House oversight committee gets to root of inflation... corporate greed.

Yeah I am seeing it the same way. I think we would probably need evidence of widespread collusion among corporations to make this theory work. And that would be illegal.

 

Totally agree about collusion. I would even argue that inflation may provide what's known as a focal pt. A focal pt is a mechanism that helps firms engage in implicit collusion. Hey, there's inf, this is a good time for everybody to raise prices....

to me, it ain't that esoteric. I think it is supply & demand.

 

I think the challenge to this explanation is that industries aren’t individuals; they are populations made up of individuals.

Imagine there is an industry with only two corporations. If both corporations, A and B, doubled their prices together, they both make more money. Agreed. But both would probably notice that breaking this tie would be selfishly advantageous. If B raises prices to 2.0X, corp A would receive a windfall by simply dropping their prices to 1.7X. This would of course hurt B, who would be forced to then drop their prices in response. Pretty soon, these corporations would both end up right back at 1.0X.

…unless they are price fixing.

 

Which brings me to my theory of high energy prices. Going back to (i think) 2014, oil companies pretty drastically lowered their development investments world wide. OPEC has always had trouble getting members to stick to their price fixing. There is no commitment device. But, strategic underinvestment is easily observable & does serve as a commitment device. You can't pump oil from non existent wells. Anyway, I've made a killing on energy stocks.

 

Don't worry, if its price gouging he's got an argument that that is a good thing too

 

true. But a big diff is "price gouging" is caused by consumers (shift in demand)

 

I dont think that's true, I think capitalists think of new ways to extract money from pretty stable demand and supply, like how NFL teams figured out they can charge money for the right to buy seats (seat license), and then charge you again for the actual tickets. Its really up to interpretation if you think that's simply innovation borne of greed, or "well people will pay it because they like football."

 

agree

 

You got a degree in a field that presupposes rational human behavior

 

utterly false. off the top of my head Khanman (Tevesky if he'd lived), Nash, Simon, V. Smith & Roth got nobel prizes. their careers were about demonstrating "irrational" behavior (hell 3 of those folks aren't even economists. )

 

It is the job of corporations primarily to represent shareholder interests, the primary interest of which is to return wealth to shareholders. To have an opportunity to raise prices, and to not do so, would be a breach of their fiduciary responsibility as well as counter to simple economic theory.

 

Damn! That's a bassakwards way of !looking at it IMO. "We don't have enough; consumers want - need! - it; so let's gouge 'em", and it's somehow the consumers' "fault"? I suppose it's true to an extent, but I look at it at the front end. It's often not the consumers' fault there isn't enough.

 

And that is a big problem for civilization. Cant imagine anything different than the reality created by capitalist innovation like "shareholder value" (itself an innovation of the innovation of public trading).

 

So you don't think corporations could be using inflation to justify prices increases so they can increase their profits (which leads to more inflation)?

 

Never said that. In fact, I clearly said that they could up thread.

 

Clever.

 

That's just a silly statement. In a well-functioning market prices and costs should be well correlated all else being equal. If they aren't something is wrong with the market.

 

prices are based on value. Surely, you can think of a situation where you'd gladly pay $1000 for a bottle of water. How much you think that cardigan cost to make?

 

So corporations using inflation to justify price increases (to make larger profits) are a cause of inflation?