consider this re: corporate profits

[nice marmot]

I know some of you love blaming Joe Biden for everything, especially inflation but....

Notably, the surge in corporate profits since 2020 has been fueled, in part, by expanding corporate profit margins. Last year, corporate profit margins (excluding the financial sector) were over 15%, a level not seen since the 1950s. This is because the increases in prices for goods and services have outpaced the increase in costs — both labor and non-labor — for corporations.

According to an analysis from the Groundwork Collaborative, "corporate profits drove 53 percent of inflation during the second and third quarters of 2023 and more than one-third since the start of the pandemic." In the four decades prior to the pandemic, corporate profits contributed to just 11% of price increases.

Theoretically, this should not happen. Corporations should not be able to dramatically increase their profit margins by increasing prices because competitors should step in with lower prices and steal market share. So what's going on?

Greg Ip, who writes about economics for the Wall Street Journal, suggests that corporations are collectively taking advantage of consumer psychology. Supply shocks related to the pandemic created widespread cost increases that consumers accepted. Although those supply shocks have dissipated, many businesses have maintained higher prices anyway. "If people are paying $3 for a dozen eggs last week, they’ll pay $3 this week. And firms take advantage of that," Yale University economist Mike Sinkinson explained.

This kind of informal collusion works best in concentrated industries. The Groundwork Collective highlights the diaper industry, where "Procter & Gamble Co. (P&G) and Kimberly-Clark Corp. control 70 percent of the domestic market." Since the onset of the pandemic, "[d]iaper prices have increased by more than 30 percent" — from $16.50 per package to nearly $21. This was initially driven by an increase in the price of wood pulp, a key input for diapers but also paper towels and toilet paper. But since January 2023, prices for wood pulp have declined by 25%.

But P&G and Kimberly-Clark are not reducing diaper prices. Instead, they are bragging to investors about their massive profits. In July 2023, P&G "predicted $800 million in windfall profits because of declining input costs." In October 2023, Kimberly-Clark acknowledged that its input costs were coming down, but said that its products were still "priced appropriately."

Similar dynamics are playing out in many other industries, including "new and used cars, groceries, and housing."

etc.

 

[-lowcountrydawg]

I know some of you love blaming Joe Biden for everything, especially inflation but....

Notably, the surge in corporate profits since 2020 has been fueled, in part, by expanding corporate profit margins. Last year, corporate profit margins (excluding the financial sector) were over 15%, a level not seen since the 1950s. This is because the increases in prices for goods and services have outpaced the increase in costs — both labor and non-labor — for corporations.

According to an analysis from the Groundwork Collaborative, "corporate profits drove 53 percent of inflation during the second and third quarters of 2023 and more than one-third since the start of the pandemic." In the four decades prior to the pandemic, corporate profits contributed to just 11% of price increases.

Theoretically, this should not happen. Corporations should not be able to dramatically increase their profit margins by increasing prices because competitors should step in with lower prices and steal market share. So what's going on?

Greg Ip, who writes about economics for the Wall Street Journal, suggests that corporations are collectively taking advantage of consumer psychology. Supply shocks related to the pandemic created widespread cost increases that consumers accepted. Although those supply shocks have dissipated, many businesses have maintained higher prices anyway. "If people are paying $3 for a dozen eggs last week, they’ll pay $3 this week. And firms take advantage of that," Yale University economist Mike Sinkinson explained.

This kind of informal collusion works best in concentrated industries. The Groundwork Collective highlights the diaper industry, where "Procter & Gamble Co. (P&G) and Kimberly-Clark Corp. control 70 percent of the domestic market." Since the onset of the pandemic, "[d]iaper prices have increased by more than 30 percent" — from $16.50 per package to nearly $21. This was initially driven by an increase in the price of wood pulp, a key input for diapers but also paper towels and toilet paper. But since January 2023, prices for wood pulp have declined by 25%.

