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Rising Prices Record Profits

rickc

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Still wondering where this inflation is coming from.

Owens and her colleagues embarked on a project to monitor corporate earnings calls since last summer. Early on, she says, CEOs “were a little surprised that consumers were forking over money at these higher price points.” But now she says the view of business leaders is we are "capitalizing on this phenomenon, we're exploiting it and we're pressing it to the hilt and we're going to take it until we touch the stove.”

Slightly different historical measures of corporate profits finds profit-levels in the last decade have been well above historical averages, meaning 2021 was likely the best year for corporate profits since World War II or longer.
 

KLATTU

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Heard at the Fortune 500 CEO's at their annual secret meeting.
" Ok I have an idea - let's ALL jacknothing up prices"
" GREAT idea- why didn't we think of it before?"
" Ok time for the mantrs.....everybody ready"
{in unison}}"RECORD PROFITS.....RECORD PROFITS.......(evil laugh ) MWAHAHAHAHAHAHAH}
"Wait won't AOC and Elizabeth Warren and Bernie Sanders be on to us"
:"hmmmm good point,...nothing gets by them.... let's make some excuse up .....I know...supply chain issues"
<evil laugh >...MWAHHAHAHAHAHAH
 

bluesmoke

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Price gouging is legal as long as there is no associated crime/violation of law or specific situation, like a state of emergency, that makes price gouging illegal. The pandemic brought on higher prices that incl increase in cost from suppliers to companies by x%, so companies charged x + % across the board to the consumer, which increased profit margins considerably, thus lowering expense margins. In an efficient model, when supply cost and other expense goes up, that % is how much the entire end user cost goes up so that profit and expense margins remain the same. The majority of states have laws stating that price gouging is illegal during a disaster or state of emergency. Good luck proving that over the next 10-20 yrs after filing the allegation. It's a judgement call and you're not the judge.
 

NatMorton

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Still wondering where this inflation is coming from.

Owens and her colleagues embarked on a project to monitor corporate earnings calls since last summer. Early on, she says, CEOs “were a little surprised that consumers were forking over money at these higher price points.” But now she says the view of business leaders is we are "capitalizing on this phenomenon, we're exploiting it and we're pressing it to the hilt and we're going to take it until we touch the stove.”

Slightly different historical measures of corporate profits finds profit-levels in the last decade have been well above historical averages, meaning 2021 was likely the best year for corporate profits since World War II or longer.
Let’s put aside the very real dynamic that increased sales alone can increase profits (not all costs are variable), and for the sake of argument say that cost of goods sold are not rising for these companies and that price hikes alone are driving inflation.

My question is, so what?

Management of a business has essentially only two obligations: obey the law and maximize shareholder value. If management believes it can raise prices and as a consequence earn more for the business’s owners, than that is exactly what they should do.

If you find this behavior greedy, then ask yourself if you were entertaining competing offers for something you were selling (e.g. your car or your home), all else being equal, would you take the higher or lower offer?
 

rickc

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Let’s put aside the very real dynamic that increased sales alone can increase profits (not all costs are variable), and for the sake of argument say that cost of goods sold are not rising for these companies and that price hikes alone are driving inflation.

My question is, so what?

Management of a business has essentially only two obligations: obey the law and maximize shareholder value. If management believes it can raise prices and as a consequence earn more for the business’s owners, than that is exactly what they should do.

If you find this behavior greedy, then ask yourself if you were entertaining competing offers for something you were selling (e.g. your car or your home), all else being equal, would you take the higher or lower offer?

Oh I agree with your assessment. The only reason for a corporation's existence is profit. Maximize shareholder value. They have no obligation other than that.

I am just reiterating where our present inflation originated. Rising prices = inflation
 

NatMorton

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Oh I agree with your assessment. The only reason for a corporation's existence is profit. Maximize shareholder value. They have no obligation other than that.

I am just reiterating where our present inflation originated. Rising prices = inflation
Um, ya. Rising prices is sort of the definition of inflation. The question is what’s causing the rising prices, and I suspect like many others, an anti-business bias is impairing your ability to think of reasons why beyond “greed.”

Let’s start with the the US government effectively creating $4T in new money over the last two years and the Fed over $15T. How could those actions not dilute the value of the US dollar?
 

OrphanSlug

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This is why liberals cannot seem to stay in power for very long... they claim to be all about economics but all they really are is class warfare experts.
 

HikerGuy83

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Yup, we are seeing mass price gouging.

They can only gouge you if you pay for it.

This is simple economics. Supply and demand. You raise prices until you clear the market with no residual demand left over.

