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I find it hilarious when companies are following their stated goal of making profits, while everybody else is rushing to explaining rising prices by factoring i

• kome 3y ago
  yes, the problem is when the central bank increase rates and increase unemployment in order to tame "inflation".
• SkyPuncher 3y ago
  I think the pandemic has played an extremely important role in the public's perception of inflation. During the start of the pandemic, there were legitimate supply chain shortages that resulted that resulted in increased prices without increased profits. Supply chain issues are mostly fixed, but companies road that public perception for a long time to justify price increases.
• dauertewigkeit 3y ago
  Because people expect that in a functioning competitive market, simpily raising prices won't work because your competitors would out bid you.
  • zozbot234 3y ago
    That really isn't how it works. Most real-world competition by far happens in a context of product differentiation where suppliers are only imperfect substitutes for each other's products. So you can raise prices and not be "outbid" in such a way anytime soon. Your market share would only suffer gradually over time if you kept your prices higher than the market.
• nostromo 3y ago
  Companies were also seeking to maximize prices in the previous decade of record low inflation.
  • coliveira 3y ago
    But could they? For example, in a normal economy if you increase prices people will spot the trick very easily. Not when everyone is concerned about "inflation".
• Barrin92 3y ago
  Because the basic economic argument against this theory is pretty sound. Companies can't arbitrarily raise prices because market competition drives profits down. It's why highly competitive industries like the restaurant sector aren't profitable, everyone competes for the same consumers, and the lowest cost provider will win. Inflation doesn't actually change anything about this so if companies can just collude and make up prices the question is why did they only start doing it three years ago
  • alexaholic 3y ago
    > Companies can't arbitrarily raise prices The article suggests this is false
    • surement 3y ago
      then you know it's not a great article.
      • ClumsyPilot 3y ago
        I know you are not critically engaging with it. You know how you think the world should work and you reject evidence in front of you. You do not liok for counter-evidence, or find faults in the evidence presented - you just reject it outright, like how flat earther rejects physics
        • deleted 3y ago
          [deleted]
• hnboredhn 3y ago
  I still don't find the argument persuasive. Companies have always tried to maximize profits, as you said. To me this highlights more companies realizing they have pricing power similar to monopoly power or cartel power. A company that has lots of competition can't raise its profit margins. But a company with a moat, where no competitors are able to fund the capital needed to compete, can raise profits.
  • coliveira 3y ago
    They always want to maximize profits, but they don't have this opportunity every day. They will increase their profits if there is a convenient reason like "inflation".
    • hnboredhn 3y ago
      I guess I'm still not convinced the "reasoning" has anything to do with it. If a company says the reason is inflation they can only maintain that pricing power if every other firm does the same thing. If no firm decides to keep prices the same, to steal more of the market, that suggests to me that either inflation is real (perhaps in a harder to quantify way than just supplies) or companies have much more consolidated competitors than they used to (perhaps start up costs are now high so new entrants become impossible).
      • ImPostingOnHN 3y ago
        > If a company says the reason is inflation they can only maintain that pricing power if every other firm does the same thing empirically, this is what's effectively happening in multiple instances given the content of the article of this post, I'm not convinced anyone can reasonably conclude that profit increases aren't accounting for a large portion of inflation: such a conclusion is unpersuasive given said content the questions of "why now" etc. are interesting, and I encourage you to seek answers on them, but answers to them aren't necessary to observe reality, a reality the article helpfully illustrates why did I decide on coffee this morning instead of tea? another similarly interesting question, but the answer, or lack thereof, similarly doesn't change the fact that that's what happened.
• jldugger 3y ago
  Well, you have to come up with a reason for why now -- the profit motive has been there forever. There's also a question of why high margins don't induce new entrants to these markets, or why consumers responding too cleanly to higher prices by buying less. There's been a variety of factors at play and I think if you want to pin it on profits you gotta put in the legwork to rule out or at least quantify the dozens of other factors. And like, if Nintendo wants to charge an extra ten dollars for Zelda[1], I don't think thats any kind of call for EU/UK regulators to step in. [1]: https://www.gamesradar.com/zelda-tears-of-the-kingdom-is-getting-partial-blame-for-the-uks-record-inflation/ https://www.gamesradar.com/zelda-tears-of-the-kingdom-is-get...
