7 ms·

The whole "greedflation" narrative still doesn't seem plausible. Why wouldn't one company reduce prices and capture the market share from the companies that art

The 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 ago
maybe markets don't work in quite the just-so story way we've all been told?
- squigz 3y ago
  Thanks, this made me laugh. I wish more people would consider such a simple fact.
- Manuel_D 3y ago
  Elaborate? 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
    It's not price fixing. It's what's stocked by big retailers. Real world example. Heinz Baked Beans, UK. There are tons of other baked beans brands, but almost every store has Heinz. It dominates the shelf space by a huge margin. Heinz is specifically called out in the article. They've made massive hikes in price, everyone's complaining about it, but often it's the only product on the shelf for a common, quick meal ingredient in UK meals. There is no choice. It's not a simple economic choice. Most people can't choose the cheaper brand as often there's no choice. Heinz Tomato Ketchup is/was in an even more dominant position. Many mid-sized grocery stores literally only stocked Heinz. (the co-op one is a pretty good substitute btw). While theoretically there is consumer choice in the market, the reality is that it's wasn't true unless you want to go round a bunch of different shops. In the long run Heinz has done some serious damage to their brand, but short/mid term are making juicy profits as the market is so slow to correct due to the way supermarkets work. How shelf space is allocated. By how the industry has become a small amount of ridiculously large companies hiding behind a patchwork of acquired brands.
    - evancox100 3y ago
      If Heinz is the only supplier of baked beans, that is literally just a monopoly. In that case you have a monopoly problem, not an inflation problem. Do you all not have private label brands? I’ve never been in a UK grocery store but it is hard for me to fathom that you would only have one brand of baked beans, given it is a food regularly consumed in the UK (or so I’m led to understand by the abomination that is beans and toast).
      - mattmanser 3y ago
        You misunderstood me slightly. It is not the only supplier. It is just the vastly dominant brand on the shelves. We have a few supermarket brands that have taken over every town and village local store. As space is constrained in those stores (long story to do with Sunday trading laws), they stock one, two or three brand of lots of different items. Like there's one choice of poppadoms. Or one brand of english mustard. And one brand of Dijon mustard. Etc. So the stores have a wide selection of goods, but a shallow selection of each individual good. In the case of baked beans, you will always have Heinz. You might have one other choice, depending on the supermarket brand. Often the other choice is cheap, and nowhere near as tasty. Bigger stores have more choice. One noticeable change is that co-op didn't used to bother stocking their own brand ketchup in smaller stores. It sold so poorly Vs Heinz it wasn't worth the shelf space. That has changed, and I'm sure other super markets are making similar changes. For context Heinz has decided on a ridiculous £4.50 a bottle, while the Co-op own brand is £1.90. Heinz used to be about £2.50-£2.90ish I think before the greedflation.
- gretch 3y ago
  Yeah maybe it does and maybe it doesn't. Do you have any theses to add instead of saying "maybe no?". A data point to support the original comment is that there are arbitrageurs all over the place. If you are trying to raise your margin, lots of people without any technical or product knowledge will simply buy it cheaper else where and drop it into your margin and eat your lunch. See the whole drop ship economy phenomenon.
- KennyBlanken 3y ago
  Maybe y'all weren't paying attention when your economics 101 professor said that basic macroeconomics describes general economic behavior, and there can be a lot of other factors? And how about the fact that at least in the US, we don't have a free market system?
anigbrowl 3y ago
Because real markets are not as simple as the toy ones of price theory in economics classrooms. There are transaction costs to entry and exit, information is highly imperfect, products are often not that fungible, inelasticities of both function and consumer preference abound, and nominal competitors often tend toward cartel behavior because many producers see themselves in a somewhat adversarial relationship with customers, and consider the true competition to take place in the corporate finance marketplace rather than the retail one.
- timeagain 3y ago
  > the true competition to take place in the corporate finance marketplace rather than the retail one. This hits the nail on the head. There is no secret cabal of colluding business owners, but for any company that is public, they are necessarily “colluding” to keep share prices high. Since they are all optimizing for the same thing, it makes sense that they would take similar approaches.
  - anigbrowl 3y ago
