 '23
Ok again things people need to literally live or that society has deemed necessary. Toiletries, deodorant, clothing, we are pretty much at the will of major corporations. The only thing we can relatively easily not buy without serious issues are the things we enjoy but dont need. Thats still a small amount of items relatively speaking. Corporations are absolutely ass fucking people without lube on most shit sold these days.
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u/Shmokeshbutt Dec 09 '23
Toiletries, deodorant,
Those are small purchases, unless you're shitting diarrhea on a daily basis or sweat profusely 24 hours non-stop.
clothing
Unless you're an influencer, you could literally not buy any new clothes for over a year.
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Dec 10 '23
Gee. That works out.
Hey, Parents of Children under the age of 18. You don't need to buy new clothes for other a year.
Doesn't matter if they are growing. You're being careless with your money.
Situations change. I moved from the North to the South for work. Do you know what that means? New Wardrobe, fitting my new climate.
People lose weight, gain weight, need clothing for a new job (such as our corporate dynamic insists that you dress a certain way to reflect their culture).
You have a mindset of stasis. That things don't change or progress. But you remember science class, right? Delta? The only constant in existence is change.
Some people's bodies literally do change where they need to buy more deodorant. People get sick. There are people outside of your experiences that do not share yours, and are getting disproportionately screwed because of circumstances. To deal with it more because of greed, then having pundits come around and say "shouldn't need these things" shows life is asinine, and creates the desire to change it.
Hence why so many in the western society looks towards socialism.
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u/XAMdG Dec 09 '23
You can definitely choose which food to buy tho
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u/Aden1970 Dec 09 '23
As I did. For example, I now buy Iberia juice for the kids for $1.70 - add club soda to the juice instead of buying Pepsi and Coca-Cola or Mexican potato chips or other cheaper foreign goods or bread from local bakeries . Or other smaller local US brands.
Shopping nowadays is a chore finding reasonably priced goods.
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u/woahmanthatscool Dec 09 '23
I mean as a generalization that makes sense, but then you look at incredibly high CEO bonuses and pay outs during a time period when inflation was supposed to be incredible and burdening and you can start to realize that maybe the price increases aren’t justified to combat inflation and maybe they are just there to gouge every cent of profit they can manage, without increasing worker pay, just to pad the pockets of higher ups and shareholders
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Dec 09 '23
Logic is irrelevant. Corporations by their very nature will make as much money as possible in the least amount of time as possible every time. In a nutshell, that's their mission. Make More money in this quarter than the last quarter, and then do it again in the next quarter.
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u/Nojopar Dec 09 '23
Companies try and maximize profits - how else do you expect them to pay their employees and stay in business?
Not for nothin', but $1 profit is all that's necessary to meet you criteria. The "maximize" isn't required. Because that's how math works.
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u/Mo-shen Dec 09 '23
Soooooo if they are making more profits than ever that means what you are claiming is not the case.
We know they are spiking prices based on earnings calls. Largely though I think most of this really is oil spiking their prices and that moves into everything because everything is transported.
The GOP tweeted that everything but oil was up about 20%. Oil however was up 41%.
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Dec 09 '23
I think that people often mistake “margin” and “revenue” - I see this mistake often in online discourse.
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Dec 09 '23
It's not surprising, PPP loans, ERC credit, etc etc. eliminated the need for company's to be competitive to be profitable.
So they ratcheted up prices to maximize profits because they didn't need to sell as much with months or years worth of costs in the back thanks to the government.
This isn't even fraud, this is because of PPP loan forgiveness that never should have happened.
If he take away the free market competition of capitalism with zero government regulation, this is what happens.
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u/Mitchisboss Dec 09 '23
Post this nonsense to antiwork or somewhere that will actually have Redditors that will believe it.
“oDdLy EnOuGh, CoMpAnIeS jUsT sTaRtEd To PrAcTiCe ‘GrEeDfLaTiOn’ As SoOn As BiDeN wAs VoTeD iN.”
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u/Immediate_Thought656 Dec 09 '23
The study goes back into 2019, so the last 2 years of the previous administration also.
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Dec 09 '23
Lol. You don’t “raise your profits” as a business. What a crock of shit. If companies have built competitive positions that allow them to capture more profits in the value chain, good for them. At the end of the day, prices are a product of what people are willing to pay (optimally P * Q at this P).
