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The trouble is that a large chunk of the media has basically lied about this and told people that no, they'd be able to consume just as much as before if it was

by makomk 4y ago

The trouble is that a large chunk of the media has basically lied about this and told people that no, they'd be able to consume just as much as before if it wasn't for the evil profiteering corporations and the mega-rich stealing from them. They've done things like point to the increase in wealth of the super-rich "during the pandemic" to prove that ordinary people have become poorer because the money they deserve was "siphoned off" (never mind the fact that wealth does not represent services and goods that are available to buy and their measurements conveniently start at the bottom of the pandemic-induced drop in share prices) or run breathless headlines about how profits at grocery stores have doubled and this proves profiteering is responsible for price increases when the profit margins of those companies goes from 1% to 2%.

geysersam 4y ago
Fact remains that wealth inequality has increased enormously over the last decades. This is a big economic issue that deserves journalistic coverage. If you don't want to frame it in terms of "evil" or "profiteering" that's fine. But this issue is important. The expected consequence of inequality is reduced economic output (in terms of utility). It leads to inefficiency. I feel this is a perspective that's not stressed enough.
- robertlagrant 4y ago
  Can you elaborate? How does the existence of a rich person somewhere else reduce my economic output?
  - ClumsyPilot 4y ago
    Growing inequality without growing GDP means you became poorer. Even if we assuming they magically appeared and you did not become poorer: will never own an asset in your life, they can price you own of a house, land, shares, etc.
    - robertlagrant 4y ago
      > Growing inequality without growing GDP means you became poorer. For example: Bill Gates comes along with Microsoft, and sells Windows to businesses worldwide, who all benefit. Why is GDP not growing? And even if it magically doesn't grow, how has that made me poorer?
      - ClumsyPilot 4y ago
        Why are you conflating growth in inequality during the pandemic with entrepreneurship? Did GDP grow during the pandemic? Did dozens of Bill Gates's spawn? How did you even get the idea that Bill gates has increaeed inequality? Thousands of people were able to get a well paid job or start a business, inequality probably decreased on average.
        robertlagrant 4y ago
        Bill Gates increased inequality by having a giant amount of money relative to almost everyone else.
  - geysersam 4y ago
    The ideal market maximizes utility production because economic actors expose their utility gain by pricing commodities. The assumption is that price and utility are similar. But when there is wealth inequality this assumption breaks down. A person with large wealth can offer higher prices for less utility compared to a less wealthy individual. This biases markets to satisfy wealthy individuals, overall reducing total utility production.
    - robertlagrant 4y ago
      This is too simple, and misleading, as it leaves out tiered pricing. A slightly better seat on an airplane is 10x the price of economy seats. Without those seats, economy seats would cost much more each. A slightly better car spec is 2x the price of the base model. Without the better spec model, the base model would cost much more. Additionally, just the development of new technology is often for the wealthy first, as it's prohibitively expensive, and then as manufacturing techniques work out the tech filters to a large group of people. E.g. Tesla cars; computers; pretty much everything, really.
      - geysersam 4y ago
        Is your point that wealthy people subsidize air travel by paying relatively more for the space on the plane? That's a perfect example of when inequality biases a market to produce suboptimal outcomes. Why? Because if people wouldn't be willing to spend to pay the cost of an airplane ticket in perfect market conditions, then them not buying a ticket is the optimal allocation of resources. If they then buy a ticket in current market conditions, that's an example of a suboptimal allocation of resources. Same goes for the car example.
        robertlagrant 4y ago
        > Because if people wouldn't be willing to spend to pay the cost of an airplane ticket in perfect market conditions, then them not buying a ticket is the optimal allocation of resources. Sorry, you've lost me. How do you define perfect market conditions?
argentinian 4y ago
Do you know where media does the same? In Argentina. Blaming businessman for inflation is very common here.
naasking 4y ago
> The trouble is that a large chunk of the media has basically lied about this and told people that no, they'd be able to consume just as much as before if it wasn't for the evil profiteering corporations and the mega-rich stealing from them Not a lie at all, corporate profits are the largest driving factor behind inflation over the past couple of years: https://www.epi.org/blog/corporate-profits-have-contributed-disproportionately-to-inflation-how-should-policymakers-respond/ https://www.epi.org/blog/corporate-profits-have-contributed-...
- Workaccount2 4y ago
  Corporations are always greedy and always trying to maximize the amount of money they can get for their goods and services. This has been true since forever. Corporations raising prices is a response to inflation, not the cause of it. When the levy breaks and the town floods, don't blame the river for being a river. Blame the engineers that built the levy.
  - naasking 4y ago
    > Corporations raising prices is a response to inflation, not the cause of it. Sorry, that's wrong. Corporations are taking advantage of the perception of supply chain disruptions to excuse price gouging. Supply chain shortages led to a 1-2% bump in inflation pushing it to 3-4%. Corporations then bumped prices 3-4% which raised inflation even more, pushing it to 7-9%. If corporations were raising prices in response to increases in costs, their profits would remain flat or only slightly increase. That's not what the data shows.

