econ101time

4년 전discuss

I'll spell it out more clearly for you, since you didn't seem to understand the implicit point: I sure hope a fellow like him understands supply and demand. I assume he does. But I think that understanding takes second seat to trying to convince people that greedy companies, not incompetent governments, are to blame for inflation. And he writes that (putting aside whether he also thinks it's true) in order to advanced a political agenda. That's why it's in a US politics op-ed section of a left-wing newspaper.

econ101time

4년 전discuss

This is how a 12 year old internet atheist sees the world. Advanced alien species is just a stand-in for the know-it-all author. Grow up. These things all have good historical reasons. And you don't turn society upside down just to get some nice parsimony in the calendar. We have a system that works and is remarkably accurate. Changing it would upset millions of social customs, accounting systems, computer systems, etc. The cost is unfathomable really. If it ain't broke, don't fix it.

econ101time

4년 전discuss

So much wrong with this line of thinking. 1) They're also facing increased costs. 2) Most companies are by no means "flush with cash". 3) Cash is fleeting but the need for capital is always hanging over your head. Even if you pride yourself on bootstrapping your business and not needing much in loans or additional investment, one or two bad quarters can quickly leave you with no choice but to get loans or sell equity.

econ101time

4년 전discuss

Robert Reich is a politico with a political agenda, and that article is in a US politics opinion section. Inflation is a major US electoral issue, and the Biden admin has tried to shift blame to greedy companies (not that it's necessarily fair to put the blame on the Biden admin, that's another issue altogether). And even if he were an economist (which he's not, despite the PPE degree), economists can be political hacks just like anyone else (Paul Krugman comes to mind).

econ101time

4년 전discuss

The alternative to shrinkflation is just raising the price (or raising it more). Yes, it's toying with sticky demand psychology, such that a plain price increase would produce a less favorable equilibrium for the seller, but I'd be surprised if it was a significant driver of inflation.

econ101time

4년 전discuss

You're forgetting that there's a market at the other end too. Every business has a cost of capital, and if its returns are not in line with other similarly placed businesses, they will have to spend a lot more money to acquire capital.

econ101time

4년 전discuss

>That seems like a pretty whacky theory to me because it assumes that companies only increase prices when forced to do so, and not just because they can.

I see people post things like this, and I'm forced to conclude that you don't understand supply and demand.

Edit: Sure, monopoly pricing is real. But blaming monopoly pricing for inflation is dubious. You'd need an account of 1) how the goods in the CPI basket are monopoly priced and 2) why all these monopolies decided to raise prices now instead of 3 or 10 years ago. The standard account is much more plausible: Supply side crunch due to covid policies and geopolitical problems and sanctions. Increased demand due to the Fed dropping money out of helicopters for over a decade + (more acutely) covid handouts.

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