But P&G and Kimberly-Clark are not reducing diaper prices. Instead, they are bragging to investors about their massive profits. In July 2023, P&G "predicted $800 million in windfall profits because of declining input costs." In October 2023, Kimberly-Clark acknowledged that its input costs were coming down, but said that its products were still "priced appropriately."

Similar dynamics are playing out in many other industries, including "new and used cars, groceries, and housing."

etc.

Your suggestion to address this? Place margin caps on companies?

 

[nice marmot]

Your suggestion to address this? Place margin caps on companies?

Why is it up to me?

Though I have not been howling about inflation like some on here, I am fine to tax the hell out of big corporations, and I say that as someone invested in some good dividend-producing companies.

The real question is what do Rs and R-leaners think should be done. Just let it ride? Can even they open their eyes and accept that this dynamic is a thing? or is it just easier to scream THANKS JOE BIDEN.

The obvious option available to the government is to increase the corporate tax burden (instead of cutting it, as the Trump admin did) and put those proceeds into helping those most affected by run-away corporate profit-taking and into mitigating the damage that certain corps do re: environment, etc.

The Republican plan (according to the Heritage Foundation, which pretty much sets the agenda) is to lower corporate taxes even further, which as we have seen, does no one any good.

 

[-lowcountrydawg]

Why is it up to me?

Though I have not been howling about inflation like some on here, I am fine to tax the hell out of big corporations, and I say that as someone invested in some good dividend-producing companies.

The real question is what do Rs and R-leaners think should be done. Just let it ride? Can even they open their eyes and accept that this dynamic is a thing? or is it just easier to scream THANKS JOE BIDEN.

The obvious option available to the government is to increase the corporate tax burden (instead of cutting it, as the Trump admin did) and put those proceeds into helping those most affected by run-away corporate profit-taking and into mitigating the damage that certain corps do re: environment, etc.

The Republican plan (according to the Heritage Foundation, which pretty much sets the agenda) is to lower corporate taxes even further, which as we have seen, does no one any good.

Free markets are an American concept, not a republican or democrat one. If businesses are charging prices that are too high, the consumer won't buy it.

Don't see how putting a larger tax expense on a business' P&L would make them want to cut prices. If anything it would be a reason to try and raise them.

The villification of businesses in this Country if anything makes them less efficient, which would restrict the supply of goods and put upward pressure on pricing.

 

[stray]

I know some of you love blaming Joe Biden for everything, especially inflation but....

Notably, the surge in corporate profits since 2020 has been fueled, in part, by expanding corporate profit margins. Last year, corporate profit margins (excluding the financial sector) were over 15%, a level not seen since the 1950s. This is because the increases in prices for goods and services have outpaced the increase in costs — both labor and non-labor — for corporations.

According to an analysis from the Groundwork Collaborative, "corporate profits drove 53 percent of inflation during the second and third quarters of 2023 and more than one-third since the start of the pandemic." In the four decades prior to the pandemic, corporate profits contributed to just 11% of price increases.

Theoretically, this should not happen. Corporations should not be able to dramatically increase their profit margins by increasing prices because competitors should step in with lower prices and steal market share. So what's going on?

Greg Ip, who writes about economics for the Wall Street Journal, suggests that corporations are collectively taking advantage of consumer psychology. Supply shocks related to the pandemic created widespread cost increases that consumers accepted. Although those supply shocks have dissipated, many businesses have maintained higher prices anyway. "If people are paying $3 for a dozen eggs last week, they’ll pay $3 this week. And firms take advantage of that," Yale University economist Mike Sinkinson explained.

This kind of informal collusion works best in concentrated industries. The Groundwork Collective highlights the diaper industry, where "Procter & Gamble Co. (P&G) and Kimberly-Clark Corp. control 70 percent of the domestic market." Since the onset of the pandemic, "[d]iaper prices have increased by more than 30 percent" — from $16.50 per package to nearly $21. This was initially driven by an increase in the price of wood pulp, a key input for diapers but also paper towels and toilet paper. But since January 2023, prices for wood pulp have declined by 25%.

