2021 - Is inflation finally back in the conversation?

[Captainant 27,669]

I'm not saying profitability is wrong - im saying our version of chasing profits for shareholders over and at the expense of employee and customer well-being is unsustainable. It's how you end up in our current economic state.

I get it though, y'all pray at the altar of supply side and trickle down economics. I'm sorry for calling your god stupid

[Bozo_Casanova 26,461]

1 hour ago, troph said:

Fair enough but that’s an outlier situation and counter productive for attempts to simplify the discussion.

I don't think think prices or inflation can be productively discussed in simple terms. And not for nothing, agricultural commodities are often a ready example of negative COGS with low price elasticity and thus gross margin that exceeds revenue (for some, depending). 

[Bozo_Casanova 26,461]

56 minutes ago, Captainant said:

I'm not saying profitability is wrong - im saying our version of chasing profits for shareholders over and at the expense of employee and customer well-being is unsustainable. It's how you end up in our current economic state.

I get it though, y'all pray at the altar of supply side and trickle down economics. I'm sorry for calling your god stupid

I think you're missing the signal, which is not surprising considering who you are arguing with. The problem in our economy is not that shortsighted management is chasing profit for shareholders at the expense of employee and customer well-being. In a healthy market economy those problems sort themselves out. The problem is that we are incenting and even subsidizing that behavior in the tax code as a result of regulatory capture. 

The biggest risk to capitalism at this moment isn't socialist progressives. The biggest risk is is economic rentiers and oligopolies with state protection and pricing power, and their legion of useful idiots.

Edited June 21, 2023 by Bozo_Casanova

[Captainant 27,669]

32 minutes ago, Bozo_Casanova said:

The biggest risk to capitalism at this moment isn't socialist progressives. The biggest risk is is economic rentiers and oligopolies with state protection and pricing power, and their legion of useful idiots.

Point of order: I don't think that social progressives are a "risk to capitalism" - this sort of oppositional framing implies that progressives are anti-capitalists (and implicitly to this audience, anti-American)

[Bozo_Casanova 26,461]

5 minutes ago, Captainant said:

Point of order: I don't think that social progressives are a "risk to capitalism" - this sort of oppositional framing implies that progressives are anti-capitalists (and implicitly to this audience, anti-American)

I don't either. I don't think they are a risk to fascists, grifters, or the enemies of democracy either. Or really any risk to anything, other than attention spans. Social progressives need to get their shit together and stop dicking around about representational issues in elite colleges or getting baited into arguments about instagram campaigns for beer or whatever.

Edited June 22, 2023 by Bozo_Casanova

[troph 24,798]

1 hour ago, Bozo_Casanova said:

I don't think think prices or inflation can be productively discussed in simple terms. And not for nothing, agricultural commodities are often a ready example of negative COGS with low price elasticity and thus gross margin that exceeds revenue (for some, depending). 

I don’t know ag commodities so I can bow out, I do know fancy auto parts, some consumer goods, and day and resort spa markets and I don’t see how we exceed 100% gross margin and you still can’t exceed 100% net profit. So the reality is profits growing by 600% in the click bait articles are still arguably misrepresenting facts. As I explained (swap cotton swabs for eggs) a 6x increase doesn’t mean 600% profits.

Edited June 22, 2023 by troph

[Bozo_Casanova 26,461]

2 minutes ago, troph said:

I don’t know ag commodities so I can bow out, I do know fancy auto parts, some consumer goods, and day and resort spa markets and I don’t see how we exceed 100% gross margin and you still can’t exceed 100% net profit. So the reality is profits growing by 600% in the click bait articles are still arguably facts. As I explained (swap cotton swabs for eggs) a 6x increase doesn’t mean 600% profits.

Agreed, obv. Good post. 
 

That said, you sometimes can have net profit exceed revenue in a business line has profits from non-core activities, such as the sale of investments, etc. 

it’s a corner case, obviously, but that’s kind of my point- the more complex a business or supply chain get, the more corner cases you have and more opportunities for tactical finance. Get big enough and eventually it’s all corner cases and finesse. 

Edited June 22, 2023 by Bozo_Casanova

[troph 24,798]

2 hours ago, Captainant said:

I'm not saying profitability is wrong - im saying our version of chasing profits for shareholders over and at the expense of employee and customer well-being is unsustainable. It's how you end up in our current economic state.