    Elegantly put! This is where the glorification of 'shareholder value' has got us; it's very unfortunate that commitment to other values like employment security or product quality are considered bad management in mainstream business thinking.
    - jrs235 3y ago
      Or social/societal stability...
- SantalBlush 3y ago
  This is a great answer. In particular, demand in general likely became more elastic during COVID, as consumers suddenly had more cash on hand. In that case, a single firm could raise prices without decreasing quantity demanded too much. That would have caused other firms to follow suit. The assumption of defecting against a cartel by lowering prices also requires that the defector have more supply, but supply was restricted during COVID, so it stands to reason that defecting wasn't possible in the short run.
stvltvs 3y ago
Direct collusion isn't necessary if the major players independently decide to ride the rising tide.
- Manuel_D 3y ago
  But a smart player would slightly undercut the competition and gobble up the market share. If each player acted independently, that is what would happen. There does indeed need to be some sort of collusion to prevent one player from playing the optimal strategy. The factor that the greedflation proponents seem to ignore is that people were spending in record numbers after the lockdowns ended, and people spent the money that was saved in record numbers. This is reflected in GDP figures. There was a huge drop in 2020, followed by a massive spike in 2021. There are indeed significant issues with the greeflation narrative: https://www.economist.com/leaders/2023/07/06/greedflation-is-a-nonsense-idea https://www.economist.com/leaders/2023/07/06/greedflation-is...
  - KennyBlanken 3y ago
    Executives are bragging in earnings calls about their supply chain prices falling and how they're keeping prices high...
    - claytongulick 3y ago
      Where?
  - majormajor 3y ago
    > But a smart player would slightly undercut the competition and gobble up the market share. You assume "slight undercut" => "gobbled up market share" but this is hard to substantiate. Any grocery store in the US will show you examples of name-brand products next to slight-undercut store-brand alternatives where many people continue to buy the name-brand one, despite the price difference being super obvious every time the purchase is made. Real markets aren't econ 101. Prices go up much more easily than they go down. https://www.investopedia.com/terms/p/priceratchet.asp https://www.investopedia.com/terms/p/priceratchet.asp In many markets consumers aren't perfectly evaluating the options from scratch on every single purchase with price the only factor, and a company doesn't want to have to accept a drop in price any more than an employee wants to have to accept a salary cut. So prices go up much more easily than they go down, since they can get forced up but require someone to take a gamble to get them to start moving down.
303uru 3y ago
They didn't have to call up their peer. I feel like I'm going crazy everytime I read, "but that not how macroeconomics works!!!" WE LITERALLY WATCHED IT IN REAL TIME. Covid caused supply chain issues, unaffected supply chains independently raised prices because people were willing to pay it. Trump was dumping $8T into the economy, business leaders also knew that. The supply chains started to clear up, but demand wasn't waning despite high prices. Throughout the entire thing anyone sitting on investor calls was hearing "highest profits in company history" over and over again. Almost as if all that sociology about people behaving coherently without direct communication might have been on to something.
- Manuel_D 3y ago
  > Covid caused supply chain issues, unaffected supply chains independently raised prices because people were willing to pay it. But that's not "greedflation". That's literally a normally functioning market. If Company A and Company B produce a largely interchangeable product, and 50% of Company A's output is lost due to shortages both companies are going to sell their products at a higher price point. The fact that Company B's output was unaffected doesn't change the fact that their product is now in more demand due to Company A's production shortfall. After the supply chain issues eased, people had loads of savings from the lockdowns. This is a big reason why companies were seeing record profits in the post pandemic period: because people were spending in record numbers. Is it surprising to see record profits in a period of record spending?
  - acdha 3y ago
    “Greedflation” would be when those companies kept prices up after their supply chain had returned to normal. Competition will chip away at that but that’s going to be slow if you’re in a market with only another megacorp trying the same thing.
    - Manuel_D 3y ago
      But has demand gone down? The gummed up supply chains created a lot of pent up demand. It's going to take a while to satisfy that demand. Compounding this, pandemic checks injected a massive amount of dollars into the economy [1]. It's simplistic, but take this analogy. A factory builds 1,000 doodads per year. COVID shut it down for a year. Then after COVID it starts producing 1,100 doodads per year. It's going to take 10 years to satisfy the pent up demand. Of course the real world is more complicated, but the fact that prices remain high after the supply chain issues are resolved isn't at all indicative of nefarious or anti competitive behavior. 1. https://fred.stlouisfed.org/series/M2SL https://fred.stlouisfed.org/series/M2SL
