Greedflation?

[ZiprHead]

Thank you for being another example.

There are like eight billion of us. You probably won't have time to thank us all individually.

I know why LD has to disagree with everything I say.

Some years ago there was a thread where participants were challenged to make an argument in favor of something they disagree with. He went there to say "nyah nyah you actually believe the argument you just made" but instead accidentally participated in the thread in a straightforward manner. I congratulated him on it. He was so embarrassed that he actually participated he even tried to give me credit for his own post which he posted. Ever since then he will disagree with me about everything and anything out of habit.

You, I am not sure why you so reflexively do it, but consider this. When I posted that time goes in only one direction you tried to use that as evidence of flat-eartherism. I responded that your point was absurd and unsubstantiated by any evidence.

I am not a flat earther.
You say everything I post is wrong.
You therefore thing I'm wrong about that.

Says the guy who confused austerity with Austrian economic theory.

 

[Jason Harvestdancer]

When I posted that time goes in only one direction you tried to use that as evidence of flat-eartherism.

I don't recall that conversation, which was clearly of far greater importance to you than I; But it remains true that our best current theory of spacetime, General Relativity, says that the claim that time goes in only one direction, or indeed that there is such a thing as absolute time, which can be agreed upon by all observers, is wrong.

What relationship that wrongness has to flat-eartherism, other than an analogy between various counter-scientific beliefs, I couldn't say.

You're the one who said it, and even you don't know why you said it. Amazing.

That makes much of your posting much clearer.

 

[bilby]

You're the one who said it, and even you don't know why you said it. Amazing.

Hardly "Amazing".

I doubt that Ripley's would be interested in exhibiting "The Amazing Forgetful Old Man".

"Marvel as he fails to recall a long ago conversation that was of little importance even at the time!"

"Prepare to be astonished as he forgets where he left his car keys - Again!!!".

 

[Jason Harvestdancer]

You don't consider it amazing that you post without knowing why. Impressive.

 

[Derec]

"The idea of blaming "greed" for inflation is reversing cause and effect" ranks among the dumbest things ever posted here.

Wrong, as usual coming from you.
Rather than being a dumb thing, it is actually what's been going on.

Ya sure, stuffing rich people's pockets with cash causes them to be greedy.

If prices rise because of combination of supply constraints and excess fiscal stimulus, then companies making more money are hardly "greedy".

you had more money chasing fewer goods and services - a golden opportunity for the greedy.

It's golden opportunity for everyone. Prices either rise in response to supply and demand or you get shortages due to artificial price caps.

On the progressive side though, this whole episode did uncover the hitherto underutilized cash cows of "surge pricing" and its ilk.
Innovation is what drives prosperity!!

I agree that surge pricing has been underutilized. For example when a hurricane etc. knocks out gasoline production, the best remedy is to let prices rise. That reduces demand. Keeping prices constant (e.g. by threatening "price gouging" prosecutions or lawsuits) leads people to hoard, exacerbating shortages even more.

 

[lpetrich]

I find this news welcome, but defenders of price gouging will feel betrayed, stabbed in the back. They will say that these actions encourage people to forget the important truth that nothing is ever free, and they will say that people will not value things very much if they don't have to pay a very high price for them.

Will these defenders decide that their heroes were pressured into their actions by left-wing traitors and enemies of all that is good?

These defenders may also ask who will pay for these giveaways. Poor innocent stockholders who have been cheated out of income?

McDonald's plans $5 US meal deal next month to counter customer frustration over high prices | AP News - 1:37 PM PDT, May 16, 2024

McDonald’s plans to introduce a $5 meal deal in the U.S. next month to counter slowing sales and customers’ frustration with high prices.

The deal would let customers get a four-piece McNugget, small fries, a small drink and either a McDouble burger or a McChicken sandwich for $5 in most areas, according to a person familiar with the deal who wasn’t authorized to discuss its details.

...
The month-long deal is scheduled to begin June 25 and will be advertised nationally. Some stores with higher costs, like those in California or Hawaii, may charge more, the person said.