I get it though, y'all pray at the altar of supply side and trickle down economics. I'm sorry for calling your god stupid

I don’t.  But look (my inner Biden) money solves a lot of problems and we live in a dog eat dog world so I’ll make as much as I can providing honest goods and services and I will advocate for reforms. 

Edited June 22, 2023 by troph

[troph 24,798]

I would argue social progressives are good for capitalism, not as an economic theory but as a modified system that serves people. It’s why I am both a capitalist and a social progressive. 

Edited June 22, 2023 by troph

[troph 24,798]

24 minutes ago, Bozo_Casanova said:

Agreed, obv. Good post. 
 

That said, you sometimes can have net profit exceed revenue in a business line has profits from non-core activities, such as the sale of investments, etc. 

it’s a corner case, obviously, but that’s kind of my point- the more complex a business or supply chain get, the more corner cases you have and more opportunities for tactical finance. Get big enough and eventually it’s all corner cases and finesse. 

Other income sure. Can we please has a standard P&L of sale of goods minus cost of goods equal gross profit mins expenses equal net profit for this lesson?  For the lawyers, liberal arts degrees, and political scientists. 😉 

And sure re large businesses and finesse accounting - that’s not my area AT ALL. But then the articles I’m pushing back on aren’t talking about that they are using simple P&L language and hiding behind percentages to make a case look like a massive extreme when 600% gross profit growth really could mean 8% - 48% which isn’t that big of a deal here when prices rise 50%.

Edited June 22, 2023 by troph

[Bozo_Casanova 26,461]

51 minutes ago, troph said:

Can we please has a standard P&L of sale of goods minus cost of goods equal gross profit mins expenses equal net profit for this lesson?  For the lawyers, liberal arts degrees, and political scientists. 😉 

And sure re large businesses and finesse accounting - that’s not my area AT ALL. But then the articles I’m pushing back on aren’t talking about that they are using simple P&L language and hiding behind percentages to make a case look like a massive extreme when 600% gross profit growth really could mean 8% - 48% which isn’t that big of a deal here when prices rise 50%.

But that’s kinda my point. Large business, global supply chains and highly finessed strategic planning are the mechanisms through which most people are experience “inflation.” They are also where I cut my teeth, and simply can’t be understood or described in simple P&L language. 
Even in the simplest parts, like the treasury team of a big company maximizing the daily cash position or a cross functional team setting a product roadmap involves the interlock of thousands of moving pieces, which creates enormous opportunity for leverage. 

Edited June 22, 2023 by Bozo_Casanova

[Bozo_Casanova 26,461]

56 minutes ago, troph said:

But then the articles I’m pushing back on aren’t talking about that they are using simple P&L language and hiding behind percentages to make a case look like a massive extreme when 600% gross profit growth really could mean 8% - 48% which isn’t that big of a deal here when prices rise 50%.

one more thing - margins on a run rate business in a mature product category rising from 8-48% would be a huge, huge increase. It's a category shift - you're moving from a CPG margin to a subscription services margin, which would be wild. If one company or a small handful does that, it could be indicative of exercising market power in a crisis, AKA, gouging.  but if all the competing businesses in the same product category are showing similar margin increases on low elasticity products (like cotton balls or staples), that could be indicative of collusion. 

Or maybe not. But worth asking questions

But either way, it is a 500% gross margin increase, from 8% to 48%.

[cactusflinthead 27,598]

1 hour ago, Bozo_Casanova said:

Agreed, obv. Good post. 
 

That said, you sometimes can have net profit exceed revenue in a business line has profits from non-core activities, such as the sale of investments, etc. 

it’s a corner case, obviously, but that’s kind of my point- the more complex a business or supply chain get, the more corner cases you have and more opportunities for tactical finance. Get big enough and eventually it’s all corner cases and finesse. 

 

I hear this guy in my tired head.

I have no doubt that the bidness ppl can make sense of all this. All I know is that the supply system is returning to something resembling normal. Round up generic is 25 a gallon instead of 50. Eggs were less than a dollar yesterday.

But, rent is through the roof.

They keep finding new and stupid ways to shrink the labor pool so that what remains becomes harder to get.

I'll go back to lurking in here. Carry on.