majormajor 3y ago
Risk-aversion is probably a big reason. Drop your prices and maybe you capture more of the market. Works best if your product is a perfect substitute and consumers will both (a) immediately know about the drop and (b) be able to switch immediately. And then you can capture some of the lost per-unit profit in volume... but just how much market share would you have to capture to come out ahead of just cruising along with higher per-unit pricing and being more profitable as-is thanks to your costs dropping again? How much would you need to spend on advertising to get the message out, and how does that effect how much you need to capture? And if it doesn't work, and you lost your margin without gaining enough to make it worth it, do you want to have been the guy in marketing who was pushing for the price cut? At this point yo-yo'ing the prices back up is gonna piss off the customers you do have once again, so you might be a bit stuck for a while. Add in things like customer loyalty, stickiness, and habits, and "let's try to send the trend in the opposite direction" only looks riskier and riskier. For instance, if Walmart dropped their prices 10% how many Target shoppers do they convert who wouldn't already be going to the usually-cheaper Walmart? There doesn't have to be anything nefarious going on to explain how markets can result in the consumer losing out, especially after shocks to the system. Let's say everyone was worried that customers wouldn't stand for 10-20% price hikes, but now that they've learned that they can, in fact, get away with it, they independently think it's easier to stay where they are then to try to get into a race to the bottom. No collusion, no "evil" cartoony-levels of greed, but no effective market pressure to fix it immediately either.
- chii 3y ago
  > but no effective market pressure to fix it immediately either. this pressure comes from the consumers. If the consumers keep opening their wallets, then there would be no pressure. So for prices to drop, all that is required is for consumers to stop purchasing. Unfortunately, people, esp. in the US (but basically all over the west too) are quite rich, and they rather spend even if prices are high.
ClumsyPilot 3y ago
I do find it fascinating that a world-leading economist could have findings in a peer reviewed study, and a random joe will reject it and be like "that's not how free market works!" > illegal and governments do take action against price-fixing You mean like how egg producers engaged in collusion in 2000's and the were founds guilty in year 2023, 20 years later? You do realise that it's too little, too late. https://www.reuters.com/legal/litigation/us-jury-awards-177-mln-kraft-other-producers-egg-price-fixing-case-2023-12-01/ https://www.reuters.com/legal/litigation/us-jury-awards-177-...
jonplackett 3y ago
You don’t need collusion to make it work. They just all have the same idea. Charge more and see if people still buy it. They do? Charge a bit more.
- chii 3y ago
  Which is already what happens pre-covid. There's zero change in corporate pricing strategy - the cost increases are all due to monetary policies interacting with the covid shocks (that is still reverberating).
cies 3y ago
Greedflation is a new word for monopolism. It not a monopoly or oligopoly this time, it's a more intricate network of multinationals, financial sector and govt. Best thing we can do is start worker coops to serve our basic needs, and somehow vote law into place that makes worker coops more tax friendly than private limiteds (and related forms of business ownership).
Aeolun 3y ago
> Why wouldn't one company reduce prices and capture the market share from the companies that artificially raised prices? I feel like the answer here is probably along the same lines as the ‘because we have a good excuse’ line of thinking that caused the massive wave of layoffs a few months ago.
- gruez 3y ago
  What makes "because we have a good excuse" more plausible of an explanation compared to the straightforward one (ie. "macroeconomic conditions have changed, money has gotten scarcer, and the management and/or shareholders are reacting accordingly by cutting costs and increasing prices")?
  - Aeolun 3y ago
    I’m not really sure if it’s more plausible, but it seems likely that at least part of the reason would be “all our competitors are raising prices without any ill effects, so we should too”. I don’t think those large mammoths would go for something uncertain like ‘potentially capturing more market share’ if they have the option of ‘guaranteed increase in profits’.
dclaw 3y ago
It's as simple as consolidation... If there is only 1 or even 2 companies in an industry, both are probably shitheads, and it doesn't pay to be the loss leader, otherwise you may end up gobbled up, you both grab what you can while possible.