But P&G and Kimberly-Clark are not reducing diaper prices. Instead, they are bragging to investors about their massive profits. In July 2023, P&G "predicted $800 million in windfall profits because of declining input costs." In October 2023, Kimberly-Clark acknowledged that its input costs were coming down, but said that its products were still "priced appropriately."

Similar dynamics are playing out in many other industries, including "new and used cars, groceries, and housing."

etc.

This may help explain this. Profits don't drive inflation, inflation drives profits. Throw in the fact that wages aren't keeping up with inflation and you have the Biden disaster we are seeing now. These wages will remained suppressed for a long time as millions of new working waltz over the southern border.

https://www.politifact.com/article/2022/dec/10/what-do-high-corporate-profits-have-do-high-inflat/

 

[nice marmot]

Free markets are an American concept, not a republican or democrat one. If businesses are charging prices that are too high, the consumer won't buy it.

right - but are ours really "free" markets?

and what to do when big businesses collude, as is suggested in the fullness of the article?
etc.

 

[-lowcountrydawg]

right - but are ours really "free" markets?

and what to do when big businesses collude, as is suggested in the fullness of the article?
etc.

Collusion is a different story. I actually believe that the efficiency and options to buy things now - online, etc. with great speed, makes it very competitive and difficult to collude relative to years' past.

I think our markets are definitely free. But they won't be for long if we do things like cap margins or employ punitive measures to companies that are successful. That's my point when asking what do you propose? My proposal is let the market work. It will find that price that doesn't work for anyone. Ultimately it may take recession to get prices to really flatten or decrease. And as painful as that is, that is the essence of a free market. It self corrects.

 

[nice marmot]

Collusion is a different story. I actually believe that the efficiency and options to buy things now - online, etc. with great speed, makes it very competitive and difficult to collude relative to years' past.

actually - I don't necessarily think this is true. Ask anyone who has had to compete with Amazon what they think of today's market environment.

for some products - especially lifestyle products and "branded" goods - the barriers to entry have been removed, sure.

 

[shonuff253]

Your suggestion to address this? Place margin caps on companies?

I think one thing we can definitely do is STOP GIVING MAJOR CORPORATIONS TAX BREAKS.

 

[nice marmot]

I think one thing we can definitely do is STOP GIVING MAJOR CORPORATIONS TAX BREAKS.

and subsidy

 

[shonuff253]

and subsidy

Why should company feel as though that should drop prices to keep up with competetiors when they get free money from the government. And when every company is thinking the same thing because the government keeps padding their pockets, then no one reduces prices like some unintentional collusion

 

[stray]

I think one thing we can definitely do is STOP GIVING MAJOR CORPORATIONS TAX BREAKS.

I don't disagree here. Let's start with subsidies for EV manufacturers, solar panels & wind mills.

It should be done but as soon as you get the conversation started everyone wants an exception for their own personal beliefs/companies. People change their tune when it's their ox being gored.

Subsidize what you want more of and tax what you want less of.

 

[stray]

Why should company feel as though that should drop prices to keep up with competetiors when they get free money from the government. And when every company is thinking the same thing because the government keeps padding their pockets, then no one reduces prices like some unintentional collusion

Basic economics. Market forces will force them to lower prices or go out of business. Competition is tougher than it's ever been with China and other countries being able to sell and ship online and ship all over the world. Brick and mortar stores are under more pressure then ever.
Government should never be able to subsidize one company over another, but if they subsidize all companies in a market to boost that market, then market forces will remain in effect and prices will necessarily go down.

 

[nice marmot]

I don't disagree here. Let's start with subsidies for EV manufacturers, solar panels & wind mills.

why not both? fossil fuel subsidies in the US still outstrip subsidies for renewables.

and globally ... well...