 

[troph 24,798]

7 minutes ago, Bozo_Casanova said:

one more thing - margins on a run rate business in a mature product category rising from 8-48% would be a huge, huge increase. It's a category shift - you're moving from a CPG margin to a subscription services margin, which would be wild. If one company or a small handful does that, it could be indicative of exercising market power in a crisis, AKA, gouging.  but if all the competing businesses in the same product category are showing similar margin increases on low elasticity products (like cotton balls or staples), that could be indicative of collusion. 

Or maybe not. But worth asking questions

But either way, it is a 500% gross margin increase, from 8% to 48%.

Make your case with actual facts that it was collusion. It hasn’t gotten any real mainstream traction has it?  Yet we know there was unprecedented avian flu that requires the destruction of the entire whatever you call an egg farm group of chickens. Some hit hard some not at all? Plus the inflation that was already present and then the demand shift - eggs for protein at $5/dozen is still cheaper than most meats. If it’s collusion or price gouging make the case. esoteric arguments about finesse accounting and corner cases aren’t really making the argument though they certain cast doubt on my position. So if you are casting doubt make your case directly. 

[Bozo_Casanova 26,461]

13 minutes ago, troph said:

Make your case with actual facts that it was collusion. It hasn’t gotten any real mainstream traction has it?  Yet we know there was unprecedented avian flu that requires the destruction of the entire whatever you call an egg farm group of chickens. Some hit hard some not at all? Plus the inflation that was already present and then the demand shift - eggs for protein at $5/dozen is still cheaper than most meats. If it’s collusion or price gouging make the case. esoteric arguments about finesse accounting and corner cases aren’t really making the argument though they certain cast doubt on my position. So if you are casting doubt make your case directly. 

For the record, I don't understand your position.
I'm not making the case for collusion, but whose margins are we talking about here? Retailers? Distributor/aggregators? Producers/farmers? Contract packing operations? Each of those represent their own potential bottleneck, and like I said, low elasticity agricultural commodities are not in any way the same thing as global supply chains of manufactured consumer electronics (or office supplies, or auto parts), but even an egg isn't just an egg but a complex system of interdependent supply chains and operating conditions.  If some hit hard and some not at all, then it's just a windfall for those lucky enough to flex pricing power in a sellers market, or "gouge" during a crisis, and how you label it depends on your point of view.  a Producer could be doing well, and their packer could be suffering, or the reverse. But if all producers are had high margins, for example, and everyone else in the chain is operating at normal or worse margins, that may or may not mean something. 

[52-80 19,159]

12 hours ago, jimmyjazz said:

Are you serious?  In your world, does a greedy jump in prices mean the reversal is equally indefensible?  Maybe (just maybe) it's an indication that the costs of doing business didn't actually justify the price hike, and competition caught up.

I mean, my graduate work was in Cockrell, not McCombs, but I'm not that ignorant.

"Price hike" implies some unilateral pricing power.  Which does not exist in 99% of markets.  Prices are determined by all participants, including you and me, who are also greedy: there's always multiple eggs at the market, and we always buy the cheapest ones.

In this dynamic, how the prices are justified are really inconsequential, because they don't determine what the prices are. 

Fun exercise:  look up margins of all the products you voluntarily pay for in your daily life, and see where food ranks among them.  (Hint: at dead last).

***

I like the egg example, because its price was really acute, and it represents critical spend.  (You could hold off on that netflix subscription... and holy shit have you seen margins in tech/entertainment sector?).  It operates in the least profitable industry sector, borne by any metric (e.g. BLS data).  And noone has provided burden of proof of bad-doing beyond "well its expensive so it must be rigged". 

Hell, even natural energy which is the least good common example, operating under visibly oligopolic control, isnt exactly doing hot now is it?

You don't need to gatekeep your own qualifications because this topic doesnt require expertise, only fair introspection.

[52-80 19,159]

7 hours ago, Bozo_Casanova said:

For the record, I don't understand your position.
I'm not making the case for collusion, but whose margins are we talking about here? Retailers? Distributor/aggregators? Producers/farmers? Contract packing operations? Each of those represent their own potential bottleneck, and like I said, low elasticity agricultural commodities are not in any way the same thing as global supply chains of manufactured consumer electronics (or office supplies, or auto parts), but even an egg isn't just an egg but a complex system of interdependent supply chains and operating conditions.  If some hit hard and some not at all, then it's just a windfall for those lucky enough to flex pricing power in a sellers market, or "gouge" during a crisis, and how you label it depends on your point of view.  a Producer could be doing well, and their packer could be suffering, or the reverse. But if all producers are had high margins, for example, and everyone else in the chain is operating at normal or worse margins, that may or may not mean something. 