recursivedoubts 3y ago

maybe markets don't work in quite the just-so story way we've all been told?

squigz 3y ago
Thanks, this made me laugh. I wish more people would consider such a simple fact.
Manuel_D 3y ago
Elaborate? 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
  It's not price fixing. It's what's stocked by big retailers. Real world example. Heinz Baked Beans, UK. There are tons of other baked beans brands, but almost every store has Heinz. It dominates the shelf space by a huge margin. Heinz is specifically called out in the article. They've made massive hikes in price, everyone's complaining about it, but often it's the only product on the shelf for a common, quick meal ingredient in UK meals. There is no choice. It's not a simple economic choice. Most people can't choose the cheaper brand as often there's no choice. Heinz Tomato Ketchup is/was in an even more dominant position. Many mid-sized grocery stores literally only stocked Heinz. (the co-op one is a pretty good substitute btw). While theoretically there is consumer choice in the market, the reality is that it's wasn't true unless you want to go round a bunch of different shops. In the long run Heinz has done some serious damage to their brand, but short/mid term are making juicy profits as the market is so slow to correct due to the way supermarkets work. How shelf space is allocated. By how the industry has become a small amount of ridiculously large companies hiding behind a patchwork of acquired brands.
  - evancox100 3y ago
    If Heinz is the only supplier of baked beans, that is literally just a monopoly. In that case you have a monopoly problem, not an inflation problem. Do you all not have private label brands? I’ve never been in a UK grocery store but it is hard for me to fathom that you would only have one brand of baked beans, given it is a food regularly consumed in the UK (or so I’m led to understand by the abomination that is beans and toast).
    - mattmanser 3y ago
      You misunderstood me slightly. It is not the only supplier. It is just the vastly dominant brand on the shelves. We have a few supermarket brands that have taken over every town and village local store. As space is constrained in those stores (long story to do with Sunday trading laws), they stock one, two or three brand of lots of different items. Like there's one choice of poppadoms. Or one brand of english mustard. And one brand of Dijon mustard. Etc. So the stores have a wide selection of goods, but a shallow selection of each individual good. In the case of baked beans, you will always have Heinz. You might have one other choice, depending on the supermarket brand. Often the other choice is cheap, and nowhere near as tasty. Bigger stores have more choice. One noticeable change is that co-op didn't used to bother stocking their own brand ketchup in smaller stores. It sold so poorly Vs Heinz it wasn't worth the shelf space. That has changed, and I'm sure other super markets are making similar changes. For context Heinz has decided on a ridiculous £4.50 a bottle, while the Co-op own brand is £1.90. Heinz used to be about £2.50-£2.90ish I think before the greedflation.
gretch 3y ago
Yeah maybe it does and maybe it doesn't. Do you have any theses to add instead of saying "maybe no?". A data point to support the original comment is that there are arbitrageurs all over the place. If you are trying to raise your margin, lots of people without any technical or product knowledge will simply buy it cheaper else where and drop it into your margin and eat your lunch. See the whole drop ship economy phenomenon.
KennyBlanken 3y ago
Maybe y'all weren't paying attention when your economics 101 professor said that basic macroeconomics describes general economic behavior, and there can be a lot of other factors? And how about the fact that at least in the US, we don't have a free market system?

anigbrowl 3y ago

Because real markets are not as simple as the toy ones of price theory in economics classrooms. There are transaction costs to entry and exit, information is highly imperfect, products are often not that fungible, inelasticities of both function and consumer preference abound, and nominal competitors often tend toward cartel behavior because many producers see themselves in a somewhat adversarial relationship with customers, and consider the true competition to take place in the corporate finance marketplace rather than the retail one.

