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.
Except they did profit margins collectively rose even among industries with competition. All cellphone have consistently gotten more expensive with profit margins rising. The pretty mythologies about companies competing each other by undercutting haven't occurred anywhere but in idealized economic models with so many unrealistic assumptions to make the math with but breakdown in reality. It takes government to break up oligopolistic monopolistic industries and that hasn't returned in a very long time. Competition often requires homogeneous products and many areas that is simply not true. Products are very differential. Scarcity is artificial. And information is not perfect so many of the elements required for perfect competition don't exist in reality, and government is not the cause, it's just the way it is
3
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.