Someone with enough curiosity could go through forensic examination of Calmaines et al financial statements quarter by quarter.

At a sector level, food/agg, food processing, food distribution, doesnt exactly look like where robber barrons are made.  link: Damodaran's sector compilation

For all the people with really shrill cries of some clear wanton wrongdoing, I'm interested in hearing them spell out exactly who is doing what, and the next logical suggestion as a consequence.  Otherwise its been just desperate, toothless handwaving.

[troph 24,798]

7 hours ago, Bozo_Casanova said:

For the record, I don't understand your position.
I'm not making the case for collusion, but whose margins are we talking about here? Retailers? Distributor/aggregators? Producers/farmers? Contract packing operations? Each of those represent their own potential bottleneck, and like I said, low elasticity agricultural commodities are not in any way the same thing as global supply chains of manufactured consumer electronics (or office supplies, or auto parts), but even an egg isn't just an egg but a complex system of interdependent supply chains and operating conditions.  If some hit hard and some not at all, then it's just a windfall for those lucky enough to flex pricing power in a sellers market, or "gouge" during a crisis, and how you label it depends on your point of view.  a Producer could be doing well, and their packer could be suffering, or the reverse. But if all producers are had high margins, for example, and everyone else in the chain is operating at normal or worse margins, that may or may not mean something. 

This thread has several claiming inflation is caused in part, but significantly by price gouging. Eggs were their primary example. I posted an article that claimed the reasons were supply costs, demand shifts and avian flu. Other articles I saw claimed 600% growth in profits - vague conclusions just like that.  I explained how 600% growth in simple terms (which you argued in multiple posts how it’s not simple) is misleading and might me completely explainable. That is to say, don’t run to price gouging as your answer for inflation for any sector. Yes it happens but it always happens and there are increases in the behavior when conditions allow it but ultimately it’s first illegal and two not widespread. That was my only assertion and I used simple P&L examples to explain misleading articles and statements about growth in profits did not truly support a price gouging conclusion. That’s it. 

[TwiceHorn 31,471]

Can we dispense with the term "price gouging"?  Maybe it fits, but it has a different connotation.

Nonetheless, there seems to be an emerging consensus that business, broadly speaking, used the chaos of post-pandemic conditions to raise prices not correlated to increased cost.  And that has been a contributor to inflation.

[troph 24,798]

7 minutes ago, TwiceHorn said:

Can we dispense with the term "price gouging"?  Maybe it fits, but it has a different connotation.

Nonetheless, there seems to be an emerging consensus that business, broadly speaking, used the chaos of post-pandemic conditions to raise prices not correlated to increased cost.  And that has been a contributor to inflation.

I will admit I don't have enough time to follow this closely so can you provide a cheat sheet on this emerging consensus?  I'm not saying it doesn't exist but I don't see it. doesn't mean it isn't there. but in my tiny world our discussion about price increases (internally and across 30-50 vendors) for the last 3 years has very much been tied to increased costs.

Edited June 22, 2023 by troph

[Trey3216 15,346]

18 hours ago, jimmyjazz said:

I didn't say it happened overnight, and it's certainly possible for a few of the largest suppliers to collude, thus driving the market.

I appreciate @Cheeseweasel's baseball analogy, but continuing the egg discussion, if supply drops 10% and demand stays flat, it would seem suppliers would need to increase price by the amount needed to cover lost profits in order to remain flat.  Are you arguing that leads to a 4X price increase?  Really?

You can sometimes think about it in a manner of how fractional reserve banking works.  You deposit $$ in a bank.  The bank is required to keep at least 10% of it in reserves.    They can theoretically loan up to a maximum of 10x your $$.   A healthy bank has a velocity of money in the range of 6-6.5x.  
 

Rapid changes in reserves cause massive changes on velocity in the short to medium run.  

