Too much of a good thing: Profits are too high. America needs a giant dose of competition

Indeed.

Except your team decided to cut corporate tax rates to 21%.

 

I was worried about this in the dental/medical industry over a decade ago. The medical side had already lost the battle for the most part with the quasi fascism. I feared dental was going to be right behind. End of the day I still feel you can make it work on the dental side but the barrier to entry is absolutely increasing. The cost of tuition being one of the big things. The other being a mindset that imo comes from the quasi fascist movement to make people comfortable with a nice paying job and good standard of living.

Some are not meant to be owners. But we need vibrant and fair completion. A field that allows anyone the ability to compete.

It was not easy for us to enter the playing field back in 2008. Borrowed 103% to get in. And the early years we worked our tail off to build what we have. But we also did not have three times the student loans some of these graduates have. However…we were committed to owning our Practice within 2-3 years.

 

disagree, the moment the corporation raises the price more than the increase in materials and labor they increase inflation

this guy says it better than I can. people expected a price hike, the corps tooka dvantage to vershoot the legit price hike to increase corp profits with nof ear of losing customers

Rising profits are driving inflation, UBS economist says | The Hill

Corporate profits have soared during the recovery from the global shutdowns caused by the coronavirus pandemic, with private sector giants from the energy sector to the financial sector posting huge gains. JPMorgan Chase & Co. pulled in a 30 percent profit margin in the third quarter.

Many CEOs on earnings calls in a variety of different industries have indicated that inflationary expectations are allowing them to raise prices on consumers to increase their margins without scaring them away.

“Companies have passed higher costs onto customers. But they have also taken advantage of circumstances to expand profit margins. The broadening of inflation beyond commodity prices is more profit margin expansion than wage cost pressures,” Donovan wrote.
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Both Baker and UBS’s Donovan have also cautioned about the power of “storytelling” in driving inflation, which can discipline consumer expectations into accepting higher prices. “Consumers seem to be buying stories that seem to justify price increase, but which really serve as a cover for profit margin expansion. Indeed, the soundbite economics of the Twitter era helps this process along,” Donovan wrote.

 

so collusion is happening at some level the same way rents are being jacked up by each property raising rates based on their neighbors doing the same through an algorithm that is sharing data across the market

 

Do you think there should be some other guiding factor than supply and demand? If the company charges x, but can charge x+10%, why would they not sell it for x + 10%?

If demand is willing to pay x+10%, but you sell for x, then goods will run out too fast, and you are leaving 10% on the table.

I am truly baffled that people think companies should sell at prices less than what demand dictates.

 

Two people disagree baconed this. It’s so weird, because none of this opinion, it is pretty much fact.

 

Single payer health care does not apply to the argument you are trying to make here. When there is a single buyer in a market it is called a monopsony and that gives power to the buyer. In this case the buyer would be the US government on behalf of all US citizens and that would be good for the consumer.

But we are talking about monopolies, which give power to the seller, and that is typically bad for the consumer.

 

You might be right, but it's not 'pretty much fact'. It is opinion.

 

My team…
Lol

 

In some cases like utilities monopolies are beneficial, albeit utilities are typically price regulated.

You rarely get monopoly, more likely to get oligopoly. Yes less sellers tends to have more pricing leverage and more profit, but it can also lead to cost efficiencies which can lead to lower prices. Plus larger companies can get lower cost of capital and invest more to bring about more efficiencies.

Larger companies (or entities like the government) have more purchasing leverage, including with labor, which can help hold costs down.

It really depends on the industry and the market.

Like I said during this period of reduced anti trust activity up until now we have not had any price inflation issues.

 

Exactly what was opinion?

 

Larger companies and oligopolies also have the power to stifle competition (and thus innovation). Ask anyone who was ever involved in a small tech startup how massive companies like Microsoft or Apple or whoever was dominant in their industry treated them. Quite often a behemoth will buy a small competitor just to eliminate the potential competition. You see it in all sorts of industries, like beer. Craft breweries get bought up by the biggies all the time.

 

Well your overall point, that corporations aren't using inflation as an excuse to raise prices more than they need to (to maintain profit levels), is an opinion, not a fact. Every market is different, but I don't doubt that some companies have used inflation as an excuse to raise prices more than they need to and thus make higher profits. In a perfect market, they wouldn't be able to do this because there would be enough competition to prevent it. That is an opinion too.

 

Yes it can work both ways. There needs to be some sort of anti trust framework. I’m just saying that more competition isn’t always best for the consumer.

Take instagram. Facebook bought them, and I suspect Instagram is a far better product with the Facebook war chest behind it than not.

Just because a company makes money doesn’t mean the customer is suffering for it.

 

You have completely bastardized what I said. I didn’t say anything about raising prices “more than they need to”. Need doesn’t have anything to do with it. They raise prices because they can. They are in business to make a profit, and any rational company is going to set pricing that will maximize their long term profitability. If you want to call it “greed”, so be it.

There is no guarantee a company will be able to sell its products/services over cost, and they can lose money. So I am not sure why a company would cap prices when supply and demand dictates it.

 

We're talking about inflation and the various causes of it. If companies can raise prices because they can (and not just because they have to due to increased costs) then that is obviously one of the causes of inflation. Record profits are contributing to inflation.

 

So do you think something other than supply and demand should determine pricing? If not supply and demand, what?

 

Sure, supply and demand determine pricing. Just like it determined the price of oil in 1880 when Standard Oil controlled 90% of the market.

 

So you agree supply and demand determine pricing, but you think greedy corporations are charging “more than they need” which is causing too much profits and inflation.

Those two positions do not reconcile.

 

I said I think greedy corporations are charging more than they need to to simply cover increased costs. And they can do this because they have the market power to do it. And that is one cause of inflation. But if you want to say it's all about supply and demand, knock yourself out. It was all about supply and demand when Standard Oil was able to set the price too.