by makomk 4y ago

geysersam 4y ago

Fact remains that wealth inequality has increased enormously over the last decades. This is a big economic issue that deserves journalistic coverage. If you don't want to frame it in terms of "evil" or "profiteering" that's fine. But this issue is important. The expected consequence of inequality is reduced economic output (in terms of utility). It leads to inefficiency. I feel this is a perspective that's not stressed enough.

robertlagrant 4y ago
Can you elaborate? How does the existence of a rich person somewhere else reduce my economic output?
- ClumsyPilot 4y ago
  Growing inequality without growing GDP means you became poorer. Even if we assuming they magically appeared and you did not become poorer: will never own an asset in your life, they can price you own of a house, land, shares, etc.
  - robertlagrant 4y ago
    > Growing inequality without growing GDP means you became poorer. For example: Bill Gates comes along with Microsoft, and sells Windows to businesses worldwide, who all benefit. Why is GDP not growing? And even if it magically doesn't grow, how has that made me poorer?
    - ClumsyPilot 4y ago
      Why are you conflating growth in inequality during the pandemic with entrepreneurship? Did GDP grow during the pandemic? Did dozens of Bill Gates's spawn? How did you even get the idea that Bill gates has increaeed inequality? Thousands of people were able to get a well paid job or start a business, inequality probably decreased on average.
      - robertlagrant 4y ago
        Bill Gates increased inequality by having a giant amount of money relative to almost everyone else.
- geysersam 4y ago
  The ideal market maximizes utility production because economic actors expose their utility gain by pricing commodities. The assumption is that price and utility are similar. But when there is wealth inequality this assumption breaks down. A person with large wealth can offer higher prices for less utility compared to a less wealthy individual. This biases markets to satisfy wealthy individuals, overall reducing total utility production.
  - robertlagrant 4y ago
    This is too simple, and misleading, as it leaves out tiered pricing. A slightly better seat on an airplane is 10x the price of economy seats. Without those seats, economy seats would cost much more each. A slightly better car spec is 2x the price of the base model. Without the better spec model, the base model would cost much more. Additionally, just the development of new technology is often for the wealthy first, as it's prohibitively expensive, and then as manufacturing techniques work out the tech filters to a large group of people. E.g. Tesla cars; computers; pretty much everything, really.
    - geysersam 4y ago
      Is your point that wealthy people subsidize air travel by paying relatively more for the space on the plane? That's a perfect example of when inequality biases a market to produce suboptimal outcomes. Why? Because if people wouldn't be willing to spend to pay the cost of an airplane ticket in perfect market conditions, then them not buying a ticket is the optimal allocation of resources. If they then buy a ticket in current market conditions, that's an example of a suboptimal allocation of resources. Same goes for the car example.
      - robertlagrant 4y ago
        > Because if people wouldn't be willing to spend to pay the cost of an airplane ticket in perfect market conditions, then them not buying a ticket is the optimal allocation of resources. Sorry, you've lost me. How do you define perfect market conditions?

argentinian 4y ago

Do you know where media does the same? In Argentina. Blaming businessman for inflation is very common here.

naasking 4y ago

> The trouble is that a large chunk of the media has basically lied about this and told people that no, they'd be able to consume just as much as before if it wasn't for the evil profiteering corporations and the mega-rich stealing from them Not a lie at all, corporate profits are the largest driving factor behind inflation over the past couple of years: https://www.epi.org/blog/corporate-profits-have-contributed-disproportionately-to-inflation-how-should-policymakers-respond/ https://www.epi.org/blog/corporate-profits-have-contributed-...

Workaccount2 4y ago
Corporations are always greedy and always trying to maximize the amount of money they can get for their goods and services. This has been true since forever. Corporations raising prices is a response to inflation, not the cause of it. When the levy breaks and the town floods, don't blame the river for being a river. Blame the engineers that built the levy.
- naasking 4y ago
  > Corporations raising prices is a response to inflation, not the cause of it. Sorry, that's wrong. Corporations are taking advantage of the perception of supply chain disruptions to excuse price gouging. Supply chain shortages led to a 1-2% bump in inflation pushing it to 3-4%. Corporations then bumped prices 3-4% which raised inflation even more, pushing it to 7-9%. If corporations were raising prices in response to increases in costs, their profits would remain flat or only slightly increase. That's not what the data shows.