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Greedflation: Corporate profiteering 'significantly' boosted global prices,study
- rjbwork 3y agoUnsurprising, really. They were given cover to increase prices, so they did it. That is their duty as the operators of those corporations to the shareholders.
- falcolas 3y agoAnd yet some of them (the c-suite for the egg producers, for example) are being convicted for it. So, there's definitely limits to that "duty".
- V__ 3y agoIt's not their duty. There is no legal or moral obligation to shareholders to maximise profits at all costs.
- mint2 3y agoIt’s twisted how that “philosophy” from hedge funds using leveraged buyouts to pillage corporate America has now become unquestioned wisdom for many. A company relies on its customers, workers, owners and the society where it operates but hey let’s ignore all the rest and only maximize the short term benefit to owners by short changing both the workers and customers.
- rjbwork 3y agoCouldn't agree more. Was playing devil's advocate to spur conversation since I was the first comment on the thread.
- codevark 3y ago[dead]
- megaman821 3y agoWhat makes more sense? (1) The majority of companies expected their input costs to rise so quickly increased prices to compensate, when they didn't rise as much as expected they slowly lowered prices to remain competitive. Since nearly everyone was reading the market the same way, they weren't punished for this. (2) Companies became really greedy a few years ago, and increased prices just because they could. Recently they have been less greedy, and prices have come down.
- 000ooo000 3y agoFalse dichotomy
- HHC-Hunter 3y agoI'll take window number 2, whilst continuing the notion that they haven't lowered their greed.
- layoric 3y agoRise like rockets, fall like feathers as they say. Out of interest, in what markets have you seen prices come down?
- megaman821 3y agoGas, batteries, cars and homes. I understand people look at their grocery bill and get mad, since nothing seems to bring down food though.
- WillPostForFood 3y agoEggs have come way back down.
- autoexec 3y agoAfter being ordered to pay massive fines in price gouging lawsuits so no surprise there.
- 3y ago
- Manuel_D 3y agoThe whole "greedflation" narrative still doesn't seem plausible. Why wouldn't one company reduce prices and capture the market share from the companies that artificially raised prices? In order for the "greedflation" to work, there must be some collusion in terms of price setting. This does happen in the market, but it's illegal and governments do take action against price-fixing [1]. A much more plausible explanation is that the economy as a whole had a massive rebound after the pandemic, and the record profits are just a byproduct of that rebound. 1. An example from my State: https://www.atg.wa.gov/news/news-releases/406-million-way-low-income-washingtonians-result-ag-ferguson-lawsuits#:~:text=Washington%20was%20the%20first%20state,by%20the%20price%2Dfixing%20conspiracy https://www.atg.wa.gov/news/news-releases/406-million-way-lo... It's not always super high-profile, but lawsuits against anti-competitive practices happen all the time.
- recursivedoubts 3y agomaybe markets don't work in quite the just-so story way we've all been told?
- squigz 3y agoThanks, this made me laugh. I wish more people would consider such a simple fact.
- Manuel_D 3y agoElaborate? I've already explained that price-fixing does sometimes happen, but it's illegal and governments do crack down on it. People like money, but they also like to stay out of prison and avoid losing that money in settlements. If anyone is making a just-so argument, it's those claiming "greedflation". The idea that record profits must equate to something nefarious happening is in my view a simplistic just-so statement. At least in America, people built up record savings during the pandemic, and then spent those savings in record numbers once the lockdowns ended. Record profits during a period of record spending seems rather unsurprising, doesn't it?
- mattmanser 3y ago
- slibhb 3y ago[flagged]
- KennyBlanken 3y agohttps://www.google.com/search?q=COVID+wealth+consolidation https://www.google.com/search?q=COVID+wealth+consolidation
- churchill 3y agoWealth is not zero sum, my fellow HNer - and just because a few news houses blame the effects of government shutting down the economy on the wealthy doesn't make it right.
- dilyevsky 3y agoDon’t forget the part where they printed a shitload of money
- churchill 3y agoIn other words, they contract production and stimulate demand at the same time and then wonder why prices are rising. Humans are just... beautiful.
