Corporations are using inflation as an excuse to raise prices and profits
businessinsider.com
businessinsider.com
You know why there's a chip shortage? Because only 2 companies still make diodes. Because only 3 companies still make pmics.Because everyone "for some reason" all use STM microcontollers.
We used to talk about efficiencies of scale. To me, today, I keep asking myself exactly your question:
> Why are people willing to pay more?
And I keep finding the answer is: no one else knows how to supply or tries to supply anymore. There is no competition anymore. Getting started competing to produce/supply real goods/materials is too hard now. Getting good making goods/materials gets you bought now.
People pay more because they have to, because there's no competitive supply, because companies can- as various replies to the topic suggest- charge whatever they want & don't need an excuse anymore. Why is that? There's no supply side competition. It's no longer about efficiencies of scale. Now we scale so we can make sure we have no competition. So we can serve the market well enough to prevent competition, then leverage our position.
When most industries were labor intensive it made little sense to aggregate businesses. Your costs are defined by the price of labor; there's little to save by grouping up. It may even have been a negative, because of the unwieldiness of large businesses.
Capital-intensive businesses love to aggregate because they can make more efficient use of the capital investment. You can buy one set of machines and do 100% utilization, rather than have two companies with two sets of machines each at 50% utilization. That's a gross oversimplification, but hopefully the point is clear.
You can also see this in older companies. It's not an accident that the Dutch East India company was massive. The sailors cost nothing relative to the price of the ship and the goods it carries.
And yes, competition does go down because nobody wants to get into a capital-intensive industry where the only way to be competitive is to scale up to the size of the existing competitor. It's a zero sum game, and you're starting out way behind.
I don't know what to do about that, but I do think this aggregation is making our supply chains brittle in exchange for cheaper goods.
https://www.investopedia.com/terms/w/wage-push-inflation.asp
It's reminiscent of the dumb rednecks I grew up around who would call every rise in gas prices a conspiracy from the government or oil companies. It's just supply and demand.
Businesses are now having to order stock in advance and hold more inventory than ever compounded by labor shortages internally and externally. Friends of the political party in power are always hungry to find ways to blame inflation on businesses greed.