Sir-Jawn t1_iujgcls wrote on October 31, 2022 at 8:03 PM

Reply to comment by dc122186 in Editorial: Better bet: Despite turbulent Senate race, Oz better prepared to lead by User_Name13

For fucks sake. You guys will believe anything to defy basic economics 101. If supply/demand doesn’t dictate prices, and companies can charge whatever they want like you claim, why weren’t we seeing high inflation pre-Covid?

It’s supply and demand. We are having supply issues while we simultaneously juiced demand through unprecedented fiscal and monetary stimulus. Any economist could have predicted this (and many did).

ZebZ t1_iujlj51 wrote on October 31, 2022 at 8:38 PM

Businesses are using Covid and supply issues as cover to jack their prices. Those things weren't there before 2020 so they couldn't get away with it.

Pre-Covid, a widget cost $8 to make and sold for $10, thus giving a $2, or 20%, profit margin. Today, it may cost $11 to make the widget but now they can sell it for $15 and claim a $4, or 27%, profit. And just like they, they get to pocket an extra $2 per widget all while disingenuously blaming it entirely on being a supply issue.

Yes, there is a degree of legitimate inflation caused by policy and by supply issues. But that's only half the reason for the additional prices you pay.

It's not rocket science. It's right there in black and white in their quarterly reports that their profit margins are increasing.

Edit: maybe instead of reflexively downvoting because it challenges your myopic worldview, read about it from Bloomberg: US Corporate Profits Soar With Margins at Widest Since 1950

Sir-Jawn t1_iujtfkk wrote on October 31, 2022 at 9:34 PM

When the market is willing to pay $15 for that widget, then that’s the market price. There is enough demand to sustain $15. If your theory were true, a company would swoop in, build widgets for $11, and sell them for $13-14 undercutting competition. Why aren’t competing companies doing that?

ZebZ t1_iujxxs3 wrote on October 31, 2022 at 10:07 PM

They are raising prices accordingly, clearly. The new floor is set, why would they leave money in the table?

US Corporate Profits Soar With Margins at Widest Since 1950

> A measure of US profit margins has reached its widest since 1950, suggesting that the prices charged by businesses are outpacing their increased costs for production and labor.

> After-tax profits as a share of gross value added for non-financial corporations, a measure of aggregate profit margins, improved in the second quarter to 15.5% -- the most since 1950