- mvc 3y agoI guess I'm one of these humans you'd consider "beautiful". We're not trying to say companies are evil for raising prices when they had the opportunity. Or that government was stupid for trying to save lives by reducing contact between people. Most non-sociopaths understood it was reasonable for society to attempt this reduction in contact in order to not overwhelm the health service. And given that, some of the companies and individuals who benefited (whatever the reason), should pay a bit more tax for a few years to help out those that lost out (whatever the reason).
- galacticstone 3y agoGreedflation is a weird way of spelling capitalism.
- churchill 3y agoWhenever I come across this argument I don't even know how to start attacking it because of how asinine it is. If inflation is a product of corporate greed, do you concede that the fairly stable prices over the years have been a product of corporate benevolence? No, you won't. The only workable explanation, in Friedman's words is that inflation is always and everywhere a monetary phenomenon. Any other explanation is economically illiterate.
- nekonyan 3y ago[flagged]
- csomar 3y agoIt’s interesting to read all the comments here trying to find any explanation ut. Corporate greed, supply chain issues, Russian gas, etc… How about the base monetary supply inflated 4 times?
- mint2 3y agoOkay so that explains inflation is always around… which part explains why it when from like a decade of 2% to 10%? And don’t say supply chain because the fed basically discarded that when they finally panicked that it wasn’t transitory like they initially assumed and the scrambled with fast interest hikes. Greedflation simply means a profit price spiral rather than a wage price spiral.
- mr_toad 3y agoAn expense is always someone else’s profit. All inflation, all prices, everywhere, is the result of someone putting up their prices, trying to make as much money as they can. If it’s not the retailers, it’s the wholesalers, the suppliers, the utility providers, the lenders, the executives, the land-owners, the unions and even finally the workers. All of them trying to make as much money as they can. All of them raising their prices whenever (and if) they can. Greed is not an explanation, because greed is everywhere in the supply chain, right down to the bottom. The question shouldn’t be why they wanted to (since why wouldn’t they?), but why they could. Examining which part of the supply chain put their prices up seems pointless unless it sheds light on why that part of the supply chain in particular could put their prices up.
- cies 3y ago> why they could. That's a question that has interested me. I came up with: We (the 99.9%) are not poor enough. We can still afford it "in some sense" and to some degree". The poorest, say, 30% shield the rest of a society from paying too much. p.s. If you know this idea has some academic name, please lemme know!
- gruez 3y ago>We (the 99.9%) are not poor enough. We can still afford it "in some sense" and to some degree". The poorest, say, 30% shield the rest of a society from paying too much. It's not necessarily "the poorest [...] 30%". It's the marginal consumers who's willing to comparison shop and put in the legwork. They keep prices down for everyone else, by threatening to switch to the other store if one store decides to get too greedy. True, being poor might be correlated with putting the legwork into saving money, but wealth isn't the definite factor. >p.s. If you know this idea has some academic name, please lemme know! sounds like https://en.wikipedia.org/wiki/Economic_surplus https://en.wikipedia.org/wiki/Economic_surplus
- chii 3y ago> The poorest, say, 30% shield the rest of a society from paying too much. aka, it's too difficult to price discrinimate common essentials (lord knows they try - look at how much labeling of "organic" and "natural" foods there are!).
- armchairhacker 3y ago"Greedflation" is a new word to describe a by-product of supply and demand as old as capitalism itself. Companies raise prices when they can, and companies hate to lower profit and will never do so unless literally forced. They are money-hungry entities who will do anything for a profit, but they've been that way since the very idea of "companies" was in its infancy. And today's companies have to make a certain amount of profit relative to their competitors, or they'll get pushed out and go bankrupt. There are 2 solutions to this problem: government interference and competition. IMO competition is what's desperately needed, and regulation/govt-funding to help the little guys with better ideas and lower profit margins compete with the big ones. When people stop buying from Walmart because their profit margins are too high, Walmart gets less total profit, and they can either lower their prices and/or sell better products, or suffer and potentially go out of business. This is how capitalism is taught in grade school, this is how it's supposed to work and actually benefit the common man, and the factors which make it not work are what we need to regulate and fund away. * There's also private funding and educating the general population to choose smaller companies over lower prices. And most companies don't actually do everything they can to 100% maximize profit. However, I don't think you can rely on these factors, because a lot of people aren't really aware or motivated, and a lot of people don't choose for others' or long-term benefits over their own short-term ones.