[52-80 19,159]

28 minutes ago, TwiceHorn said:

Nonetheless, there seems to be an emerging consensus that business, broadly speaking, used the chaos of post-pandemic conditions to raise prices not correlated to increased cost.  And that has been a contributor to inflation.

Non-sequitur, because the first statement lacks any meaningful consequence.  All businesses seek to maximize their prices ALL THE TIME.  They don't require a global medical event as cover.  If Apple could sell its iPhone today for $2000 instead of $1500, it would do it.  The primary, secondary, and tertiary constraint on their pricing is not a lack of plausible public story.

Edited June 22, 2023 by 52-80

[52-80 19,159]

That a business wants to optimize its profit is in itself not some enlighted moral indictment, any more than my wanting to expend as little as possible on any of my spending. 

Monopolistic/collusive behavior over essential goods impacting the health of society - i'm all for regulating/governing/prosecuting.  But that requires actual proof, of which theres been fuckall.

[TwiceHorn 31,471]

5 minutes ago, 52-80 said:

Non-sequitur, because the first statement lacks any meaningful consequence.  All businesses seek to maximize their prices ALL THE TIME.  They don't require a global medical event as cover.  If Apple could sell its iPhone today for $2000 instead of $1500, it would do it.  The primary, secondary, and tertiary constraint on their pricing is not a lack of plausible public story.

Of course they do.  But I have heard a number of economists, and not just the fringey progressive ones, acknowledge that in this post-pandemic environment there has been an identifiable uptick in pricing across the board that doesn't correlate to increased costs.  They also acknowledge that it is within the realm of "normal" corporate behavior.  But it is also a contributor to inflation.

 

[Incredulity 11,672]

4 minutes ago, TwiceHorn said:

Of course they do.  But I have heard a number of economists, and not just the fringey progressive ones, acknowledge that in this post-pandemic environment there has been an identifiable uptick in pricing across the board that doesn't correlate to increased costs.  They also acknowledge that it is within the realm of "normal" corporate behavior.  But it is also a contributor to inflation.

 

Pricing of non-commodity goods at the end of the day is a WAG.  Those products universally utilize commodity raw materials(or a step removed).  The swings in commodities over the pandemic/post-pandemic have been out of the ordinary.  That instability pushes the WAG to the high side.

Thats just the raw materials side of COGS.  Labor, overhead have all increased significantly.  Again pushing the WAG higher.

 

 

For clarity WAG includes all sorts of statistical modeling/analysis/forecasting …for  sophisticated businesses.  

 

[Cheeseweasel 26,438]

16 minutes ago, TwiceHorn said:

But I have heard a number of economists, and not just the fringey progressive ones, acknowledge that in this post-pandemic environment there has been an identifiable uptick in pricing across the board that doesn't correlate to increased costs. 

Non-commodity pricing rarely rises in a straight line. "Never let a good crisis go to waste" works in business just like politics. Most businesses absorb minor cost increases through efficiency and reshuffling their portfolio of products (i.e. cull lower/zero profit items, push higher profit items). This happens for years until something disrupts the market. At that point, some brave soul pushing for a higher selling price. The market reacts by accepting the new price (and other suppliers follow) or gets rejected by the market (and other suppliers don't follow). What you are missing is the years of increases costs that DON'T result in inflation. But that doesn't get Economists on talking head shows.

[Bozo_Casanova 26,461]

4 hours ago, 52-80 said:

Someone with enough curiosity could go through forensic examination of Calmaines et al financial statements quarter by quarter.

At a sector level, food/agg, food processing, food distribution, doesnt exactly look like where robber barrons are made.  link: Damodaran's sector compilation

For all the people with really shrill cries of some clear wanton wrongdoing, I'm interested in hearing them spell out exactly who is doing what, and the next logical suggestion as a consequence.  Otherwise its been just desperate, toothless handwaving.

Agreed - look, it's very likely that various companies or even whole industries have used supply chain disruptions and shortages as an opportunity to raise prices and boost margins. There's nothing wrong with that intrinsically and I'm not sure what there is to investigate. I'll come back to why below.  

3 hours ago, TwiceHorn said:

Can we dispense with the term "price gouging"?  Maybe it fits, but it has a different connotation.

