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Greedflation is a word that's been seen a lot lately and it implies that corporations are greedy and that's why we see inflation, but the reality is that corpor
by hayst4ck 3y ago
Greedflation is a word that's been seen a lot lately and it implies that corporations are greedy and that's why we see inflation, but the reality is that corporations are only able to be greedy because they don't have meaningful competition and therefore no market forces to push their prices down.
Mergers like this create less competitive markets.
- diordiderot 3y agoIt also helps managers bend employees over. Where else are they gonna go
- drdaeman 3y agoI wonder, besides classical antitrust stuff (which doesn't seem to work at all), is there some sort of measures that would make the process inverse, making giant corporations want to disperse into smaller autonomous companies?
- gostsamo 3y agoRegulation. If you forbid verticals on a market, you might prevent mergers or create splits. E.g. american cinema where studios are forbidden from having their own saloons and are forced to license their products. Currently made irrelevant by the streaming services where the rule does not apply.
- nostromo 3y agoRegulation often has the opposite effect by raising barriers to entry and reducing competition.
- rocqua 3y agoRegulation against vertical integration should have much less of such an effect.
- hayst4ck 3y agoI think that is a simple view of regulation. "You must do this" style regulation like GDPR does raise barriers of entry. "You can't do this," style regulation like trust busting doesn't seem like it would involve raising barriers to entry. It seems like it would lower them.
- psd1 3y agoOn GDPR, broadly speaking it's more "you can't" than "you must". Don't keep people's data and you're fine. Granted, some businesses need to keep some data as a matter of doing business. But the problem that pre-gdpr businesses have with the rules is that they were set up with the mindset that keeping everything is free. A startup need merely nuke stale accounts. So it's an advantage over the incumbents, who have to figure out deletion in databases that weren't designed for it.
- zeroonetwothree 3y agoThe startup now has to spend $X more implementing handling those regulations rather than building an MVP and finding PMF. This might be the difference between success and failure. Thus there will be fewer successful startups than in the world without the regulation. Conversely a big corporation will lose some % of profit to dealing with the regulation (or perhaps it will just raise prices if it’s not competitive). But it’s not an existential concern.
- matkoniecz 3y agoIt rather depends on whether something has large constant cost that is punishing for small companies and negligible for large. For example if something requires producing 10 000 pages of legalese it will block new companies and be not so problematic for large ones. Or when company needs to heavily research what exactly they can offer/sell and it requires massive effort (it technically is "you can't do this" one).
- gostsamo 3y agoYou just repeated a mantra without thinking through it. Regulation is whatever it is made to be.
- ThunderSizzle 3y agoIt is made to be a barrier to competition. Good luck setting up an in compliance web store based on the current sales tax rules that Amazon basically brought to us.
- Timon3 3y agoCould you try to clearly explain how regulation against vertical integration raises the barrier to competition? I can't come up with any explanation where it doesn't lower the barrier.
- naveen99 3y agoVertical integration is a value add. By restricting it, you make it harder for challengers who want to start with vertical integration. Example: vertical integration restrictions prohibit car manufacturers from operating dealerships. Tesla used vertical integration in other states to lower costs and create a cheaper electric car business. With tighter rules against vertical integration you may not have tesla.
- Timon3 3y agoIf the goal of regulation is to prevent vertical integration, it is not really helpful to say "oh, but doing this will prevent vertical integration!". Yes, of course it will, that's what we said it should do. You might think this is a bad idea, but it's not a downside of the regulation.
- naveen99 3y agoVertical integration isn’t an end goal of businesses or regulation. it’s also hard to even define.
- nostromo 3y agoBlock more mergers. It’s easier than breaking companies up afterwards.
- drbaba 3y agoMaybe progressive taxation of companies, where they pay more tax the larger they become?
- anshumankmr 3y agoIf their revenue would increase, would they not be taxed more?
- Rygian 3y agoThe amount taxed is not relevant. It's the tax rate that would grow higher.
- patmorgan23 3y agoRevenue is not taxed, only profit (revenue-expenses) is.
- rocqua 3y agoMight be to much nuance in dealing with the obvious tax-dodge of a company splitting up into a conglomerate of subsidiaries. But I do very much like the idea.
- zeroonetwothree 3y agoCorporate income taxes are already terrible for health and create awful incentives. Ultimately corporate profits go to individuals so we should only tax them at that point. (Or have just a consumption tax, which kind of solves all these problems)
- hayst4ck 3y agoAfter citizens united the feedback loop of corruption became too strong. Company pays for candidates advertisements so they can win primary -> can only vote on candidates that companies voted for first -> politicians are responsive to their benefactors -> politicians de-regulate/ignore mergers/grid lock themselves -> companies are able to centralize more power -> company increases their influence over the government to get even more influence... This un-virtuous cycle means the only way out is unions (or french-ery). We have openly corrupt supreme court justices who laugh in our face and say "what are you gonna do about it?" Pelosi said "I can trade stock on companies I regulate" and basically said "what are you gonna do about it?" Government intervention can only come after we have an answer for corrupt politicians saying "what are you gonna do about it?" Kroger and Albertsons are gonna merge... "what are you going to do about it?"