 

[shonuff253]

Basic economics. Market forces will force them to lower prices or go out of business. Competition is tougher than it's ever been with China and other countries being able to sell and ship online and ship all over the world. Brick and mortar stores are under more pressure then ever.
Government should never be able to subsidize one company over another, but if they subsidize all companies in a market to boost that market, then market forces will remain in effect and prices will necessarily go down.

If govenrenment is filling corporations pockets why should they reduce prices. So instead of using those subsidizes for reinvesting into operations they are used for profit.

 

[stray]

why not both? fossil fuel subsidies in the US still outstrip subsidies for renewables.

and globally ... well...

I can agree with that but like I said, there will screaming and nashing of teeth on both sides and nothing will get done. People on both sides will put in exceptions and we end up right where we are now.

My point was that each side complains about subsidies for certain companies(like oil companies) but once we get to cutting what they care about they will throw up road blocks and throw a temper tantrum.
I think we all know that without subsidies the oil companies will survive, but it's unlikely the current cause du jour(solar and wind) will not. They are just not financially viable right now.

Of course beyond energy, there are plenty of other markets be subsidized that each of us care about and wouldn't want going away.

 

[TivoliDawg]

I know some of you love blaming Joe Biden for everything, especially inflation but....

Notably, the surge in corporate profits since 2020 has been fueled, in part, by expanding corporate profit margins. Last year, corporate profit margins (excluding the financial sector) were over 15%, a level not seen since the 1950s. This is because the increases in prices for goods and services have outpaced the increase in costs — both labor and non-labor — for corporations.

According to an analysis from the Groundwork Collaborative, "corporate profits drove 53 percent of inflation during the second and third quarters of 2023 and more than one-third since the start of the pandemic." In the four decades prior to the pandemic, corporate profits contributed to just 11% of price increases.

Theoretically, this should not happen. Corporations should not be able to dramatically increase their profit margins by increasing prices because competitors should step in with lower prices and steal market share. So what's going on?

Greg Ip, who writes about economics for the Wall Street Journal, suggests that corporations are collectively taking advantage of consumer psychology. Supply shocks related to the pandemic created widespread cost increases that consumers accepted. Although those supply shocks have dissipated, many businesses have maintained higher prices anyway. "If people are paying $3 for a dozen eggs last week, they’ll pay $3 this week. And firms take advantage of that," Yale University economist Mike Sinkinson explained.

This kind of informal collusion works best in concentrated industries. The Groundwork Collective highlights the diaper industry, where "Procter & Gamble Co. (P&G) and Kimberly-Clark Corp. control 70 percent of the domestic market." Since the onset of the pandemic, "[d]iaper prices have increased by more than 30 percent" — from $16.50 per package to nearly $21. This was initially driven by an increase in the price of wood pulp, a key input for diapers but also paper towels and toilet paper. But since January 2023, prices for wood pulp have declined by 25%.

But P&G and Kimberly-Clark are not reducing diaper prices. Instead, they are bragging to investors about their massive profits. In July 2023, P&G "predicted $800 million in windfall profits because of declining input costs." In October 2023, Kimberly-Clark acknowledged that its input costs were coming down, but said that its products were still "priced appropriately."

Similar dynamics are playing out in many other industries, including "new and used cars, groceries, and housing."

etc.

Corporate profits are up because of remote work and AI. The WSJ had a huge article on Meta’s most profitable quarter in history. (Fueled by layoffs and AI).

What’s the point of posting this?

 

[Athens is Heaven]

I can agree with that but like I said, there will screaming and nashing of teeth on both sides and nothing will get done. People on both sides will put in exceptions and we end up right where we are now.

My point was that each side complains about subsidies for certain companies(like oil companies) but once we get to cutting what they care about they will throw up road blocks and throw a temper tantrum.
I think we all know that without subsidies the oil companies will survive, but it's unlikely the current cause du jour(solar and wind) will not. They are just not financially viable right now.

Of course beyond energy, there are plenty of other markets be subsidized that each of us care about is and wouldn't want going away.