  • alexaholic 3y ago
    https://news.ycombinator.com/item?id=36484267 https://news.ycombinator.com/item?id=36484267 > I suspect what happened was rising prices because of the pandemic and the war showed companies they can increase prices without also suffering a significant decrease in sales. After all, when virtually all prices are going up, where are consumers going to go?
    • jldugger 3y ago
      I'm not disputing that's what is happening, but I do find it interesting _why_ its happening. Consider a scenario where consumer demand for your product jumps rapidly. The two normal profit maximizing responses are to raise prices and increase output. Ideally do both. On the Odd Lots podcast, it's been discussed in various markets that companies that survived 2008 learned to avoid large capital investments when their competitors all went out of business chasing market share. And if market incumbents are all too afraid of making large, long term investments right now, output can only go up after new entrants to the market appear. The online discourse seems to favor cigars and shady board rooms, but it seems just as likely to be risk aversion.
  • asdff 3y ago
    Its hard to enter a market as a truly novel competitor. Chances are on your way up you run into some essential sources that are controlled by a competitor. Imagine starting a Peach computer company in your garage today. You think Broadcom will want to potentially sour their relationship with Apple by offering you good terms? There's a reason why a lot of these "pulled myself up by the bootstraps" stories happened in eras where you could comfortably rent a workshop with little means and do things like solder your circuitry for a desktop computer by hand and ship it to clients yourself. A lot of such windows of opportunity were open for a few short years or even decades but have long since been shut and bricked over.
• concordDance 3y ago
  Well the question they are asking is: why now? Were companies not wanting to maximize profits 5 years ago?
  • alexaholic 3y ago
    I suspect what happened was rising prices because of the pandemic and the war showed companies they can increase prices without also suffering a significant decrease in sales. After all, when virtually all prices are going up, where are consumers going to go?
  • mrguyorama 3y ago
    Surely nothing happened in the past couple years that demonstrated people can absorb some extra costs?
• jaredklewis 3y ago
  How could desire for profits possibly be an explanation for _rising prices_? Were companies not seeking profits in the 2010s? Did they only become greedy in recent years? It seems obvious to me that if companies could have raised prices more previously they would have. Therefore companies pushing price is just a proximate cause of inflation, not a root cause.
• kortilla 3y ago
  Well it can’t be just profit seeking, companies have been doing that forever. Something has enabled them to raise prices without impacting sales.
  • truckerbill 3y ago
    It's tragedy of the commons. A series of events that have happened which has misaligned the market into an unspoken cartel. An opportunity (or temporary need) arose to raise prices and now they don't want to lower them. They are looking over their shoulder and their friendly rivals aren't doing so either.
    • ClumsyPilot 3y ago
      > misaligned the market into an unspoken cartel. We are assuming its unspoken. What if its spoken? how would you know
• eldritch_4ier 3y ago
  Of course inflation is "just" businesses increasing their prices, how else would prices increase - they are decided by humans after all. It's STILL the fault of loose monetary policy. Do you understand that? Many people mention corporate profits drive inflation like that's the end of the conversation. It's the equivalent of saying your house got flooded because the door broke open (allowing the raging hurricane outside to get in). It's pointing at a barely relevant proximal cause to ignore the real issue (the raging hurricane). The economy is a system of individual actors. Everyone is constantly trying to raise their price (employees and employers included). When you do the equivalent of doubling the money supply in under a year, combined with covid supply chain issues, you create an environment where actors in the economy are able to dramatically increase their prices - often out of necessity because their competitors and suppliers are doing the same. The consequence is inflation. This happens if and only if you dump massive amounts of money into the economy above and beyond what can be absorbed by the rate of production. In a sense, both are technically true: inflation is because Biden among other world leaders flooded the economy with money, and the economy aka the system of individual actors reacted to this and found they were able to raise prices because the economy could sustain that. The difference is that one of these is a massive unforced error with easily foreseen consequences that caused significant suffering, and the other is human nature (wrapped up in a prisoner's dilemma). The blame is still rightfully entirely on people like Biden who greenlit this objectively terrible policy.
  • alexaholic 3y ago
    The article is about inflation in Europe
    • eldritch_4ier 3y ago
      Yes, inflation in Europe is the very same phenomenon with their counterpart actors.