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For a counterpoint, see the Planet Money episode "Inflation and the Profit-Price Spiral" [1], where a researcher has some convincing arguments that yes, corpora

• crazygringo 3y ago
  Can you provide a summary? It's quick to skim an article for arguments, but not a video.
  • dtech 3y ago
    From memory: Products prices are determined by costs + profits. Inflation is a rise of that sum. Economists traditionally hyper-focus on costs, primarily wages, as the cause of inflation, while completely ignoring profits. The podcast features a researcher, who has received high pushback from the economics corner although recently more articles support her view somewhat, who says that her research shows corporate profits are the main driver of the 2022+ inflation, and also played a - lesser but under-highlighted - role in the past inflationary periods in the 20th century. One main reason she highlights is companies expect higher costs and raise prices, but those costs don't materialize, leading to higher profits. This also has a compounding effect throughout the supply chain because each intermediary adds an effect, resulting in a high increase at the consumer end.
    • crazygringo 3y ago
      > Products prices are determined by costs + profits. That's already backwards, though. Prices are determined by what the market will bear, according to the demand curve and what competitors are charging (which puts a ceiling on it). Then companies attempt to keep costs as low as possible, and their success or lack thereof determines their profits. (This assumes a lack of collusion over pricing -- but that's the responsibility of the government to prevent, catch, and deter through antitrust.)
  • hnburnsy 3y ago
    Summary of What has been driving inflation? Economists' thinking may have changed | Planet Money This is an AI generated summary. There may be inaccuracies. 00:00:00 - 00:25:00 In this video, economists discuss the factors driving inflation and how their thinking has evolved. Traditionally, inflation has been attributed to factors such as excessive demand, insufficient supply, or too much money chasing too few goods. However, economists are now exploring alternative explanations, including the wage-price spiral and the profit-price spiral. While rising wages leading to higher prices and vice versa have been a historical concern, recent data suggests that wages have not been keeping up with inflation, prompting economists to examine the role of corporate profits. The video highlights that corporate greed is not the primary driver of inflation, as firms have always pursued profits. However, severe bottlenecks in the economy, such as those experienced after World War II and during the pandemic, can create opportunities for corporations to increase prices and profits. The economists discuss the concept of price controls and the role of corporate profit growth in driving inflation. They find evidence that markup growth, closely related to corporate profits, accounted for a significant portion of inflation in 2021. This challenges the traditional focus on wage growth as an indicator of inflation and suggests that rising profits should also be considered. The idea that the expectations of higher costs in the future could drive inflation, even if costs themselves don't increase, is also discussed. The economists express uncertainty and acknowledge they may not have all the answers, but they feel validated by the evidence gathered and are interested in seeing how corporations will behave in the coming year.
• wing-_-nuts 3y ago
  The only, and I mean only decent argument I've seen against 'greedflation' is that if corporations are increasing prices for increased profit, it's odd that I haven't seen it reflect in share prices.
  • dtech 3y ago
    That would only hold true if shares always trade against a fixed P/E ratio, and with rising interest rates up P/E ratios have historically gone down.