This electric mess needs to go away. This is just a joke.

 

[Athens is Heaven]

why not both? fossil fuel subsidies in the US still outstrip subsidies for renewables.

and globally ... well...to

You are dreaming about this electric mess it is not even possible to handle all electric vehicles on our grid especially if you are dependent on windmills and solar panels.

 

[nice marmot]

Corporate profits are up because of remote work and AI. The WSJ had a huge article on Meta’s most profitable quarter in history. (Fueled by layoffs and AI).

What’s the point of posting this?

uhm... because Meta doesn't make anything of value and is the sort of company that can benefit from AI, etc.

diapers, man.

 

[3 Pete]

Profit margins increased when manufacturing was moved to China.

 

[cherrydawg]

Free markets are an American concept, not a republican or democrat one. If businesses are charging prices that are too high, the consumer won't buy it.

Don't see how putting a larger tax expense on a business' P&L would make them want to cut prices. If anything it would be a reason to try and raise them.

The villification of businesses in this Country if anything makes them less efficient, which would restrict the supply of goods and put upward pressure on pricing.

He won't understand this, his socialist upbringing says profit bad, government and tax good.

 

[nice marmot]

He won't understand this, his socialist upbringing says profit bad, government and tax good.

way to bring... nothing... to the conversation.

 

[Athens is Heaven]

Basic economics. Market forces will force them to lower prices or go out of business. Competition is tougher than it's ever been with China and other countries being able to sell and ship online and ship all over the world. Brick and mortar stores are under more pressure then ever.
Government should never be able to subsidize one company over another, but if they subsidize all companies in a market to boost that market, then market forces will remain in effect to and prices will necessarily go down.

The government is trying to ram these evs down our throat but the people are smarter than that. The government is subsidizing this electric mess and the people are saying they don’t want it. The people will win in the long run.

 

[Papapete11]

Joe Biden Sucks.

 

[cherrydawg]

way to bring... nothing... to the conversation.

Way to be your typical uninformed liberal socialist self.

 

[shonuff253]

Free markets are an American concept, not a republican or democrat one. If businesses are charging prices that are too high, the consumer won't buy it.

Don't see how putting a larger tax expense on a business' P&L would make them want to cut prices. If anything it would be a reason to try and raise them.

The villification of businesses in this Country if anything makes them less efficient, which would restrict the supply of goods and put upward pressure on pricing.

Free markets are a myth that don't exist anywhere in actually practice. Every market system has restriction and or regulations. Those restrictions and regulations are far more often than not put into place by the citizenry as some form of government oversight to project Ameican consumers...see anti-monopoly and labor laws. A total free market would be a nightmare hellscape for the consumer.

 

[nice marmot]

A total free market would be a nightmare hellscape for the consumer.

not to mention for the worker, which I presume all of us are.

 

[Papapete11]

not to mention for the worker, which I presume all of us are.

Some of us work harder than others. 😭😭😭😜😜😜😜

 

[zingerdawg]

I know some of you love blaming Joe Biden for everything, especially inflation but....

Notably, the surge in corporate profits since 2020 has been fueled, in part, by expanding corporate profit margins. Last year, corporate profit margins (excluding the financial sector) were over 15%, a level not seen since the 1950s. This is because the increases in prices for goods and services have outpaced the increase in costs — both labor and non-labor — for corporations.

According to an analysis from the Groundwork Collaborative, "corporate profits drove 53 percent of inflation during the second and third quarters of 2023 and more than one-third since the start of the pandemic." In the four decades prior to the pandemic, corporate profits contributed to just 11% of price increases.

Theoretically, this should not happen. Corporations should not be able to dramatically increase their profit margins by increasing prices because competitors should step in with lower prices and steal market share. So what's going on?

