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Does this make anyone else spitefully want to spend less, even though they don't have to? My econ training is very limited, and perhaps this is a pointless ide
by abeppu 3y ago
Does this make anyone else spitefully want to spend less, even though they don't have to?
My econ training is very limited, and perhaps this is a pointless idea, but
- the central bank approach to curbing inflation seems to assume that actors in the economy won't change their spending patterns (and decrease firms' price-setting power) until they're unable to continue (i.e. are laid off, can't access financing, etc) or are at least afraid of being unable to continue
- but if we can make people emotionally motivated, can we get people who are secure about their income to cut spending even if they aren't afraid? If you can get securely employed people with good emergency reserves to increase their savings rate out of a stubborn desire to "punish" gouging corporations ... we'd remove corporation's pricing power earlier, right?
- there have been a bunch of "unconstructive" recent examples of people willing to change their spending habits without being forced, for emotional reasons (e.g. boycotting budweiser), which I think do demonstrate that not much is needed to nudge (some) people to shift their behavior
- NoboruWataya 3y agoIf you want to boycott every corporation that is trying to increase profits, you will lead a highly ascetic life. That said, what you are saying isn't entirely untrue, and in fact is considered conventional wisdom by many. If everyone was a lot more price sensitive and more willing to forego discretionary spending, then yes, profit margins and prices would probably be lower. When boomers talk about millennials and their avo toast, this is what they are talking about.
- abeppu 3y agoI don't think people need to fully boycott every company -- but we can deliberately attempt to decrease companies' pricing power by: - voluntarily reduce discretionary spending across categories - within each product category, try to spend most on the company with the thinnest margins (which may not be the cheapest)
- pnt12 3y agoOlder generations always critize younger, that has little to do with inflation and price sensitivity. The boomer doesn't like avocado toast, so they don't understand how someone would pay money for it. But it's likely they are also buying stuff milenials have no interest in.
- hayst4ck 3y ago> Does this make anyone else spitefully want to spend less, even though they don't have to? You are trying to exercise individual market power, when there are other "scabs" who will go and spend that money keeping prices inflated anyway. Your action alone will not produce any value, it requires collusion with other market participants. If you want to make a change you need to exercise power and that means unionizing.
- abeppu 3y agoYes, I agree -- but 'unionizing' might not take the conventional form of a formally organized group with leadership which can negotiate with corporations. I referenced the Budweiser case intentionally -- where there was certainly coordinated action among a large number of market participants, but it was kind of a disorganized and haphazard campaign, and it's not as though 'scabs' drank the beer that conservative activists spurned.