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This is exactly my reaction whenever I see things like this. Profit margins are not the DRIVER for any of these market changes, they are the end result of all t

This is exactly my reaction whenever I see things like this. Profit margins are not the DRIVER for any of these market changes, they are the end result of all the various factors at play.

jjoonathan 3y ago
The profit motive & margins fund lobbyists and political campaigns to change policies that absolutely drive these market changes. We could choose to have anti-trust measures with teeth. We could choose to tax assets. We could have progressive corporate taxes to encourage smaller company sizes and more public transparency. There are so many things we could choose, but the ones that we do choose are the ones that shareholders lobby into place to generate ROI. This is either a feature or a bug, depending on whether your income flows through line 1 or line 7 of your 1040.
- evancox100 3y ago
  All of those things are independent from nominal price/wage increases. If higher pay was such an unalloyed good, why doesn't the government just pass a law saying "Whatever amount you were getting paid on 6/26/23, now you're getting paid double that, and you have twice as much money in your bank account."? Because no one would actually be better off. Prices would instantly double. It's just a change of units, like going from getting paid in $ to getting paid the same amount in ¢.
  - juve1996 3y ago
    > Because no one would actually be better off. Prices would instantly double. It's just a change of units, like going from getting paid in $ to getting paid the same amount in ¢. This is so basic but so many people miss it. I have continually explained this to my parents. It doesn't matter how good your 401k is doing if it leads to eggs being $12 a dozen in your retirement.
    - autoexec 3y ago
      Historically, that hasn't happened when worker's wages increased. Prices do tend to go up (they always do) but not to the degree that it makes the wage increases worthless. When minimum wages go up, workers lives improve. Also, when companies don't have an excuse, consumers simply won't pay $12 for a dozen eggs. Every consumer has some idea of what things are worth and if a company tries to jack prices up for no reason consumers feel cheated and stop paying. There's zero reason why companies can't all just triple their prices right now, except that if they did, people wouldn't pay and their profits would drop. Companies constantly test consumer's acceptance of price increases and usually only increment their prices slowly so that the next generation they rip off doesn't know any better having always grown up with the slightly higher prices. The supply shortages of the pandemic broke the system. It gave every company an excuse for price gouging, and at first, much of that was legitimate supply/demand and consumers were understanding. Then as the supply of goods came back they started using the inflation narrative (complete with "printed money" excuse) to justify further increasing prices, but now we have a growing pile of evidence that they were lying and were just pocketing the extra money. Naturally, and rightly, people are starting to feel ripped off.
      - juve1996 3y ago
        You make an assumptions that is false. 1. Minimum wage increases != wage increases. It's a small subset. The poorest of the poor is never the problem. > Every consumer has some idea of what things are worth and if a company tries to jack prices up for no reason consumers feel cheated and stop paying. The recent inflation proves otherwise. Many costs have remained sticky for no added benefit. If this was true then we would never have inflation - because the inflation the last 2 years has been so extreme that your belief should have come to pass without any help and much earlier when the supply shocks subsided. > Then as the supply of goods came back they started using the inflation narrative (complete with "printed money" excuse) to justify further increasing prices, This just proves the point further - consumers continued spending despite the rising costs. But now you'll say they're only now started to feel ripped off? Seems awfully convenient for your argument, but isn't consistent. What is consistent is that raising interest rates have helped somewhat. The fed is doing the right thing and yes it impacts wages as it impacts other asset classes. Again, if your eggs cost 300% more but your wages increased, it doesn't matter, in the end you're still likely losing.
- cortesoft 3y ago
  These things may help reduce corporate profits, but it wouldn't change inflation.
  - ImPostingOnHN 3y ago
    reducing corporate profits would reduce inflation, since corporate profits account for almost half of inflation, according to the article
    - cortesoft 3y ago
      No, because the profits would go towards taxes instead of profits, but that doesn’t lower prices. If you do lower prices, you would end up with shortages.

This is exactly my reaction whenever I see things like this. Profit margins are not the DRIVER for any of these market changes, they are the end result of all the various factors at play.

jjoonathan 3y ago

The profit motive & margins fund lobbyists and political campaigns to change policies that absolutely drive these market changes. We could choose to have anti-trust measures with teeth. We could choose to tax assets. We could have progressive corporate taxes to encourage smaller company sizes and more public transparency. There are so many things we could choose, but the ones that we do choose are the ones that shareholders lobby into place to generate ROI. This is either a feature or a bug, depending on whether your income flows through line 1 or line 7 of your 1040.

evancox100 3y ago
All of those things are independent from nominal price/wage increases. If higher pay was such an unalloyed good, why doesn't the government just pass a law saying "Whatever amount you were getting paid on 6/26/23, now you're getting paid double that, and you have twice as much money in your bank account."? Because no one would actually be better off. Prices would instantly double. It's just a change of units, like going from getting paid in $ to getting paid the same amount in ¢.
- juve1996 3y ago
  > Because no one would actually be better off. Prices would instantly double. It's just a change of units, like going from getting paid in $ to getting paid the same amount in ¢. This is so basic but so many people miss it. I have continually explained this to my parents. It doesn't matter how good your 401k is doing if it leads to eggs being $12 a dozen in your retirement.
  - autoexec 3y ago
    Historically, that hasn't happened when worker's wages increased. Prices do tend to go up (they always do) but not to the degree that it makes the wage increases worthless. When minimum wages go up, workers lives improve. Also, when companies don't have an excuse, consumers simply won't pay $12 for a dozen eggs. Every consumer has some idea of what things are worth and if a company tries to jack prices up for no reason consumers feel cheated and stop paying. There's zero reason why companies can't all just triple their prices right now, except that if they did, people wouldn't pay and their profits would drop. Companies constantly test consumer's acceptance of price increases and usually only increment their prices slowly so that the next generation they rip off doesn't know any better having always grown up with the slightly higher prices. The supply shortages of the pandemic broke the system. It gave every company an excuse for price gouging, and at first, much of that was legitimate supply/demand and consumers were understanding. Then as the supply of goods came back they started using the inflation narrative (complete with "printed money" excuse) to justify further increasing prices, but now we have a growing pile of evidence that they were lying and were just pocketing the extra money. Naturally, and rightly, people are starting to feel ripped off.
    - juve1996 3y ago
      You make an assumptions that is false. 1. Minimum wage increases != wage increases. It's a small subset. The poorest of the poor is never the problem. > Every consumer has some idea of what things are worth and if a company tries to jack prices up for no reason consumers feel cheated and stop paying. The recent inflation proves otherwise. Many costs have remained sticky for no added benefit. If this was true then we would never have inflation - because the inflation the last 2 years has been so extreme that your belief should have come to pass without any help and much earlier when the supply shocks subsided. > Then as the supply of goods came back they started using the inflation narrative (complete with "printed money" excuse) to justify further increasing prices, This just proves the point further - consumers continued spending despite the rising costs. But now you'll say they're only now started to feel ripped off? Seems awfully convenient for your argument, but isn't consistent. What is consistent is that raising interest rates have helped somewhat. The fed is doing the right thing and yes it impacts wages as it impacts other asset classes. Again, if your eggs cost 300% more but your wages increased, it doesn't matter, in the end you're still likely losing.
cortesoft 3y ago
These things may help reduce corporate profits, but it wouldn't change inflation.
- ImPostingOnHN 3y ago
  reducing corporate profits would reduce inflation, since corporate profits account for almost half of inflation, according to the article
  - cortesoft 3y ago
    No, because the profits would go towards taxes instead of profits, but that doesn’t lower prices. If you do lower prices, you would end up with shortages.