Why? Gouging is a real thing, as you know - to take unfair advantage of market power in a crisis or disaster by raising prices to consumers on essential goods. There was some of that during the toilet paper shortage. Or masks at the outset of the pandemic. But the price mechanism is also the mechanism that drives supply to the market. Whether you call it gouging or not is up to you. but it's the same thing, and whether it's a crime of "Price Gouging" in any individual instance is a matter for the law to decide. 

3 hours ago, troph said:

I will admit I don't have enough time to follow this closely so can you provide a cheat sheet on this emerging consensus?  I'm not saying it doesn't exist but I don't see it. doesn't mean it isn't there. but in my tiny world our discussion about price increases (internally and across 30-50 vendors) for the last 3 years has very much been tied to increased costs.

Your cost is somebody else's price. It's turtles all the way down. 

 

2 hours ago, 52-80 said:

That a business wants to optimize its profit is in itself not some enlighted moral indictment, any more than my wanting to expend as little as possible on any of my spending. 

Monopolistic/collusive behavior over essential goods impacting the health of society - i'm all for regulating/governing/prosecuting.  But that requires actual proof, of which theres been fuckall.

If margins and prices both went up across a group of companies in the same sector or industry or link in the supply chain for a given thing, there's your prima facie evidence that prices were increased in a moment of increased power or profiteering, but is that some big mystery? A healthy competitive market should address it. Unfortunately, that's not what we've got, mainly because the tax code is rigged.
That's our problem, not a lack of law enforcement or corporate morality. 
 

 

[52-80 19,159]

2 minutes ago, Bozo_Casanova said:

Unfortunately, that's not what we've got, mainly because the tax code is rigged.

Another fantastic topic worth chewing the cud on and debating over.... if not smeared by class warfare commentary

[Cheeseweasel 26,438]

10 minutes ago, 52-80 said:

Another fantastic topic worth chewing the cud on and debating over.... if not smeared by class warfare commentary

Truth. I'm team Free Markets, but you can't complain about "unfair tax code" without discussing the hundreds of other shitty ways the government gets involved in business practices. Tax code is just the tip of the government dildo.

[Bozo_Casanova 26,461]

11 minutes ago, Cheeseweasel said:

Truth. I'm team Free Markets, but you can't complain about "unfair tax code" without discussing the hundreds of other shitty ways the government gets involved in business practices. Tax code is just the tip of the government dildo.

"the hundreds of other shitty ways the government gets involved in business practices" for you is the "stable regulatory environment with robust standards" for larger players. It's all in the game.
 

Edited June 22, 2023 by Bozo_Casanova

[Cheeseweasel 26,438]

10 minutes ago, Bozo_Casanova said:

"the hundreds of other shitty ways the government gets involved in business practices" for you is the "stable regulatory environment with robust standards" for larger players. It's all in the game.

That's very true. When you are a billion dollar company and can afford a full time Government Bullshit Management Department, you certainly have a leg up over us little guys.

[Bozo_Casanova 26,461]

12 minutes ago, Cheeseweasel said:

That's very true. When you are a billion dollar company and can afford a full time Government Bullshit Management Department, you certainly have a leg up over us little guys.

Very true - look no further than who wins coming out of financial crises - huge institutions that present systemic risk. The regulatory burden and cost of compliance is thereby increased for the community financial ecosystem - i.e. small banks and credit unions, which makes it harder for them to compete with ... the players that create the risk, who also have the scale to comply without having to deprioritize competitive initiatives. 

[Cheeseweasel 26,438]

4 minutes ago, Bozo_Casanova said:

Very true - look no further than who wins coming out of financial crises - huge institutions that present systemic risk. The regulatory burden and cost of compliance is thereby increased for the community financial ecosystem - i.e. small banks and credit unions, which makes it harder for them to compete with ... the players that create the risk, who also have the scale to comply without having to deprioritize competitive initiatives. 

Golden Rule: He who makes the gold, makes the rules. And you are correct--this is the true threat to capitalism. 

[Bozo_Casanova 26,461]

5 minutes ago, Cheeseweasel said:

Golden Rule: He who makes the gold, makes the rules. And you are correct--this is the true threat to capitalism. 

[Fudge Nuggets 19,190]

Been seeing reports about a shitty orange harvest in Florida.  Orange growers laying the ground work to get in on the price gouging trend.  We'll see $20 half gallon orange juice soon enough.  