Walgreens Joins Target, Amazon, Walmart Announcing Steep Price Cuts: Here's What’s Being Discounted

Walgreens is cutting prices on more than 1,300 items as part of its “Summer of Savings,” the drug store chain announced Wednesday, joining a slew of big-box retailers slashing prices to boost sales amid persistent inflation.

noting Walgreens Introduces Summer of Savings | Business Wire - "Walgreens continues to lower prices on over 1,300 products, and offers promotions to help consumers save"
and Target is Cutting Prices On 5,000 Everyday Items To Lure Budget-Stretched Shoppers Amid High Inflation
and Amazon is slashing prices on 4,000 grocery items, joining Target and Walmart | CNN Business and Amazon Fresh joins Walmart, Target in correcting pricing, slashes costs on 4,000 items | Fortune

Walmart has cut prices on nearly 7,000 products across food categories, Walmart U.S. CEO John Furner said in a May 16 earnings call, though Furner did not specify what products have had price reductions—Forbes has contacted Walmart for more information.

and aldi-doubles-down-on-summer-savings-to-put-100-million-back-into-customers-wallets-press-release.pdf

 

[lpetrich]

Kroger News: Company Gouged Prices Above Inflation - Newsweek

While testifying to a Federal Trade Commission attorney Tuesday, Kroger's Senior Director for Pricing Andy Groff said the grocery giant had raised prices for eggs and milk beyond inflation levels.

"This is not at all surprising," Drew Powers, the founder of Illinois-based Powers Financial Group, told Newsweek. "Companies across multiple industries have been posting record profits since the COVID-19 crisis while consumers have faced the highest inflation in recent history. The math can only point to companies raising prices above the general level of inflation. As the old saying goes, 'Never let a good crisis go to waste.'"

...
Groff said Kroger intends to "pass through our inflation to consumers," after an internal email from the executive showed that the price of eggs and milk routinely surpassed what inflation would require for the chain to still make profits.

What a confession.

During the pandemic, food and energy prices drove the overall level of inflation, and many of those same sectors saw companies post record profits, Powers said.

"There is not just one bad apple in this bunch," Powers said, adding that most companies who engage in price gouging receive limited consequences.

...
Executives tend to be incentivized to maximize shareholder wealth by increasing revenue and reducing costs, Thompson said.

"This pricing strategy was likely implemented to maximize profits," Thompson said. "Other grocers may have taken similar actions, as executive compensation is often tied to stock price performance. Many executives push the boundaries of what's legally permissible to boost returns."

 

[lpetrich]

This is not new.
During Antitrust Trial, Exec Admits Kroger Jacked Up Milk and Egg Prices Above Inflation | Common Dreams

But Rakeen Mabud, chief economist at the Groundwork Collaborative, noted Wednesday that "execs all over the economy were saying this stuff on their earning calls back in 2021."

"This was not a secret," Mabud added.

...
The U.S. grocery sector—dominated by Kroger, Walmart, and a handful of other major companies—profited hugely during the Covid-19 pandemic as corporate giants exploited supply chain disruptions to aggressively jack up prices.

"The grocery industry, as represented by four of its largest players, became more profitable in the pandemic, and it has stayed that way for a couple of years at least," The Financial Times noted Monday. "It is a good guess that price increases in excess of cost increases have played a role in this."

In its legal challenge against Kroger's proposed merger with Albertsons, the FTC argues that the deal would further drive up costs for consumers by eliminating "fierce competition" between the two grocers.

 

[Harry Bosch]

This is not new.
During Antitrust Trial, Exec Admits Kroger Jacked Up Milk and Egg Prices Above Inflation | Common Dreams

But Rakeen Mabud, chief economist at the Groundwork Collaborative, noted Wednesday that "execs all over the economy were saying this stuff on their earning calls back in 2021."

"This was not a secret," Mabud added.

...
The U.S. grocery sector—dominated by Kroger, Walmart, and a handful of other major companies—profited hugely during the Covid-19 pandemic as corporate giants exploited supply chain disruptions to aggressively jack up prices.