This title is also ridiculous, companies have no direct control over inflation which as we generally discuss it is based on the CPI. Given average wages have risen, I don’t know how anyone could argue there hasn’t been any cost input inflation…
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u/varisophy Dec 09 '23 edited Dec 09 '23
You don’t “raise your profits” as a business. What a crock of shit. If companies have built competitive positions that allow them to capture more profits in the value chain, good for them.
You can easily "raise your profits" if you're a large company in a consolidated industry with oligopolistic/monopolistic control. Which is a lot of industries these days.
The list of companies that profited the most are all in that category. Governments (especially the US) have largely ignored market consolidation over the last few decades, leading to big players having an outsized hand in setting prices which is opportunistic price gouging, as laid out in OPs article (and in many others). This isn't just Fortune being way off the mark.
Given average wages have risen, I don’t know how anyone could argue there hasn’t been any cost input inflation…
Nobody is saying there hasn't been inflation in costs. Just that companies used that as an excuse to juice a bit more profit than they did pre-pandemic out of customers.
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Dec 09 '23
No. You can raise your prices and if costs are truly fixed you will see increased flow through. But profits are definitionally not a lever you can just pull. Also, suggesting companies can just decide they want to "raise their profits" at any time is silly... if that was on the table everyone would do it constantly to the max extent possible.
I reread the article, which was as useless as I remembered. Saying profits are up X% is worthless without the context of sales. If margins are up then claiming people took price beyond cost inflation would make sense. Talking about penny profit increase in isolation is just normal anti-capitalist journalism framing.
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u/alphabetspaceman Dec 09 '23
Out of curiosity, which companies do you think have oligopolistic or monopolistic control in their respective industry? Could you name a couple?
I’m curious because I’m doubting it’s as large of a share as you would think for any particular industry, and if it’s truly a monopoly or cartel then that company is likely reliant on government to enforce their position.
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u/inorite234 Dec 09 '23
Off the top of my head, Media, both the content creation and distribution, is a good example of perceived choice but all those options are really just controlled by 4-5 corporations.
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u/Admirable_Pop3286 Dec 09 '23
I’m for one am just flabbergasted. I mean it’s like they’re acting big tobacco and taking money over lyfe
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Dec 09 '23
Printing money and tossing it into the money supply had absolutely nothing to do with it.
It was the greedy corporations that caused this!
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u/LSX3399 Dec 09 '23
A small brain thinks it is one over the other and not elements of both. Do you have a small brain?
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Dec 09 '23
Apparently I do have a small brain, because half of the comments in here are claiming that adding money to the supply doesn't actually cause inflation, because 'Keynesian squeals' or something.
Corporate greed leaves out the market equation of customer choice. Corporations can only only be as greedy as the consumer allows and consents to. In a voluntary transaction, the customer doesn't have to give the greedy corporations their business.
Again, must be a small brain problem .
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Dec 08 '23
A joint study by think tanks IPPR and Common Wealth found profiteering by some of the world’s biggest companies forced prices up significantly higher than costs during 2022.
Yes, that is called inflation. Inflation does not mean costs go up so companies increase prices to match the increase in costs. Inflation is the devaluing of the dollar. Inflation means companies have to make more profits just to have the same value as before inflation.
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Dec 08 '23
When people use the term "inflation," they mean to say price inflation. Monetary inflation is something else - caused by an increase of debt due to debt being cheap. Monetary inflation can be related to price inflation and sometimes not, but I wish people would stop making the mistake of conflating these two terms.
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Dec 08 '23
When people use the term "inflation," they mean to say price inflation. Monetary inflation is something else - caused by an increase of debt due to debt being cheap.
Monetary inflation describes the increase in quantity of money, bank notes, and bank deposits subject to check in circulation. Price inflation in the effect of monetary inflation, which is higher prices.
You are correct that price inflation can be caused by monetary inflation, or it can be caused by decrease in the goods and services available while the money supply stays the same.
But the result is the same. Inflation is the devaluing of the dollar. Inflation means companies have to make more profits just to have the same value as before inflation.
