Corporate profits have contributed disproportionately to inflation

> It is unlikely that either the extent of corporate greed or even the power of corporations generally has increased during the past two years. Instead, the already-excessive power of corporations has been channeled into raising prices rather than the more traditional form it has taken in recent decades: suppressing wages. That said, one effective way to prevent corporate power from being channeled into higher prices in the coming year would be a temporary excess profits tax.

I appreciate that they don't claim there is some invisible "greed" metric that it somehow higher now than before. But this still feels a bit half-baked. If this is so much more successful than suppressing wages, why not do this this whole time? Also, why does inflation continue even when the stock market is suppressed?

I think everyone is really ignoring what happened supply-side the last few years. We lost a huge amount of suppliers, especially in sectors with inelastic demand (like energy). With a semi-artificial constraint on the economy, of course profits are going to be higher. If you are a US oil producer, a war in Ukraine was the best thing to happen to your business.

Focusing on the corporate profitability kind of misses the forest for the trees - prices are higher because there is just less stuff.

Turns out that when you overheat the economy by printing money and giving it to people for free, people buy so much stuff that most producers are running at capacity and can sell at high margins.

These articles are just nuts. I work in the lumber manufacturing business. We always sell to the highest bidder. We sell to the highest bidder when prices are high and we sell to the highest bidder when prices are low. How else would we do it? Would we tell the highest bidder “no” and sell our lumber for less? If we did, to whom would we sell? Would we hold a lottery or something? If we did that, we’d sell out immediately and there would be shortages. This narrative of price gouging has taken hold, and Biden very explicitly has accused American corporations of being greedy. But at least for commodities like oil and lumber, and I have to believe most other products, you’re always going to sell the product for the most the market will bear. Prices go down when people stop purchasing (which reliably happens every time prices go up too much). This is all very basic and at least in my business it’s all definitionally true.

> abnormally high contribution of profits to price growth

Isn't this basically saying that corporations have jacked up prices all at once, just to gouge consumers?

If so, why not say it that way?

What's the difference between "contribution of profit to price growth" and "rip-off"?

Very interesting. I like analyses that go beyond traditional thinking. A bit more of rigour would help.