Comment by simonh | Hacker News Reader

Comment by simonh | Hacker News Reader

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Increased prices and price gouging are not the same thing. If production costs are up, and they are up, then prices can go up without anyone making any more money. You have to actually look at why prices are going up.

The other factor is that rising prices often mean an increased need for investment by producers. That investment capital has to come from somewhere, so what look like increased profits based on current cost structures can actually be entirely justified if the company then needs to invest that money in order to get production volumes up and cope with increased capital costs.

I don't know enough about the food industry to be able to say which of these is happening, in which sector or country, but these are much more complex issues that the knee jerk reactions here imply. What I can say is, it seems to me that if the reduced supply from Ukraine and Russia is going to be made up, somebody somewhere is gong to have to ramp up food production an awful lot, and I can't imagine that's going to be cheap.

> Increased prices and price gouging are not the same thing

Considering that's the explicit context of this comment thread, obviously, the difference is exactly what we're talking about here.

> I don't know enough about the food industry to be able to say which of these is happening, in which sector or country, but these are much more complex issues that the knee jerk reactions here imply.

That's what I mean about sparing a company's feelings. You have no material objections, but it's important we not use the word "gouging" for companies whose profits are rising considerably faster than inflation and it's consumers being hurt. Tone policing is the least important (and least interesting) part of this conversation.

I think the point is a little finer than you think. Yes, profits are up, but can you necessarily conclude from that single fact that the issue is price gouging? In a scenario where every company is trying to maximize profit, "price gouging" cannot explain why prices are increasing now in particular. Other things can, such as the elements pointed above. In an industry with a lot of competition, I find it much more productive to discuss what are the macroeconomic elements that cause inflation than whether the selfishness of corporations has increased recently.

the "trying to maximize profit" is synonymous with said gouging

Increased prices (and sufficient demand to justify the price increase - e.g, overall profit increase) is part of the interaction between demand and supply. Sure, demand for food is inelastic, but there are plenty of different suppliers at each level of the supply chain (different food brands, different grocery stores, etc.) who are individually acting to support the price search function (via individual profit maximization).

Price is a signal of scarcity. Food is more scarce due to supply chain issues, therefore food is more expensive. Is that bad? Sure, let's address the supply chain issues, overall macroeconomic inflation and, uh, other disruptions (incl. the UA war).

Unless you are specifically alleging direct conspiracy between food producers to raise prices (e.g., monopolistic action), (also already an illegal thing), there doesn't seem to be a clear call to action here.

the thesis is pretty simple:

if any given step in the value chain is increasing their prices beyond what is necessary to cover increases in costs (they are), that additional margin purely for the purpose of wanting more money is, imo, pretty shameless when it's hurting so many people down the line

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