"The grocery industry, as represented by four of its largest players, became more profitable in the pandemic, and it has stayed that way for a couple of years at least," The Financial Times noted Monday. "It is a good guess that price increases in excess of cost increases have played a role in this."

In its legal challenge against Kroger's proposed merger with Albertsons, the FTC argues that the deal would further drive up costs for consumers by eliminating "fierce competition" between the two grocers.

Most companies raise prices to meet demand, not inflation.

 

[Politesse]

If you control a nation's only access to food, that's a crime, and you deserve to be killed and eaten by the hungry children of your victims.

 

[Harry Bosch]

If you control a nation's only access to food, that's a crime, and you deserve to be killed and eaten by the hungry children of your victims.

I agree that monopolies are very bad.

 

[scombrid]

Unilever, Pepsi, etc... control too much of the supply and the distribution gets more consolidated every day too. Look in the pantry and bathroom and see how many brands are owned by Unilever.

Kroger says it will lower prices by acquiring Albertsons. Uhuh.

 

[Derec]

If you control a nation's only access to food, that's a crime, and you deserve to be killed and eaten by the hungry children of your victims.

Who controls what nation's only access to food?

 

[Derec]

This is not new.
During Antitrust Trial, Exec Admits Kroger Jacked Up Milk and Egg Prices Above Inflation | Common Dreams

Common Dreams? Really?

We discussed this all before. Market prices are based on supply and demand. If there is a supply-side shortage due to supply chains issues and at the same time a demand-side glut due to all the Pandemic programs (stimulus checks, extended unemployment and child tax credit, etc.) then the prices will equilibrate at a significantly higher level. If the costs do not rise as much or as fast as the prices of the final product, there can be a temporary increase in profit margins, all without any greed being involved.
The alternative to prices equilibrating would be shortages. Say there is a shortage of eggs. Prices of eggs rise, people reduce their egg consumption until supply improves. Prices are not allowed to rise, and you get bare shelves quick. The first option is better.

 

[TV and credit cards]

This is not new.
During Antitrust Trial, Exec Admits Kroger Jacked Up Milk and Egg Prices Above Inflation | Common Dreams

Common Dreams? Really?

We discussed this all before. Market prices are based on supply and demand. If there is a supply-side shortage due to supply chains issues and at the same time a demand-side glut due to all the Pandemic programs (stimulus checks, extended unemployment and child tax credit, etc.) then the prices will equilibrate at a significantly higher level. If the costs do not rise as much or as fast as the prices of the final product, there can be a temporary increase in profit margins, all without any greed being involved.
The alternative to prices equilibrating would be shortages. Say there is a shortage of eggs. Prices of eggs rise, people reduce their egg consumption until supply improves. Prices are not allowed to rise, and you get bare shelves quick. The first option is better.

You can find the same article on Bloomberg which Yahoo has made available to the unwashed masses. This is a quote from a top Kroger executive to the FTC so it being in Common Dreams has nothing to do with it.

I can't imagine demand side changes much for perishables like milk and eggs so we can discount that.

This "temporary increase in profit margin" is the crux of it. They see this opportunity. They know their costs are rising and may continue to do so for some time and bake in a healthy price to consumer buffer to insure their costs are well covered. It is the height of naivete to consider these as honest mistakes. Beyond their cost increases, they are looking to their competitors pricing and raising theirs in conjunction with. This favorably skews their profit margin as the people at each company in charge of raising prices on individual items are going to ensure they are not caught after the fact that they did not raise prices enough.
One other point, if this temporary increase in profit margin is an honest mistake (not generated by greed) wouldn't it more likely be found in processed foods where there's more labor, utility (cold storage), and transportation inflation to try and factor in? Milk and eggs are nearly farm to table and should reflect the greatest accuracy between retailer cost and consumer pricing.

 

[laughing dog]

This is not new.
During Antitrust Trial, Exec Admits Kroger Jacked Up Milk and Egg Prices Above Inflation | Common Dreams

Common Dreams? Really?