timeagain 3y ago
> the true competition to take place in the corporate finance marketplace rather than the retail one. This hits the nail on the head. There is no secret cabal of colluding business owners, but for any company that is public, they are necessarily “colluding” to keep share prices high. Since they are all optimizing for the same thing, it makes sense that they would take similar approaches.
- anigbrowl 3y ago
  Elegantly put! This is where the glorification of 'shareholder value' has got us; it's very unfortunate that commitment to other values like employment security or product quality are considered bad management in mainstream business thinking.
  - jrs235 3y ago
    Or social/societal stability...
SantalBlush 3y ago
This is a great answer. In particular, demand in general likely became more elastic during COVID, as consumers suddenly had more cash on hand. In that case, a single firm could raise prices without decreasing quantity demanded too much. That would have caused other firms to follow suit. The assumption of defecting against a cartel by lowering prices also requires that the defector have more supply, but supply was restricted during COVID, so it stands to reason that defecting wasn't possible in the short run.

stvltvs 3y ago

Direct collusion isn't necessary if the major players independently decide to ride the rising tide.

Manuel_D 3y ago
But a smart player would slightly undercut the competition and gobble up the market share. If each player acted independently, that is what would happen. There does indeed need to be some sort of collusion to prevent one player from playing the optimal strategy. The factor that the greedflation proponents seem to ignore is that people were spending in record numbers after the lockdowns ended, and people spent the money that was saved in record numbers. This is reflected in GDP figures. There was a huge drop in 2020, followed by a massive spike in 2021. There are indeed significant issues with the greeflation narrative: https://www.economist.com/leaders/2023/07/06/greedflation-is-a-nonsense-idea https://www.economist.com/leaders/2023/07/06/greedflation-is...
- KennyBlanken 3y ago
  Executives are bragging in earnings calls about their supply chain prices falling and how they're keeping prices high...
  - claytongulick 3y ago
    Where?
- majormajor 3y ago
  > But a smart player would slightly undercut the competition and gobble up the market share. You assume "slight undercut" => "gobbled up market share" but this is hard to substantiate. Any grocery store in the US will show you examples of name-brand products next to slight-undercut store-brand alternatives where many people continue to buy the name-brand one, despite the price difference being super obvious every time the purchase is made. Real markets aren't econ 101. Prices go up much more easily than they go down. https://www.investopedia.com/terms/p/priceratchet.asp https://www.investopedia.com/terms/p/priceratchet.asp In many markets consumers aren't perfectly evaluating the options from scratch on every single purchase with price the only factor, and a company doesn't want to have to accept a drop in price any more than an employee wants to have to accept a salary cut. So prices go up much more easily than they go down, since they can get forced up but require someone to take a gamble to get them to start moving down.

303uru 3y ago

They didn't have to call up their peer. I feel like I'm going crazy everytime I read, "but that not how macroeconomics works!!!" WE LITERALLY WATCHED IT IN REAL TIME. Covid caused supply chain issues, unaffected supply chains independently raised prices because people were willing to pay it. Trump was dumping $8T into the economy, business leaders also knew that. The supply chains started to clear up, but demand wasn't waning despite high prices. Throughout the entire thing anyone sitting on investor calls was hearing "highest profits in company history" over and over again. Almost as if all that sociology about people behaving coherently without direct communication might have been on to something.

Manuel_D 3y ago
> Covid caused supply chain issues, unaffected supply chains independently raised prices because people were willing to pay it. But that's not "greedflation". That's literally a normally functioning market. If Company A and Company B produce a largely interchangeable product, and 50% of Company A's output is lost due to shortages both companies are going to sell their products at a higher price point. The fact that Company B's output was unaffected doesn't change the fact that their product is now in more demand due to Company A's production shortfall. After the supply chain issues eased, people had loads of savings from the lockdowns. This is a big reason why companies were seeing record profits in the post pandemic period: because people were spending in record numbers. Is it surprising to see record profits in a period of record spending?
- acdha 3y ago
  “Greedflation” would be when those companies kept prices up after their supply chain had returned to normal. Competition will chip away at that but that’s going to be slow if you’re in a market with only another megacorp trying the same thing.
  - Manuel_D 3y ago
    But has demand gone down? The gummed up supply chains created a lot of pent up demand. It's going to take a while to satisfy that demand. Compounding this, pandemic checks injected a massive amount of dollars into the economy [1]. It's simplistic, but take this analogy. A factory builds 1,000 doodads per year. COVID shut it down for a year. Then after COVID it starts producing 1,100 doodads per year. It's going to take 10 years to satisfy the pent up demand. Of course the real world is more complicated, but the fact that prices remain high after the supply chain issues are resolved isn't at all indicative of nefarious or anti competitive behavior. 1. https://fred.stlouisfed.org/series/M2SL https://fred.stlouisfed.org/series/M2SL