- howeyc 3y agoBecause we all know corporations were keeping prices and profits low before COVID because it's good for PR. After COVID they said screw the PR let's be greedy now.
- gruez 3y ago>Because we all know corporations were keeping prices and profits low before COVID because it's good for PR. Is this the same corporations that didn't want to pay "essential workers" a living wage and/or give them reasonable hours? I find it doubtful that they turned over a new leaf during covid because it was "good for PR".
- evancox100 3y agowhoosh The sarcasm went right over your head. Of course the inherent greediness of companies & executives did not undergo wild swings during/after COVID, the idea is absurd on its face.
- PM_me_your_math 3y ago[dead]
- silexia 3y agoWhen inflation happens and then goes back down, prices remain high unless DEFLATION happens... this "study" and article are just proclaiming a specific anti-business worldview without actually looking at the true cause... most governments printed trillions of dollars of their currency during the pandemic and the currencies are forever worth less than they once were.
- deleted 3y ago[deleted]
- aaomidi 3y agoProducers for consumer goods are consolidating left and right. No shit. The FTC is responsible for this consolidation.
- lamontcg 3y agoI feel like I'm going crazy reading this stuff. Inflation is always greedflation. There's more money chasing less stuff so they hike up the prices on the stuff to capture as much money as possible, and that is inflation. That is capitalism with an inelastic demand curve. If there were more goods and more competition then prices would lower. They're always greedy, and if you keep spending they keep raising prices.
- pengaru 3y agoNever let a good crisis go to waste.
- Ekaros 3y agoI wonder how many on the labour side would be willing to lower their wage for same work if prices actually came back down? Would you? That then too is greedflation... Everyone is trying to maximise their profits. And keep them at same level when they can.
- mvc 3y agoThey may not be "willing" but that's what happens over the long-term due to the relative power of market participants.
- ssss11 3y agoAfter tough years for corporate profits due to covid, is it too simple that this inflation is the corporates trying to claw back additional profit that was lost during those years? It certainly seems likely
- datacruncher01 3y agoI think the easiest explanation is people rightly figured back during the pandemic lockdowns and wfh policies that people had more money than they usually did even in spite of some people losing their jobs. Gov spending was very high to be honest and people suddenly had somewhere between 1k to 2k extra cashflow. That kind of increase leads to every business trying to extract that as fast as they can. If your business didn't increase their costs during the last three years it's a dying business.
- chewmieser 3y agoAs someone in the industry my experience was sudden insanely high shipping & container costs and an inability to get stuff out of port while storage fees added up. Of course prices for goods had to increase to support these sudden expense increases. You literally could not get containers at all at certain points during the pandemic. My company, and I suspect others as well, were cautious about reducing prices as shipping costs eased. Which has contributed to their healthy margins but others are finally starting to lower their prices as well which is now causing us to do the same.
- okr 3y agoThis was also my impression, that it is one of the reasons, why prices increase and also fall. (thanks for the insight and not spreading the boring anti-capitalism and marxist virus, that hackernews usually gets infected with)
- foxyv 3y agoThis is another indication that we need to start breaking up large corporations. In a competitive market this wouldn't fly. You would be out-priced by your competitors and go out of business. EG: Why buy chicken at $4/lb from Tyson when you can buy it from 10 other companies for $1/lb. But when you are such a huge percentage of the market you can easily watch your competitors (If you have any) run out of stock and raise their prices as well. I hope this gives the FTC a ton of ammunition in their future legal battles. Although I'm not optimistic, considering they are less funded than the legal departments of the corporations they are going up against.
- anon291 3y agoWhy is this surprising? Higher rates mean businesses need to provide a higher return to stay competitive. You increase the cost of capital, businesses and people will adjust prices to adjust.
- PM_me_your_math 3y ago[dead]
- 29athrowaway 3y agoPerhaps it is good to have something that signals we are approaching or past carrying capacity, as a species without a natural predator.