Comment by thegrim000 | Hacker News Reader

Comment by thegrim000 | Hacker News Reader

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The most relevant point to the headline is the claim that large grocers unfairly raised prices more than they had to.

Well, if you pull up the report, it says "This study did not test whether the specific companies that received 6(b) Orders increased their prices by more or less than their input cost increases". So .. they don't actually have any data that says this, from the grocers they studied.

What they're instead going on, from the report, is looking at grocer's profit numbers (which they never provide a source for): "Specifically, food and beverage retailer revenues increased to more than 6 percent over total costs in 2021, higher than their most recent peak, in 2015, of 5.6 percent".

So .. before the pandemic they had peaks of up to 5.6% over cost, and the year after the pandemic they were at ~6% over cost (also, what does "more than" mean? Why not just write the number? They had no problem writing 5.6%, why not write 6.1% or 6.7% or whatever the number is?).

Ok? So basically the same with some minor, less than half a percent variation? Where less than half a percent of difference could be explained by a multitude of factors? Seems like the year of covid and year after covid had virtually no impact. The (slightly) more interesting figure is that in 2023 (why was no 2022 data point included, did it not fit the narrative?) the rate was ~7% over cost. But multiple years on from covid I'm not sure what the connection to covid is at that point.

Also .. isn't it extremely basics economics that when supply drops but demand stays the same or rises, this should result in higher prices? That's exactly the scenario we had in covid. If prices only rose less than half a percent more than pre-covid profit peaks, doesn't that say something extremely positive about the grocers? If they really wanted to "take advantage" of the consumer they could have raised prices to make demand drop to match the supply, for example instead of selling out of toilet paper, selling them at $100 a roll, $200 a roll. That's not remotely what happened.

It reads as highly politicized. I am not one for Biden or Trump, so I am sharing a neutral perspective here.

But as they say, where there’s a spark there’s usually a fire. Cutting through the cruft - the main issue seems to be that some grocers may have cashed in on their monopoly, by forcing suppliers to give them preferential treatment or face some penalty.

I think that’s a pretty standard business practice. While I like my groceries to be cheaper, I think that any retrospective government interference in free economics is unwarranted.

I get it - it’s a hard balance to strike between supporting individuals wanting to be treated fair and businesses trying to make money under uncertainty.

I also don’t like that CEOs earn 100-200x an average employees salary. But objectively, simply flexing your business muscles and getting a better deal is not illegal.

> But objectively, simply flexing your business muscles and getting a better deal is not illegal.

Pretty sure it's objectively illegal [1].

Having a more efficient operation -> lower prices is fine. Using your size (market power) -> lower prices is not fine.

[1]: https://en.wikipedia.org/wiki/Sherman_Antitrust_Act

By that logic - it was illegal for US to scoop up vaccine capacity of Pfizer at the height of the pandemic.

But it’s not - because universally, we accept the difference in fighting for survival and intentionally starving your competition.

This was one of those times. Each business was out for its survival. When supply is low, we cannot expect companies to support egalitarian values. The concept of fairness is a human creation (or, more widely, of sentient intelligent beings). In times of survival, there is no fairness in nature or civilization.

So, the suppliers were thinking about their survival (choosing to keep their relationship with the big guys), just as the businesses were thinking about theirs.

However, like I pointed out, there is a more profound argument to be made - in the pursuit for higher bonuses/payout, the company executives (possibly with the full cooperation of the board) were overzealous in increasing profitability in the name of survival. This included doing mass layoffs, hogging inventory, hiking rates sharply by 20% (over a 3 year period, the inflation was between 4% and 8% - which is equivalent to ~13% when combined, so there’s an unexplained difference of maybe 6-7% or so).

It doesn’t make sense to hinge the entire argument on how unfair this was to the little guy.

The US isn't a business so anti-trust laws don't apply to it.

Exactly, the problem here is the consolidation of the industry so there are only a few large corporations and large bars of entry for new players. It's not a free competitive market anymore. It's also food, a necessity, and not a luxury people could choose not to buy anymore.

>So basically the same with some minor, less than half a percent variation?

half a percent in profits can mean millions of dollars, I wouldn't easily discount that, especially if my job is precisely to look into bad price control.

> The (slightly) more interesting figure is that in 2023 (why was no 2022 data point included, did it not fit the narrative?) the rate was ~7% over cost.

probably because it did fall and did in fact raise higher in 2023, which is adding more smoke to a potential fire. I remember a lot of grocers price hikes starting in early 2023.

>But multiple years on from covid I'm not sure what the connection to covid is at that point.

that, " Large Grocers Took Advantage of Pandemic Supply Chain Disruptions"? You say yourself how falling supply works. Well, if supply came back by 2023 and prices kept rising, there's the reason FTC initiated this investigation. Anecdotally, prices did not in fact fall back down in the past 15 months.

>If they really wanted to "take advantage" of the consumer they could have raised prices to make demand drop to match the supply, for example instead of selling out of toilet paper, selling them at $100 a roll, $200 a roll. That's not remotely what happened.

That'd be both a PR and legal disasters. They are looser than other countries. but the US still does have regulations on price fluctuations, if only so companies can be somewhat evil instead of mustache twirling evil. Individuals can scalp on eBay, but WalMart/Vonz/etc. cannot.

> half a percent in profits can mean millions of dollars

You took the right framing and inverted it into the wrong framing. It may be millions of dollars, but it's only half a percent relative to total profits. Variance is relative (see, e.g., the normal distribution).

Eh, lies, damn lies, and statistics. You saying it's the "right" or "wrong" framing is implying any of us had applied statistic rigor to centuries of grocer data, accounting for inflation and other economic factors.

You even say it yourself, variance it relative. We don't know the normal distribution. I'm just explaining the POV that can prompt an investigation. A difference of millions of dollars is a lot to pocket for a business selling a necessary good. It's worth looking into.

> half a percent in profits can mean millions of dollars, I wouldn't easily discount that, especially if my job is precisely to look into bad price control.

I took a statistics class over 30 years ago and can recall very little of it but even I remember that this could easily fall within the margin of error.

One could also reasonably correlate the higher profits with people eating in more (since restaurants were mostly closed) but that doesn't set off the dog whistles.

And, you know, inflation...prices will never fall back down to pre-pandemic levels.

>I took a statistics class over 30 years ago and can recall very little of it but even I remember that this could easily fall within the margin of error.

it could. It could not. I imagine the data is out there to determine it, but not enough of it is in the article nor any of its links to form an analysis.

But this admitedly isn't a statistics 101 problem , between taking into account inflation, local and record fluctuations, expected pandemic impacts, the PPP/interest rates and more affecting the result, etc.

>One could also reasonably correlate the higher profits with people eating in more (since restaurants were mostly closed) but that doesn't set off the dog whistles.

It'd be pretty easy to support/weaken that evidence if we just look at food delivery services. less people eating in doesn't mean less people ordered out.

I don't know why you're being so cynical about the government doing its job for once and investigating potential greed. Worse case, nothing happens and life moves on, best case we get better grocery prices in the future. I don't see the downside as a consumer.

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