Edited June 22, 2023 by Fudge Nuggets

[Cheeseweasel 26,438]

I've seen that movie.

[StassneyHorn 6,576]

Been pleasantly surprised there has not been a “PRICE OF SUNSCREEN HAS SKYROCKETED” from once-a-year summer buyers.

[Parliament 14,260]

1 hour ago, Fudge Nuggets said:

Been seeing reports about a shitty orange harvest in Florida.  Orange growers laying the ground work to get in on the price gouging trend.  We'll see $20 half gallon orange juice soon enough.  

Good.  My puts are gonna boom.

[troph 24,798]

@Bozo_Casanova you didn't answer my question. you disagreed with several of my posts, using corner cases and esoteric examples. you then said you didn't understand my point. I explained, and you claimed there is an emerging consensus that businesses systematically took advantage of rising prices - that is to say, price gouging. I asked for that consensus. your response was "your cost is somebody else's price. It's turtles all the way down." That's not really a response. It's actually making my point.  Is price gouging really the economic consensus? I don't think so.

[troph 24,798]

2 hours ago, Cheeseweasel said:

Truth. I'm team Free Markets, but you can't complain about "unfair tax code" without discussing the hundreds of other shitty ways the government gets involved in business practices. Tax code is just the tip of the government dildo.

don't use the word dildo in this context, that implies pleasure for some of us.

[Bozo_Casanova 26,461]

31 minutes ago, troph said:

@Bozo_Casanova you didn't answer my question. you disagreed with several of my posts, using corner cases and esoteric examples. you then said you didn't understand my point. I explained, and you claimed there is an emerging consensus that businesses systematically took advantage of rising prices - that is to say, price gouging. I asked for that consensus. your response was "your cost is somebody else's price. It's turtles all the way down." That's not really a response. It's actually making my point.  Is price gouging really the economic consensus? I don't think so.

Price gouging is not an observed behavior, but a legal or ethical condemnation of an observed behavior. 

It is evident that in some cases, in some industries, prices were raised and margins increased when consumers were experiencing inflation. That’s not a matter of consensus or interpretation or even particularly complex - if prices are raised faster than COGS went up, the price increases are more opportunistic than they are the downstream consequence of higher upstream costs.
I leave the question of whether those price increases were in fact “gouging” to others. 
 

But again- that’s not really the problem-  any company who does that should be vulnerable in a healthy competitive market, and yet these businesses and industries are often protected by the tax code and the power of the state. 
 

25-30 years ago big shops used  tax increases and higher costs as an opportunity to lower prices and squeeze the little guys and each other. Now many markets are consolidated to 2-3 key players, and the only guy left to squeeze is the buyer.

[troph 24,798]

I think our convo is complete, thank you for the thorough response. I don't have anything else to add.

[Cheeseweasel 26,438]

22 minutes ago, Bozo_Casanova said:

Now many markets are consolidated to 2-3 key players, and the only guy left to squeeze is the buyer.

Or the supplier, depending on the market. From my experience, If you've ever had to deal with a Mega Corporation like Walmart, Cat, Amazon, they fuck their suppliers on a regular basis. 

Oh, your costs have gone up 25%? Sucks to be you. Next!

[Bozo_Casanova 26,461]

1 hour ago, Cheeseweasel said:

Or the supplier, depending on the market. From my experience, If you've ever had to deal with a Mega Corporation like Walmart, Cat, Amazon, they fuck their suppliers on a regular basis. 

Oh, your costs have gone up 25%? Sucks to be you. Next!

Oh fuck yeah, man. One of the best decisions I never made as a product manager was to let a competitor “win” shelf share with a certain huge retailer*. Their “dominance” there ended up hurting them so bad they pulled out of that product slot within two years. And guess who wound up with pricing power? Us. 

 

*this was of course anathema to our SVP, who was basically shielded from what was happening because his devotion to market share was ideologically fanatic.

Edited June 22, 2023 by Bozo_Casanova

[Cheeseweasel 26,438]

Similar experience with CAT. We priced a few items for them, they liked our product/pricing, bought a few items to test and work out the kinks. Then promised us a multi million dollar deal if we'd agree to hold our pricing for 5 years plus a 5% reduction in pricing per year. 