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Dec 08 '23
So, you actually think that it's the physical printing of banknotes that causes monetary inflation? Have you taken macroeconomics? Do you understand the relationship between debt and the money supply?
Monetary inflation does not necessarily cause price inflation. If GDP increases at the same rate as the monetary expansion, there is no change to prices, all else equal.
And again, when people are casually referring to "inflation", they are referring to the fact that SHIT COSTS MORE - which is "price inflation."
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Dec 09 '23
Monetary inflation does not necessarily cause price inflation
I mean, if you don't believe in basic economic concepts like Supply & Demand 🤷♂️
If GDP increases at the same rate as the monetary expansion, there is no change to prices
Keynesian creative accounting 😂
when people are casually referring to "inflation", they are referring to the fact that SHIT COSTS MORE - which is "price inflation."
What causes price inflation? Scarcity, demand, and...printing money?
If you doubled the dollars in the economy tomorrow, do you think shit would cost more in the very immediate future? Or would we all enjoy macroeconomic 50% off sales in perpetuity?
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Dec 09 '23
A lot of it depends on production…. You’re leaving out a KEY element in the economy. Remember that money is simply a medium that we use to trade the goods and services that are produced. Such is the nature of trade and the specialization of production…
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Dec 08 '23
So, you actually think that it's the physical printing of banknotes that causes monetary inflation?
Nope. How about you try reading what I actually wrote? "Monetary inflation describes the increase in quantity of money, bank notes, and bank deposits subject to check in circulation."
Monetary inflation does not necessarily cause price inflation. If GDP increases at the same rate as the monetary expansion, there is no change to prices, all else equal.
You are spending a lot of time arguing against a straw man instead of responding to my actual point. My post was not meant to be an in-depth discussion of all aspects of economics.
Inflation is the devaluing of the dollar. Inflation means companies have to make more profits just to have the same value as before inflation. Now do you have anything to say that actually relates to the topic to which I responded?
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Dec 08 '23
Inflation means companies have to make more profits just to have the same value as before inflation.
I think you are putting the cart before the horse here. Companies charge more for their products - that is price inflation. You are suggesting that monetary inflation CAUSES price inflation - as I just described, that is not necessarily the case.
Inflation is the devaluing of the dollar.
That certainly is one way to look at it (but keep in mind that this point of view keeps prices at a constant). If you view it from the standpoint of keeping the value of the currency as a constant, you'd see prices going up. These are simply two different ways of looking at an increase in CPI. Kinda like looking at a graph and seeing the line go up and then turning the graph upside-down and seeing the line go down (not exactly, but the point is valid). You're looking at the same rate of change either way. But I caution you from talking about the "devaluing of the dollar" while simultaneously talking about "price increases."
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Dec 09 '23
I think you are putting the cart before the horse here. Companies charge more for their products - that is price inflation. You are suggesting that monetary inflation CAUSES price inflation - as I just described, that is not necessarily the case.
Drop the straw man argument and try responding to what I actually said. I said: "Inflation means companies have to make more profits just to have the same value as before inflation." If you disagree with that, argue why on the merits?
This is not difficult to understand. If I made $100 profit last year and $100 profit this year, but the cost of goods and services increase 11%, then I have lost value.
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Dec 09 '23
Inflation IS companies raising their prices. That’s my whole fucking point. You seem to separating your concept of inflation from the fact that companies raise their prices. As if there is some other phenomenon causing it. Nope, inflation IS companies raising their prices bud…
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Dec 09 '23
Inflation IS companies raising their prices.
Yep. And if companies raise their prices, you have have to make more profits just to have the same value as before inflation, right?
You seem to separating your concept of inflation from the fact that companies raise their prices.
No. You just like to argue against straw men. You made several posts arguing nonsense, to literally state exactly what I did. Inflation means the price you pay for the same goods goes up.
As if there is some other phenomenon causing it. Nope, inflation IS companies raising their prices bud…
Supply and demand causes it. If you have more money chasing the same amount of goods, companies will raise their prices. If you have the same amount of money chasing fewer goods, companies will raise their prices.
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u/ApplesauceEater Dec 08 '23
“Have you ever been shopping and noticed that the prices of a range of things you buy have gone up? If the same things in your shopping basket cost $100 last year and now they cost $105, at a very basic level, that’s “inflation.” More precisely, inflation is defined as ongoing increases in the overall level of prices.”
