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This seems pretty disingenuous. Keeping up with costs is just part of stable profitability and in no way implies growth at the rate modern investors demand.

pixl97 3y ago
The problem here is you're looking at the system as individual parts instead of the entire system. Lets imagine an entire economic system that was steady state. Why would profitability have to increase? Instead we have a system that profit must increase, and profit must increase in every component of the system constantly due to inflationary practices.
- thereddaikon 3y ago
  That's not how that works. Raising profits is not the same as raising prices to match inflation.
  - pixl97 3y ago
    Raising profits can cause inflation. https://www.npr.org/2023/05/19/1177180972/economists-are-reconsidering-how-much-corporate-profits-drive-inflation https://www.npr.org/2023/05/19/1177180972/economists-are-rec... >He found that in 2021, corporate profits could account for about double that, nearly 60% of inflation, meaning it was not costs driving inflation. It was corporate profits. Now, some economists hear this and think this is proof that companies were just using inflation as an excuse to gouge customers.
- johnbellone 3y ago
  You're talking about "profits" when you should really be talking about "costs". At a macro level, in a large company/business, your employees expect raises for a variety of reasons (inflation, quality of life, promos, etc). A new product or feature may require hiring additional employees. If an employee exits, you may need to spend more money to hire a replacement. In addition to all of that, there are contractual obligations with vendors, your customers may be trying to eliminate product (or leave entirely), etc. All of that raise the cost to run the business. If you want to keep your margin you need to raise your prices, cut expenses, or both.
- astrange 3y ago
  Profit only has to increase in nominal terms, not real terms. You don't have to grow in real terms as long as you don't promise equity investors you'll try to grow. If you don't even grow nominally, you won't outrun debt and wage growth.

pixl97 3y ago

The problem here is you're looking at the system as individual parts instead of the entire system. Lets imagine an entire economic system that was steady state. Why would profitability have to increase? Instead we have a system that profit must increase, and profit must increase in every component of the system constantly due to inflationary practices.

thereddaikon 3y ago
That's not how that works. Raising profits is not the same as raising prices to match inflation.
- pixl97 3y ago
  Raising profits can cause inflation. https://www.npr.org/2023/05/19/1177180972/economists-are-reconsidering-how-much-corporate-profits-drive-inflation https://www.npr.org/2023/05/19/1177180972/economists-are-rec... >He found that in 2021, corporate profits could account for about double that, nearly 60% of inflation, meaning it was not costs driving inflation. It was corporate profits. Now, some economists hear this and think this is proof that companies were just using inflation as an excuse to gouge customers.
johnbellone 3y ago
You're talking about "profits" when you should really be talking about "costs". At a macro level, in a large company/business, your employees expect raises for a variety of reasons (inflation, quality of life, promos, etc). A new product or feature may require hiring additional employees. If an employee exits, you may need to spend more money to hire a replacement. In addition to all of that, there are contractual obligations with vendors, your customers may be trying to eliminate product (or leave entirely), etc. All of that raise the cost to run the business. If you want to keep your margin you need to raise your prices, cut expenses, or both.
astrange 3y ago
Profit only has to increase in nominal terms, not real terms. You don't have to grow in real terms as long as you don't promise equity investors you'll try to grow. If you don't even grow nominally, you won't outrun debt and wage growth.