- baremetal 3y agoWe have no way to hold our leaders accountable. On either side of the aisle.
- zeroonetwothree 3y agoCorporations actually don’t spend that much on advertising. It’s mostly super PACs that benefit from Citizens United. Many of them are funded by wealthy individuals, not corporations.
- rocqua 3y agoCurrently the SEC disclosure work scales sub-linearly with size. Because you only need to report on 'material information' and what counts as material is about relative size. Forcing companies to report on any effort above 1 mil might make reporting on big companies so horrible they prefer to split up?
- KirillPanov 3y agoGraduated corporate income tax. It's real simple. Want a lower tax rate? Do a demerger.
- ouid 3y ago[dead]
- zeroonetwothree 3y agoLarger companies breaking up happens all the time too. It’s part of the natural business cycle.
- ilyt 3y agoTax the fuck out of them. On income, not profits, based on marketshare they own.
- rocqua 3y agoI feel like some of my groceries are decently competitive markets. But brand momentum and just information insensitivity keeps me (and others) from buying a different product just because their price went up less. And if the price increase is inevitable, then by delaying your price increase compared to competitors only gives you a limited window for gaining customers based on the better price. In such a world, if your competitors are doing greed-flation, it might prove that you are leaving money on the table unless you also join. Sadly this logic effectively yields collective action between competitors without any illegal agreements.
- hayst4ck 3y agoWhere does intervention come from? Theoretically the government regulates commons and so the government should intervene and regulate commons when the public good requires it. Why can't the government intervene? Because these companies have gotten so large they have literally hundreds of millions of dollars to spend preventing intervention.
- rocqua 3y agoIt is very hard to 'prove' this greed-flation. The coordination happens only through the market in this theory, so there is no damming communication evidence, or even testimony that can prove this is what happened. Perhaps something to make customers more price-sensitive by making price comparison easier or by forcing more disclosure around when price-increases happen. The best solution is to stop high inflation. That lengthens the window you can keep prices lower than your competitors, to take market share. But inflation is very difficult to affect.
- hayst4ck 3y agohttps://www.npr.org/transcripts/1088346603 https://www.npr.org/transcripts/1088346603 NPR seems to agree with both of us. > SCOTT MORTON (Yale economist who focuses on anti trust): In a concentrated market, one firm could announce it's going to raise prices because of inflation. And its rivals might look at that and say, oh, this is a good excuse to raise prices. They're raising prices, so we should match. And we should announce we're raising prices also. We call this tacit collusion. And in a setting like this one, where inflation might be giving firms permission to raise prices and then they follow each other, that could cause price increases. > WOODS (host): So bottom line - companies raise prices when they can. That's what companies have always done. And what keeps them from doing it is usually competition. But even when we have uncompetitive markets like in the meat industry where prices are high, that is not the big driver of inflation in the economy right now. But that does not mean that it is a good thing to let monopolies keep their monopoly power. Fiona says it is good public policy to crack down. That means scrutinizing mergers, investigating possible collusion and splitting companies if needed. > SCOTT MORTON: Is it a good idea to do? Absolutely. Because it brings down prices in general because markups are lower when there's more competition. It raises quality. It raises innovation. It increases productivity. It increases the efficiency of the economy. So there's many, many ways in which antitrust enforcement and competitive markets benefit consumers. More vigorous antitrust enforcement is a long-run project. It's not going to change prices in 2022. My understanding in reading the article is that the economist was making a distinction that doesn't make sense to me, which is that the cause is distinct from what enables it. It seems that what was said is that supply chain shocks and tacit collusion are the cause, but they are enabled and amplified by lack of competition.
- nebulousthree 3y agoCapitalist philosophy is about maximizing profit and minimizing expenditures. One is led to believe that the end result is a flourishing competitive environment but, in reality, the best way to achieve the above is to collude with your "competitors". Better yet, create your own competition, and then "compete" against them.
- lr4444lr 3y agoWhat economic system isn't interested in those things? Barter? Mercantilism? Socialism is just about the ownership model, not the operation.
- readthenotes1 3y agoWell regulated capitalism is an answer. Greed has to be restrained by brute force or capitalism fails through monopololization/collusion.
- deleted 3y ago[deleted]
- nicbou 3y agoIt's fair to recognize a systemic problem without having an alternative.
- 29athrowaway 3y agoA consequence of monopolies and collusion.