One day down; three more to go. No major upheaval. So far so good with the Democratic National Convention.
I did not watch the convention proceedings of the Democratic National Convention here in Chicago last night. Fifty years ago I followed the national political conventions with rapt attention. I just don’t have it in me any more. Did I miss anything?
On a lighter note things are still fulminating in Dolton. The police chief there just received a vote of no confidence.
Fifty years later, you realize that they’re not cheering on for the part or country or even candidates, but for their own financial interests in the continuing one party system.
Dont watch conventions or speeches. Read them when interested and can find them. Biden supposedly talked about corporate greed. I have taken an interest in this and I thought this piece from CATO had nice stats. By their estimates about 1/3 of the price increases we saw with inflation over the last 4 years went to corporate profits. That’s actually a lot more than i would have guessed. (The CATO people concentrate on the percentage for the last 2 years, but that is when inflation has been much lower so that doesnt seem as meaningful and looking at prices and their cause over the longer period makes more sense to me.)
https://www.cato.org/commentary/new-nonsense-profit-driven-inflation
Steve
The Chicago Tribune has a photo that seems to sum up the protestors, some one climbing a fence whilst wearing a huge monkey shaped back pack.
LOL. So corporations just became greedy all of the sudden. Or had a fever.
Here is reality. Corporation who sell are greedy. Corporations who buy from other corporations are also greedy. They check on the other corporations. Consumers are greedy. They check on all the corporations.
Grow up, or at least have a minimalist understanding of economics. So funny to see a doctor, beneficiary of monopoly and third party payers lecturing on greed or ill functioning markets.
You can’t make this shit up.
I’m old enough to remember when most delegates were appointed by the state parties, and when primaries were rare. So, I was interested to see if the reimposition of top-down delegate assignment would cause some resentment and rebellion. But the assembled delegates were really quite submissive and obedient, and there were only a handful of “present” votes casts and no votes for other candidates (at least through Kansas, when I went to bed).
The numbers are what they are. As always you respond with feelings and avoid dealing with any numbers you dont like. You noted here a couple of days ago that people raised prices ahead of anticipated inflation. Now we have a better idea how much they raised prices. They contributed about 1/3 of the increase in prices, per CATO. All I said was that was more than I expected. You appear to be the one associating it with greed.
Steve
Steve –
Grocery margins are about 1.5%. Grocery prices are up, variously, 30-50%. Shall we talk about energy? That’s not sudden greed, it’s policy and economic reality.
Politicians and economic illiterates always want to point the finger elsewhere. But ultimately it’s always government spending – monetized – outstripping productive capacity, or market failure.
Not surprised you have no clue. And your, as well, attempts to pull out some singular study as always fails. I bet I could pull out a study about perpetual motion machines.
Steve I do not understand your interpretation of that data. Since the CATO article is drawing the opposite conclusion to the one you’re making it would seem that the burden is on you to show your work.
By my reckoning, and I think the OP’s, the inclusion of 4 years data includes 2019-2020 period of lower prices and inflation. During those years the share of price increase taken as profit was 35% but that’s a percentage of a much lower amount. When you isolate the years of rising prices, 2021-23, that percentage drops and then becomes negative! If corporations did not take profits during the part of the cycle when consumer confidence was high and people were buying more goods, and then were also supposed to get through periods of low or negative profits, how could they stay in business and why would anyone invest their capital to attempt running a business?
CStanley
You just made my point. There are ups to cycles…..and downs.
A good businessman attempts to anticipate both. But no one is that good.
Steve picks and chooses his papers, and conclusions. All through a hyperpartisan lens. On the issue at hand, despite his weak argumentative efforts, any good businessman would not fall behind the cost curve if possible. But then Steve conveniently ignores the monopolistic nature of his industry. Not mention his infamous admission that he would make up diagnoses to hold revenue steady.
Another factor that has not been mentioned is floorplanning. Many retailers don’t use cash to buy the inventory on the floor (“floorplanning”) but finance it. Consequently, when interest rates rise they raise their prices.
As I said previously my main concern about any anti-price-gouging measures is how extensive not to mention expensive they will be. How do you know what a fair price is? Regulators will need to monitor every price and every cost.
Just saying “price increases greater than the rate of inflation” is far too simple-minded. Inflation and cost increases are not consistent across the economy or across the country. And then there are the exceptions. Will exceptions be carved out for, say medical and legal services? There almost always are.
Bottom chart labeled Share of price increases through Q3 2023. Bars are labeled Profit share, Labor share, Other input share. First set of bars is labeled Past 4 years Q3 2019-. Looks to me like he is claiming that 35% of the share of price increases was due to profits over that 4 year period. I agree that he wants to concentrate on the last grouping labeled Past Year 2022 Q3, however that is when inflation was already coming down and I am not really sure why you would want to pick just that one year when you have the data for the entire period when inflation was at its worst but also include the one year the author likes.
So either I am interpreting this wrong, this guy from CATO has his numbers wrong (I generally find them pretty reliable though biased in favor of business) or for that 4 year period 1/3 of our price increases went to profits. Drew wants to concentrate on trivial stuff we should all know like this wont be uniform for every business. That the profit margins are lower in general for grocery stores than other entities. Duh! What we have is a pro-markets guy claiming that overall, lumping everyone together, 35% of our price increases while inflation was bad went to profits.
As I noted above I really didnt make a value judgment as I dont know if that is high, low or normal, I just think it sounds a lot higher than I would have expected.
Steve
Price gouging can occur whenever there are economic disruptions as material markets are not frictionless, instantaneous, or omniscient.
To make an exaggerated example: There’s a flood. You’re adrift in a vast expanse of water which is moving out to sea. Suddenly, you see a boat. You’re saved! Right? The boat comes close. They offer to save you—but only if you hand over all your assets. Now, in a perfect material market, a lot more boats would suddenly show up offering a lower price. The price you pay to be saved would be close to the cost of the boat trip itself, with maybe a “free” blanket to keep you warm. But material markets are not frictionless, instantaneous, and omniscient.
Nor are all markets material. People also trade in moral sentiments.