Otherwise, you have things like gas lines.

Fuel it with the fear of shortages and you jump the demand curve.
 

tacomancer

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They can only gouge you if you pay for it.

This is simple economics. Supply and demand. You raise prices until you clear the market with no residual demand left over.

Otherwise, you have things like gas lines.

Fuel it with the fear of shortages and you jump the demand curve.
Price gouging is not simply a consideration of price vs demand. You also have to consider whether a company is taking undue advantage of a situation from a social standpoint.
 

rickc

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Um, ya. Rising prices is sort of the definition of inflation. The question is what’s causing the rising prices, and I suspect like many others, an anti-business bias is impairing your ability to think of reasons why beyond “greed.”

Let’s start with the the US government effectively creating $4T in new money over the last two years and the Fed over $15T. How could those actions not dilute the value of the US dollar?

Obviously you didn't read this

Owens and her colleagues embarked on a project to monitor corporate earnings calls since last summer. Early on, she says, CEOs “were a little surprised that consumers were forking over money at these higher price points.” But now she says the view of business leaders is we are "capitalizing on this phenomenon, we're exploiting it and we're pressing it to the hilt and we're going to take it until we touch the stove.”

Slightly different historical measures of corporate profits finds profit-levels in the last decade have been well above historical averages, meaning 2021 was likely the best year for corporate profits since World War II or longer.
 

HikerGuy83

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Price gouging is not simply a consideration of price vs demand. You also have to consider whether a company is taking undue advantage of a situation from a social standpoint.

Please explain that one to me.

First, who decides what is gouging ? Gasoline is about the purest commodity there is. When supply is short, you have it really jack up the price to match demand (cut it back). Gasoline is very inelastic in the short term.

Second, what is undue advantage ? The only place I see this being an issue is in necessities and in that case you'd need to consider another system.

I have no idea what you mean by social standpoint.
 

tacomancer

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Please explain that one to me.

First, who decides what is gouging ? Gasoline is about the purest commodity there is. When supply is short, you have it really jack up the price to match demand (cut it back). Gasoline is very inelastic in the short term.

Second, what is undue advantage ? The only place I see this being an issue is in necessities and in that case you'd need to consider another system.

I have no idea what you mean by social standpoint.
Society and the government

Capitalism is fine as long as it’s not allowed run rampant
 

PeacefulWarrior

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What we really need is some more Socialism around here imo.

Get Government controls on this price gouging.

I'd support it.(y)
 

HikerGuy83

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Obviously you didn't read this

Owens and her colleagues embarked on a project to monitor corporate earnings calls since last summer. Early on, she says, CEOs “were a little surprised that consumers were forking over money at these higher price points.” But now she says the view of business leaders is we are "capitalizing on this phenomenon, we're exploiting it and we're pressing it to the hilt and we're going to take it until we touch the stove.”

Slightly different historical measures of corporate profits finds profit-levels in the last decade have been well above historical averages, meaning 2021 was likely the best year for corporate profits since World War II or longer.

I am not able to connect this as a response to his comment.

Can you please clarify ?
 

JMB802

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Still wondering where this inflation is coming from.

Owens and her colleagues embarked on a project to monitor corporate earnings calls since last summer. Early on, she says, CEOs “were a little surprised that consumers were forking over money at these higher price points.” But now she says the view of business leaders is we are "capitalizing on this phenomenon, we're exploiting it and we're pressing it to the hilt and we're going to take it until we touch the stove.”

Slightly different historical measures of corporate profits finds profit-levels in the last decade have been well above historical averages, meaning 2021 was likely the best year for corporate profits since World War II or longer.
I know some employees at Target. Their wages have increased but now their hours are erratic and their job performance goals are nearly unattainable. And they need to have wide-open availability so it is impossible to juggle another in-person job because they never know when they'll work.
 

CaughtInThe

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it's kind of expected though. what is more American than price gouging during a pandemic (and then complaining about the economy).

it's so similar to the stuff we see politically in threads daily (needling the president while all the price gouging and antivaxxers have their way).

same ole, same ole.
 

HikerGuy83

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Society and the government

Capitalism is fine as long as it’s not allowed run rampant

That does not help me.

Again you are using words that have no quantifiable meaning. What constitutes rampant ?
 

HikerGuy83

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I know some employees at Target. Their wages have increased but now their hours are erratic and their job performance goals are nearly unattainable. And they need to have wide-open availability so it is impossible to juggle another in-person job because they never know when they'll work.

I would advise them to look for another job.

Target only gets away with it because the employees let them.
 
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