economy makes more sense when you consider that things are being done intentionally and are not just a collection of random events converging to create a scenario that somehow almost always f--ks 90% of people and benefits the top 1%.
Edit:them/it
Can you help me distinguish between this and the 'stale dogma?'
The paper contrasts commodities from all other concentrated markets; whereas the former is expected to have an impulse transient response whose price discovery quickly settles by way of competitive forces consistent with Smith, the latter has a salient capacity as price maker to play games.
Megacorps and multi-nationals weren't exactly meta in the 18th century. Exponential tech complexity, sector consolidation, global economies of scale, regulatory capture, the speed of information and capacity of market participants to meaningfully act are just a few modern barriers to entry in concentrated markets suppressing the notional competition that Smith leans heavily into.
However, in this case, it would be very naive to think there wasn't some intentional orchestration going on.
I like to bring up the recent massive intentionally orchestrated conspiracy by "dozens" of major tech companies to defraud their own employees with "no poaching" collusion. It's estimated that they may have effectively stolen over $8,000,000,000 from their own employees.
> The defendants were high-technology companies Adobe, Apple Inc., Google, Intel, Intuit, Pixar, Lucasfilm and eBay,
https://en.wikipedia.org/wiki/High-Tech_Employee_Antitrust_L...
But Pando Daily dug into the court documents and found that the practice had spread to "dozens" of other major tech companies.
https://web.archive.org/web/20200304045453/https://pando.com...
The conclusion is clear: however moral the individuals, as a class these folks will do whatever they think they can get away with.
The mechanism that keeps them in check is competition. We should expect constant attempts to circumvent this mechanism requiring frequent intervention to keep it in place. That's not a conspiracy theory, that's a consequence of incentives working, which is the reason why we have this system in the first place. Not for these incentives, for other better ones, but these come along for the ride. You should expect to see them.
These are basic reasonable expectations you should have in a capitalist economy.
https://investor.vanguard.com/investment-products/etfs/profi...
so that the firms that run that kind of fund are the largest shareholders of many firms. If I was a shareholder in, say, Delta airlines, but not American, I might want Delta to compete really hard against American today (at the expense of immediate profits) so that it gains market share and is worth more tomorrow.
If I am a shareholder in all the airlines, however, it makes no difference to me in how the market is partitioned, I just want the industry as a whole to be profitable. So one would imagine that large index fund shareholders would be having conversations to that end with the firms that they own.
So by shareholders you mean the majority of everyday people.
Do you really believe that businesses priced their products low until the business press started reporting on inflation and then realized “oh man, I should raise my prices!”?
Did the (apparent) sudden flourishing of gen-AI from a bunch of different companies come about because the press started reporting on gen-AI? Or do the press start writing about the early part of the wave?
Absolutely yes. They had an excuse they thought their customers would swallow, and saw other companies doing it.
My view is: A. Injecting as much money into the economy as we did was bound to reduce the value of an individual dollar. B. Sellers would naturally demand more of those less valuable dollars for their goods and services. C. The press then reports on the first signs of that wave landing. D. The rest of the wave then lands.
Starting at step C, it looks like the reporting caused inflation. I think that’s a “wet streets cause rain” analysis of the situation.
It’s quite possible that the injection was the least bad thing given the real and perceived constraints of the day. But the inevitable consequence was the devaluing of the dollar.
Yes, inflation matters a lot, but the psychological part is significant as well (and is conveniently overlooked in basic classical undergrad economics).
A similar thing happened when the Euro was introduced in Europe in 2002: The act of changing the price tags, the confusion of consumers when showing different numbers was an opportunity to hike prices.
To the extent that you use the profits from selling widgets as the means to buy groceries to feed your family, yes, you have to, unless your family wants to go on a diet.
But…what if they’ve been reading in the news about how inflation is through the roof and the price of everything is going up? Now they’re psychologically primed for an increase and we can raise prices higher with less concern about the blowback. Make hay while the sun shines.
That said, inflation does create an environment where businesses can "reset prices" for reasons other than inflation driving up costs. But that's inflation in general - it creates an environment of rising wages, rising costs and a vicious circle where price increases in one place, drive price in other places. It's one reason why inflation is so hard to break. When expectations are that "prices are going up faster" then people's behavior changes.
Do you really think a believable excuse people will swallow doesn't make a difference in what companies can get away with? (Especially one that's global?)
See, for example, daily housekeeping in hotels. Hotels were trying to do away with this pre-COVID, without much success; people correctly saw it as a measure to boost profits at customers' expense.
People accepted "oh it's COVID" as an explanation, so they got away with it, and it's not going to come back.
― Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations
for me, war is bad so i expect markets to go down...but instead they rally. because war is good for the 1%.
markets are ultimately driven by the incentives and best interest of the monopolists. and there is always a monopoly whatever the political or economic system is called.
the stock market rally this year which put S&P and Nasdaq at one point their best year since 1995 and 1970s was presented in the media heavily as an AI narrative rally. but you can see the markets started rallying (and diverged from most other markets) on the exact day that the BTFP (bank term funding program/shadow liquidity) was announced to bailout SVB and provide another money spigot for bankers to yolo into.
Quark: That's the 35th Rule.
Lieutenant Jadzia Dax : Oh, you're right. What's the 34th?
Quark: "War is good for business". It's easy to get them confused.
*disclaimer: not a trekkie, just a pedant