We discussed this all before. Market prices are based on supply and demand. If there is a supply-side shortage due to supply chains issues and at the same time a demand-side glut due to all the Pandemic programs (stimulus checks, extended unemployment and child tax credit, etc.) then the prices will equilibrate at a significantly higher level. If the costs do not rise as much or as fast as the prices of the final product, there can be a temporary increase in profit margins, all without any greed being involved.
The alternative to prices equilibrating would be shortages. Say there is a shortage of eggs. Prices of eggs rise, people reduce their egg consumption until supply improves. Prices are not allowed to rise, and you get bare shelves quick. The first option is better.

In order for market prices to be based on supply and demand, there must be sufficient competition in the market. When there is market power, market prices are not subject to the moderating forces of competition on market price. When there is market power, then there is certainly an element of "greed" in the setting of market prices.

 

[ZiprHead]

This is not new.
During Antitrust Trial, Exec Admits Kroger Jacked Up Milk and Egg Prices Above Inflation | Common Dreams

Common Dreams? Really?

We discussed this all before. Market prices are based on supply and demand. If there is a supply-side shortage due to supply chains issues and at the same time a demand-side glut due to all the Pandemic programs (stimulus checks, extended unemployment and child tax credit, etc.) then the prices will equilibrate at a significantly higher level. If the costs do not rise as much or as fast as the prices of the final product, there can be a temporary increase in profit margins, all without any greed being involved.
The alternative to prices equilibrating would be shortages. Say there is a shortage of eggs. Prices of eggs rise, people reduce their egg consumption until supply improves. Prices are not allowed to rise, and you get bare shelves quick. The first option is better.

In order for market prices to be based on supply and demand, there must be sufficient competition in the market. When there is market power, market prices are not subject to the moderating forces of competition on market price. When there is market power, then there is certainly an element of "greed" in the setting of market prices.

And there was no small profit increases for a short time. It was record profits across the board for a long time.

Derec is using Economics 101 that covers the basics. Greed is a market force that's part of the field of economics too.

 

[BH]

I don't believe in Catholicism but a book in the Catholic version of the Bible says "The rich think of the poor as their field to go and take from".

We have a command and controlled economy but it is by the rich for the rich. The FED throwing people out of work to lower inflation makes me sick.

 

[lpetrich]

 Market concentration is a recognized effect.

When market concentration is high, it indicates that a few firms dominate the market and oligopoly[4] or monopolistic competition is likely to exist. In most cases, high market concentration produces undesirable consequences such as reduced competition and higher prices.[5]

 Oligopoly - small number of sellers -  Monopoly - only one seller
 Oligopsony - small number of buyers -  Monopsony - only one buyer

 

[lpetrich]

One can measure the degree of market concentration using formulas also used for political parties and for populations of organisms:  Effective number of parties and  Diversity index and  Herfindahl–Hirschman index

One starts with market-share fractions or vote fractions or legislature-seat fractions or population fractions f_i for entity i of whatever one is working with.

There are several formulas for the effective fraction, and by extension, the reciprocal of it, the effective number. These are generally weighted averages, the weighting from the fractions of the entities:

\( <f> \ = F^{-1} \left( \sum_i f_i F(f_i) \right) \)

where F is the averaging function. For a power law, \(F(f) = f^q\) we get

\( <f> \ = \left( \sum_i (f_i)^{q+1} \right)^{1/q} \)

For q -> 0, one gets the entropy or Shannon information measure:

\( I = - \sum_i f_i \log(f_i) \)

For base-2 logarithms, that gives the number of bits needed to specify which of the entities.

For q = 1, one gets the reciprocal of what is variously called the Laakso-Taagapera number of political parties, the Herfindahl–Hirschman index of effective number of competing firms, and the Simpson index of species diversity:

\( <f> \ = \sum_i (f_i)^2 \)

For q -> +oo, one gets the maximum of the f's.

From the effective number of parties is also Grigorii Golosov's formula for the effective number:

\( \displaystyle{ <N> \ = \sum_i \frac{f_i}{f_i + (f_1)^2 - (f_i)^2} } \)

where \(f_1\) is the largest fraction.