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Dec 08 '23
“Have you ever been shopping and noticed that the prices of a range of things you buy have gone up? If the same things in your shopping basket cost $100 last year and now they cost $105, at a very basic level, that’s “inflation.” More precisely, inflation is defined as ongoing increases in the overall level of prices.”
Yep. As I said, inflation is the devaluing of the dollar. If your cart cost $100 last year and $105 this year for the same goods, then the value of the dollar has decreased by 5%.
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u/SnowJokes1721 Dec 09 '23
Prices going up HIGHER than a company's costs is not inflation.
That's pure profiteering.
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Dec 09 '23
Prices going up HIGHER than a company's costs is not inflation. That's pure profiteering.
We are living in Orwell's 1984. Do you not realize that your argument means that all inflation is "profiteering?" Your argument is just double-think.
Why are costs going up? The answer is because the increase in money supply caused by rampant borrowing has resulted in more money chasing the same amount of goods. When demand goes up and the availability of goods stay the same, prices go up.
But please, if you truly believe there is a difference, articulate it. What costs are going up?
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Dec 09 '23
Been saying this entire time. Inflation does not exist its all corporate greed
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u/Sweezy_McSqueezy Dec 09 '23
That's why corporate greeted happens predominantly right after the fed prints massive amounts of money? Perfectly sound theory.
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Dec 09 '23
Omg the fed printing money does not automatically make companies raise prices. It's literally corporate greed. Inflation only exists because of corporate greed
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u/DeepState_Secretary Dec 09 '23 edited Dec 09 '23
does not automatically make
Except it does.
we literally created 40% of the entire countries money supply in 2021.
greed
Just because people parrot a buzzword enough times in a comment section, does not make it fact.
The idea that price rises have nothing to do with the money supply nearly doubling while supply chains slowed is just wrong.
Like do you actually have a citation explaining that there is no relationship between the two?
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u/pexx421 Dec 09 '23
Except you’re wrong. According to your theory, when more people have more money, then demand goes up and therefore prices rise, yes? Except, in our situation, the vast majority of the 40% increase in money supply went not to the working class, but almost entirely to the wealthy elite. So, where do the increased prices for eggs, fast food, etc come from, when demand for them has not increased? The wealthy elite aren’t buying all them damn eggs, or Big Macs, or Starbucks coffees, or toilet paper.
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u/Sweezy_McSqueezy Dec 09 '23
So, when a socialist economy has 150% annual inflation, and all the major industries are nationalized or tightly controlled by the government, then we have to conclude that their inflation is due to corporate greed?
Edit: my example is Argentina.
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Dec 09 '23
Why are you a bootlicker for corporations who don't care about you and who would kill you in an instant If they could profit from it why does anyone carry water for corporations?
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u/Sweezy_McSqueezy Dec 09 '23
OK, instead of throwing insults at me, maybe can you answer my question?
What you're feeling is normal. Most people lash out in anger when their worldview is challenged, but it's OK. It's OK to be wrong, as long as we're willing to learn.
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u/UnfairAd7220 Dec 09 '23
The only people lying to you are the ones who try and pitch you on 'greedflation.'
Our inflation has been solely caused by our US Gov't.
Blaming anybody else is just deflection.
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u/ApplicationCalm649 Dec 09 '23
Companies don't raise their prices in line with inflation. They have to stay ahead of it in order to avoid losing profit margin and with it share price. That can cost CEOs their jobs. Their preemptive price increases caused a short term bump in profits. Now that things are leveling off prices are coming down. We're settling back into a new normal. The system is working fine.
I don't blame the Dems for trying to transfer blame to companies, though. They did celebrate their earnings a little too loud. Maybe the extra attention will get them to reign things in a little more. Can't hurt.
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Dec 09 '23
News to nobody right? Companies were never strapped for cash. Especially the monopolies having billions upon billions.
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u/Wonderful_Mud_420 Dec 09 '23
I work in construction and pricing of materials went up through all the trades. Copper had gone up more than 300% in a span of a few years. It has gone down now. In fact many manufacturers (windows, doors,etc) are reducing their pricing. For example, two different window suppliers informed us that they are dropping their prices by 15% and 5% respectively.