Greg Ip, who writes about economics for the Wall Street Journal, suggests that corporations are collectively taking advantage of consumer psychology. Supply shocks related to the pandemic created widespread cost increases that consumers accepted. Although those supply shocks have dissipated, many businesses have maintained higher prices anyway. "If people are paying $3 for a dozen eggs last week, they’ll pay $3 this week. And firms take advantage of that," Yale University economist Mike Sinkinson explained.

This kind of informal collusion works best in concentrated industries. The Groundwork Collective highlights the diaper industry, where "Procter & Gamble Co. (P&G) and Kimberly-Clark Corp. control 70 percent of the domestic market." Since the onset of the pandemic, "[d]iaper prices have increased by more than 30 percent" — from $16.50 per package to nearly $21. This was initially driven by an increase in the price of wood pulp, a key input for diapers but also paper towels and toilet paper. But since January 2023, prices for wood pulp have declined by 25%.

But P&G and Kimberly-Clark are not reducing diaper prices. Instead, they are bragging to investors about their massive profits. In July 2023, P&G "predicted $800 million in windfall profits because of declining input costs." In October 2023, Kimberly-Clark acknowledged that its input costs were coming down, but said that its products were still "priced appropriately."

Similar dynamics are playing out in many other industries, including "new and used cars, groceries, and housing."

etc.

Lowering taxes have done nothing for them.? It is the only time they aren’t gouging. Well, we know raising taxes and rising inflation keeps producing the same results for corporations. Higher prices. Passed on to the consumer. Bigger margins. And quicker consumption. They cut portions of whatever they are supplying. Same thing happened last time gas prices went thru the roof. Oil companies were making a killing and were called out for it. This is what needs to happen to corporations gouging. Press coverage of who is doing what. The press does nothing but cover for the admin. So they say nothing , and it keeps happening. They cover this when a pub is in office. So they can blame it on republicans period. So attention is brought to the issue and it works(free market) itself out. This is why the media being partisan is so incredibly dangerous. Companies respond to public pressure and the market. Same way bud light started making super manly commercials recently. If the press will cover it, take the public hit it may put on Biden, it will start to correct itself.

 

[stray]

The government is trying to ram these evs down our throat but the people are smarter than that. The government is subsidizing this electric mess and the people are saying they don’t want it. The people will win in the long run.

Very true. Fiskar is going bankrupt, Rivian has “paused” the building of its plant in GA and lots of investment is being pulled out of EV companies and projects. Toyota and Ford have changed their plans for all EV vehicles.
The market has peaked and most people who want one have gotten one.

There is a part of the EV push that no one has addressed. The used car market is a huge blind spot and will be a nightmare for lower and middle income families. Used EVs will not be financially viable for them and if that is the only option they will not be able to afford to drive to work.

A 10 year old Camry can be bought for $2500 and driver another 10 years without any major repair costs
A 10 year old Tesla will have an initial higher cost but in addition , there will be a battery that needs to be replaced. That cost could be $20k, none of them will be able to afford that so they are screwed. When those subsidies go away, all of those costs get even worse.

 

[ClydeDawg]

Why is it up to me?

Though I have not been howling about inflation like some on here, I am fine to tax the hell out of big corporations, and I say that as someone invested in some good dividend-producing companies.

The real question is what do Rs and R-leaners think should be done. Just let it ride? Can even they open their eyes and accept that this dynamic is a thing? or is it just easier to scream THANKS JOE BIDEN.

The obvious option available to the government is to increase the corporate tax burden (instead of cutting it, as the Trump admin did) and put those proceeds into helping those most affected by run-away corporate profit-taking and into mitigating the damage that certain corps do re: environment, etc.

The Republican plan (according to the Heritage Foundation, which pretty much sets the agenda) is to lower corporate taxes even further, which as we have seen, does no one any good.

R lean here. As long as the increase in taxes is not spent on illegals and other stupid shit I'm fine w that.

 

[stray]

R lean here. As long as the increase in taxes is not spent on illegals and other stupid shit I'm fine w that.

Let’s not forget. Businesses don’t pay taxes, they collect them for the government.