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Comment by talkingtab | Hacker News Reader

The terminology we use is important. We call this "inflation" - things cost more. But it is not "things costing more" it is corporations extracting the wealth of the citizens. The cost of gas did go up, but the profits that gas companies went up at least as much.

Money is like water, you need it to flow to do good. When it is dammed up by corporations it does no good. We will not survive if we allow corporation to continually generate larger profits while paying wages that do not provide a living wage to people.

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Prices going up and things costing more are synonymous. This is textbook inflation. Policy makers have to look at things from different angles. Central banks really can't do much of anything about structural problems. They can only raise or lower rates. They will put some weight on the distinction of core prices and volatile ones, but really they don't have any levers to affect profits or wages directly.

That job goes to legislators and even then, they don't always have clear options. Windfall profits tax is a start, but what they do with the profits they collect is another. No one likes price controls, but taking short-term action or maybe enacting price stabilization could be very effective. And, of course, all legislation becomes a political minefield where vocal contingencies will simply disavow empirical evidence in favor of pushing an agenda.

I'd also caution against laying too much at the feet of "corporations". Absolutely anybody selling anything on the open market will be doing the same thing. Most homes are sold peer to peer and home prices are inflating like crazy. I wouldn't expect any rational home owner to sell their house for less than the maximum price they could extract because they think buyers deserve a break.

> Windfall profits tax is a start, but what they do with the profits they collect is another. No one likes price controls, but taking short-term action or maybe enacting price stabilization could be very effective.

You are talking gravely serious interventions and I really think you are missing the knockoff incentive effects.

Price controls have a bad reputation from there enforcement by corrupt and reactionary governments of the past, but there's a very strong case being made by mainstream economists that there's a path to doing it properly: https://www.project-syndicate.org/magazine/inflation-targete...

UMass Amherst is a known center of heterodox economic thinking, her views do not reflect the mainstream at all. The problem with price controls is not that the government enforcing them is 'reactionary.'

So your contention is that corporations just suddenly got greedy and realized they could raise prices and keep the extra money? Why didn't they think of this sooner?

Low rates and supply chain shock (Ever Given/port problems/COVID) created the opportunity for tacit collusion: https://en.wikipedia.org/wiki/Tacit_collusion

Another angle on a solution: start your own gas company with competitive margins.

Easier said than done, obviously. But maybe we should try to make it easier?

I can imagine a downward spiral of government regulation creating moats for companies that take advantage of the lack of competition, leading to ever more government interventions that further entrench the status quo.

> start your own gas company with competitive margins

Are you serious? Why would existing large companies allow this? And even if you succeed they are just going to buy up the company.

Beautiful example of this is large IT companies buying startups and stopping competition.

> And even if you succeed they are just going to buy up the company.

Wonderful! Easy money. Then you go and start another company. Keep doing that and enjoy the profits.

Your large competitor can't afford to keep buying you out forever.

> competitor can't afford to keep buying you out forever

Not saying this is in fact the case, but with trillions of dollars of QE and the Cantillon effect it seems entirely possible that in some industries they could.

You would be correct.

To have a true capitalistic marketplace ala Adam Smith, you need government regulation to specifically break up oligopolies: companies which get so large they can collude and price-fix. We call these laws anti-trust laws.

In the US particularly, anti-trust laws are recklessly unenforced, leading to exactly this situation.

Greedflation, in other words...

Greedflation frames the problem around greed. Greed is not the problem. Lack of competition is the problem. Robber barons are the problem. Citizens united legalizing bribery is the problem.

Ultimately it is deeper than that. Laborers don't know how to exercise power and laborers don't know how to provide consequences when our aristocracy takes advantage of us.

If banks can say "we'll trash the economy if you don't bail us out," but every day people say "we're going to suffer if you don't bail us out," the people in power have to account for these banks, but don't have to care about your suffering.

The banks had a credible threat of force against decision makers making a decision, while the people offered predatory lending had no credible threat of force.

Until laborers can provide a credible threat of force, we should expect to see a continuous decline in labor power, and therefore wages.

Greedflation means lack of unionization.

> Ultimately it is deeper than that. Laborers don't know how to exercise power and laborers don't know how to provide consequences when our aristocracy takes advantage of us.

It's deeper than that even still!

You've got half the labor pool fighting against the one thing that would give them power: Unions.

And they don't want consequences against the aristocracy because they have this delusional notion that one day they'll be a part of said aristocracy.

> one thing

There are also guillotines. It never ceases to amaze me that pro gun rights people are generally anti union. Both are extra judicial exercises of power to get a seat at the negotiating table and ultimately prevent tyranny against ones self. Both involve seeking justice through use of force when justice is no where to be found.

> And they don't want consequences against the aristocracy because they have this delusional notion that one day they'll be a part of said aristocracy.

This is over simplified and echo chamber talk. This would not survive a conversation with a skeptic. Those people wouldn't say that they are anti-union because they might eventually be a business owner. They would say that one of the authorities they trust said unions are corrupt and won't work, ignoring the business owners corruption who paid for that authority to sell that story. Conservationism frequently lies with the truth. Only through understanding the bigger picture can you understand that the framing of a given truth creates a lie in the context of a bigger picture.

They have been lied to about cause and effect by entities like fox news and don't have the critical thinking skills to question it. People who believe in trickle down economics don't believe it because they think they will be able to trickle down onto others in the future, they believe it because someone they held in a position of authority told them it's an optimal economic system and they didn't think about it too much or question it.

If you build a culture around following authority and not questioning it too much (like church) then it's easy to hoodwink those people because they are used to trusting [their] authorities without question.

>Laborers don't know how to exercise power and laborers don't know how to provide consequences when our aristocracy takes advantage of us.

The US specifically structured its labor laws to prevent sectorial bargaining and the kind of labor power that exists in Europe. That’s why we have company-level unions. Our country will also quite violently suppresses all protest movements and empower those on the right to maim/kill those who oppose elite economic interests. While we certainly need more unions, this in itself will not resolve these problems any more than more unionization in Russia would overthrow their oligarch class.

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