They were absolutely shocked when we said no. They love to give these deals to mom & pop shops that tool up for these projects so they have them over the barrel midway thru the deal. Ruthless. 

[Fudge Nuggets 19,190]

5 hours ago, Cheeseweasel said:

Or the supplier, depending on the market. From my experience, If you've ever had to deal with a Mega Corporation like Walmart, Cat, Amazon, they fuck their suppliers on a regular basis. 

Oh, your costs have gone up 25%? Sucks to be you. Next!

Our main supplier received three increases to contract prices over the last two years.  They came back this week looking for a fourth and we told them to fuck off and put the contract back up for bid.  Current supplier is likely going to lose a $100MM per year contract over it.  Sucks to be them.

[Cheeseweasel 26,438]

Not all business is good business.

[Bozo_Casanova 26,461]

1 hour ago, Cheeseweasel said:

Not all business is good business.

Amen to that. And positioning your competition to win the bad kind can be a great strategy. 

[HonkeyVape 107]

On 6/22/2023 at 11:24 AM, StassneyHorn said:

Been pleasantly surprised there has not been a “PRICE OF SUNSCREEN HAS SKYROCKETED” from once-a-year summer buyers.

Read this today. "Fun-flation" is the new "greed-flation" to explain non-transitory inflation: (ETA, NYT Link: https://www.nytimes.com/section/business/dealbook?)

Quote

 

Is a summer of fun to blame for inflation?

Uncomfortably high inflation appears set to linger, forcing central bankers to inflict further pain on consumers and businesses by raising borrowing costs again and again.

But economists have spotted an unusual trend heading into the summer: Consumers are still splashing out on expensive but fun experiences, from nights out to concerts, despite surging prices.

Central bank chiefs on both sides of the Atlantic are sounding the alarm. The Bank of England raised interest rates by a higher-than-expected half-percentage point after failing to get a handle on the highest inflation of any Group of 7 country. The bank’s governor, Andrew Bailey, whose credibility is taking a pummeling, gave a cautionary explanation: “If we don’t raise rates now, it could be worse later.”

Hours later, Jay Powell, the Fed chair, told a Senate committee that he saw a similar threat. “We are committed to getting inflation under control,” he said, warning that at least one more increase is on the table.

Economists are seeing something weird in the inflation data. Consumers are splurging on pricey meals, through-the-roof airfare and expensive concert tickets. Some economists in Sweden even blamed Beyoncé fans for driving up prices of hotels and restaurants when they converged on the country last month to see the star kick off her world tour. In the U.S., others have seen a similar effect with hotel prices soaring in cities where Taylor Swift performs.

“It’s fun-flation, if you’re looking for a word,” Holger Schmieding, chief economist at Berenberg, told DealBook. And the data suggests this brand of inflation isn’t receding. “We’re looking at the summer of fun,” he said.

When inflation runs persistently high, consumers normally cut back. If they do spend, it is typically on so-called durable goods: a new washing machine, a car, a house. The thinking is that it’s prudent to bring forward such purchases if you believe you’ll spend more for them in the near future. Economists and central bankers are seeing a bit of that, but also higher spending on discretionary items, such as travel and nights out.

Some call the phenomenon “revenge spending,” the zeal to indulge in experiences now that Covid lockdowns are far in the past. (It helps that many still have pandemic savings to draw on, or have seen their wages surge in the past year.) Grant Fitzner, the chief economist of Britain’s Office for National Statistics, has singled out airfare, concert tickets and computer games as big drivers behind the country’s stubbornly high inflation.

A summer of fun could invite a tougher policy response this autumn. “The only way to get inflation down to 2 percent is to crush demand and slow down the economy in a more substantial way,” Torsten Slok, chief economist at Apollo Global Management, told The Financial Times.

 

I wish the newer generations had an understanding or ability to shift gears into "austere mode", but poor people pooling together their money in an airbnb in Miami won't be stopped. We are going to get rate hikes until there is blood in the streets and then we will say, "but why did it have to come to this?"

Edited June 23, 2023 by HonkeyVape

[Bozo_Casanova 26,461]

1 minute ago, HonkeyVape said:

A summer of fun could invite a tougher policy response this autumn. “The only way to get inflation down to 2 percent is to crush demand and slow down the economy in a more substantial way,” Torsten Slok, chief economist at Apollo Global Management, told The Financial Times