majormajor 3y ago

Risk-aversion is probably a big reason. Drop your prices and maybe you capture more of the market. Works best if your product is a perfect substitute and consumers will both (a) immediately know about the drop and (b) be able to switch immediately. And then you can capture some of the lost per-unit profit in volume... but just how much market share would you have to capture to come out ahead of just cruising along with higher per-unit pricing and being more profitable as-is thanks to your costs dropping again? How much would you need to spend on advertising to get the message out, and how does that effect how much you need to capture? And if it doesn't work, and you lost your margin without gaining enough to make it worth it, do you want to have been the guy in marketing who was pushing for the price cut? At this point yo-yo'ing the prices back up is gonna piss off the customers you do have once again, so you might be a bit stuck for a while. Add in things like customer loyalty, stickiness, and habits, and "let's try to send the trend in the opposite direction" only looks riskier and riskier. For instance, if Walmart dropped their prices 10% how many Target shoppers do they convert who wouldn't already be going to the usually-cheaper Walmart? There doesn't have to be anything nefarious going on to explain how markets can result in the consumer losing out, especially after shocks to the system. Let's say everyone was worried that customers wouldn't stand for 10-20% price hikes, but now that they've learned that they can, in fact, get away with it, they independently think it's easier to stay where they are then to try to get into a race to the bottom. No collusion, no "evil" cartoony-levels of greed, but no effective market pressure to fix it immediately either.

chii 3y ago
> but no effective market pressure to fix it immediately either. this pressure comes from the consumers. If the consumers keep opening their wallets, then there would be no pressure. So for prices to drop, all that is required is for consumers to stop purchasing. Unfortunately, people, esp. in the US (but basically all over the west too) are quite rich, and they rather spend even if prices are high.

ClumsyPilot 3y ago

I do find it fascinating that a world-leading economist could have findings in a peer reviewed study, and a random joe will reject it and be like "that's not how free market works!" > illegal and governments do take action against price-fixing You mean like how egg producers engaged in collusion in 2000's and the were founds guilty in year 2023, 20 years later? You do realise that it's too little, too late. https://www.reuters.com/legal/litigation/us-jury-awards-177-mln-kraft-other-producers-egg-price-fixing-case-2023-12-01/ https://www.reuters.com/legal/litigation/us-jury-awards-177-...

jonplackett 3y ago

You don’t need collusion to make it work. They just all have the same idea. Charge more and see if people still buy it. They do? Charge a bit more.

chii 3y ago
Which is already what happens pre-covid. There's zero change in corporate pricing strategy - the cost increases are all due to monetary policies interacting with the covid shocks (that is still reverberating).

cies 3y ago

Greedflation is a new word for monopolism. It not a monopoly or oligopoly this time, it's a more intricate network of multinationals, financial sector and govt. Best thing we can do is start worker coops to serve our basic needs, and somehow vote law into place that makes worker coops more tax friendly than private limiteds (and related forms of business ownership).

Aeolun 3y ago

> Why wouldn't one company reduce prices and capture the market share from the companies that artificially raised prices? I feel like the answer here is probably along the same lines as the ‘because we have a good excuse’ line of thinking that caused the massive wave of layoffs a few months ago.

gruez 3y ago
What makes "because we have a good excuse" more plausible of an explanation compared to the straightforward one (ie. "macroeconomic conditions have changed, money has gotten scarcer, and the management and/or shareholders are reacting accordingly by cutting costs and increasing prices")?
- Aeolun 3y ago
  I’m not really sure if it’s more plausible, but it seems likely that at least part of the reason would be “all our competitors are raising prices without any ill effects, so we should too”. I don’t think those large mammoths would go for something uncertain like ‘potentially capturing more market share’ if they have the option of ‘guaranteed increase in profits’.

dclaw 3y ago

It's as simple as consolidation... If there is only 1 or even 2 companies in an industry, both are probably shitheads, and it doesn't pay to be the loss leader, otherwise you may end up gobbled up, you both grab what you can while possible.