Evil Rich People

[TDub]

so it has nothing to do with the pandemic, the supply shortages, the shipping logistics issues, the war in Ukraine, the fertilizer shortage, the chip shortage, the trillions printed out of thin air in the last 5 years, the shutoff of Russian Oil, the climate crisis impacted global crops, the feds keeping interest rates artificially low to stimulate the economy during the pandemic to try and stave off recession?

good to know.

[Mjl]

where to ask this one:

so what's this Q keeps hearing about how 60% inflation is due to corporate price gouging?

You're the one that brought it up, so, where does one come up with a number like that? I assume you already know, since I sense you already believe it's true? You wouldn't just believe it because it's fitting your pre-conceived notions without something to back it up.

[ousdahl]

Why corporations are reaping record profits with inflation on the rise

https://www.pbs.org/newshour/show/why-c ... n-the-rise


Corporate profits have contributed disproportionately to inflation. How should policymakers respond?

https://www.epi.org/blog/corporate-prof ... s-respond/


U.S. companies post their biggest profit growth in decades by jacking up prices during the pandemic

https://fortune.com/2022/03/31/us-compa ... inflation/


Corporate Profits are Soaring as Prices Rise: Are Corporate Greed and Profiteering Fueling Inflation?

https://www.budget.senate.gov/hearings/ ... -inflation

[Mjl]

These are all looking at profits, not profit margin, right? That isn't surprising during inflation, that is inflation. Prices are up while margins either remain steady or fall.

Why don't competitors just take the whole market then by undercutting the competitors on price?

[Mjl]

These are all looking at profits, not profit margin, right? That isn't surprising during inflation, that is inflation. Prices are up while margins either remain steady or fall.

Why don't competitors just take the whole market then by undercutting the competitors on price?

I should have read the links first... Thanks Ous

[Deleted User 863]

When you print a bunch of money and give it to people to spend inflation occurs. Every. Single. Time.

There are only so many goods. There is only so much money. When the supply of money goes up, and the demand for products goes up, prices go up and supply of products goes down. That is basic enconomics.

[Mjl]

But if profit margins are up then that's not the case. I'm curious to dig more into to sources cited in Ous's second link.

I still don't quite understand if margins are up how someone isn't just undercutting the competitors on price to grab the whole market.

[Mjl]

First thing I am wondering on this - since the first link mentions my employer... It's misleading to say profit margins are up, therefore that's the cause of inflation. Our profit margin isn't up on groceries which would be an inflation driver. It's moreso the B2B sales that are way up - selling the data and the software that delivers it. And selling targeted advertising. That's the stuff that has high profit margin. That shouldn't be nearly as much of an inflation driver.

[Deleted User 863]

I still don't quite understand if margins are up how someone isn't just undercutting the competitors on price to grab the whole market.

Barriers to entry?

[ousdahl]

cool!

let us know if you dig up anything good.

re: "just undercutting the competitors on price," three thoughts:

1. there are a lot of factors affecting consumer markets besides just the price

2. how often do shareholders sign off on things like, "yeah let's go ahead and make our prices lower"

3. https://www.upworthy.com/arizona-iced-t ... belltitem1

[PhDhawk]

cool!

let us know if you dig up anything good.

re: "just undercutting the competitors on price," three thoughts:

1. there are a lot of factors affecting consumer markets besides just the price

2. how often do shareholders sign off on things like, "yeah let's go ahead and make our prices lower"

3. https://www.upworthy.com/arizona-iced-t ... belltitem1

#2 is how Sam Walton became a billionaire. You can make less money per unit, if you move significantly more units.

Do you think shareholders are involved in how much a loaf of bread costs?

[ousdahl]

that seems like an oversimplification of "how Sam Walton became a billionaire."

but yeah, economies of scale was among the factors.

and while shareholders may not directly set the prices for individual loaves of bread, they do set the performance expectations, don't they? So while they may not be telling operational managers "make the price of bread THIS much," they likely are telling operational managers "we gotta make our numbers happen this quarter," which in turn prompts operational managers to raise prices on things like bread?

[PhDhawk]

that seems like an oversimplification of "how Sam Walton became a billionaire."

but yeah, economies of scale was among the factors.

and while shareholders may not directly set the prices for individual loaves of bread, they do set the performance expectations, don't they? So while they may not be telling operational managers "make the price of bread THIS much," they likely are telling operational managers "we gotta make our numbers happen this quarter," which in turn prompts operational managers to raise prices on things like bread?

Right but unless Kroger and Wal-mart and safeway are colluding...If Kroger is price gouging shouldn't Wal-mart and Safeway make a killing by selling a loaf of bread at the market price...presumably they'd sell far more loaves because people would choose to go there instead of Kroger.

[Mjl]

Exactly. We absolutely had a board-driven price reduction on certain items (essentials like milk and eggs) a couple years ago.

[ousdahl]

yea.

but, there are a lot of factors affecting consumer markets besides just the price.

what if the Walmart is within walking distance, yet the Kroger is on the far side of town, thus making it inconvenient or unavailable for a consumer to access?

what if Walmart is the only area retailer in this area, that carries this particular loaf of bread?

what if this bread just isn't as popular as other brands?

What if this particular loaf of bread has a regional following, and sells better in certain markets than others?

what if bread is most commonly purchased at the same time as eggs, and Kroger is beating Walmart on those prices?

what if the product in question isn't some sustenance staple like bread, which people need to survive; but is a durable, or a luxury item, or a service, or something?

what if there's some vulture consumer buys up all the bread and hoards it like pandemic toilet paper?

what if Walmart and Kroger aren't explicitly colluding, per se, but their too-big-to-fail size and disproportionate share in the grocery markets effectively give them something closer to duopolistic control anyway?

what if the consumer can't afford the loaf of bread in the first place cuz they earn shit wages working at Walmart?


...ok some of those examples are better than others. but the point is, I'm not sure market domination is as simple as undercutting a product price.

[ousdahl]

Exactly. We absolutely had a board-driven price reduction on certain items (essentials like milk and eggs) a couple years ago.

what was the rationale?

was the board expecting milk and eggs to be loss leaders or whatever?

[Mjl]

Exactly. We absolutely had a board-driven price reduction on certain items (essentials like milk and eggs) a couple years ago.

what was the rationale?

was the board expecting milk and eggs to be loss leaders or whatever?

Fear of increased competition from Aldi and Lidl, and uncertainty/fear that Whole Foods would start to try to compete on price when Amazon bought them.

[MICHHAWK]

what if the consumer can't afford the loaf of bread in the first place cuz they earn shit wages working at Walmart?

they are starting out at $18.00/hr. they don't shop at walmart. they are shopping at whole foods.

[ousdahl]

are there metrics or other info about how far consumers go to save money on a product? particularly products like milk and eggs.

how much does the price of bread factor in compared to things like the location of the grocery store in proximity to the community, the prices or promotions of other items like steaks or laundry detergent or Apple Jacks?

are these consumer behaviors similar for durables or luxury items or services, as they are for things like groceries?

[Cascadia]

what if the consumer can't afford the loaf of bread in the first place cuz they earn shit wages working at Walmart?

they are starting out at $18.00/hr. they don't shop at walmart. they are shopping at whole foods.

lol, what? $18/hr is shit wages and those people are definitely not shopping at Whole Foods.

You just displaced mjl as the most out of touch poster. Congrats.