What a terrible article. The title and the first paragraph talk about how new business models are circumventing existing laws, which seems fair enough and actually quite an interesting subject.
Then, there is a switch to the most traditional of businesses with the most traditional business models. Who, the author argues, are engaging in price gauging. In the second paragraph he claims that apps cause this inflation ("so much of inflation can be attributed to a crime, done with an app"), then goes on to list a couple of traditional companies who are, he argues rising prices above inflation. And who he partially blames for inflation.
None of the examples he gives support the case he is trying to make in his title. Apparently being an "App" has absolutely zero to do with getting away with financial misdeeds.
None of the questions raised by the title are even investigated. And the core argument, that traditional companies are causing inflation, is never argued for. The last paragraph portraits a stunning lack of economic knowledge, as companies raising prices in line with inflation obviously would not lower prices after the source of the inflation is gone. The source of the inflation being gone does not cause inflation to reverse. And so the fair market price would not get lower, getting something so basic wrong seems ridiculous for someone leveling serious accusations at companies.
> Then, there is a switch to the most traditional of businesses with the most traditional business models. Who, the author argues, are engaging in price gauging. In the second paragraph he claims that apps cause this inflation
He is saying that the traditional businesses use an app that allows for a legal way of price gauging.
> The last paragraph portraits a stunning lack of economic knowledge, as companies raising prices in line with inflation obviously would not lower prices after the source of the inflation is gone.
The author claims, that these companies raise prices more than inflation based cost increases in production would allow for.
>The author claims, that these companies raise prices more than inflation based cost increases in production would allow for.
That's just supply and demand? People get mad that when there's an oil shortage, that oil companies raise prices above the cost of production, but they're happy to see oil companies' margin collapse when there's an oil glut.
Did we read the same article? There are repeated examples of cartels colluding to fix prices which aren't being prosecuted because they're using a third party (app) to coordinate the collusion rather than doing it in a board room.
This is what has repeatedly bothered me about Doctorow, he writes quite compellingly on the surface, but the arguments are often sketchy at best, and the pandering to/expression of outrage often dominates any attempts at clear analysis.
The fact that this is seemingly the top comment shows how entrenched HN’s typical user is in making money off the predatory practices articulated thoroughly in the article.
I noticed you mistook "gouging" for "gauging", which I agree, would change it to an obviously-wrong essay that failed to back up anything.
There's a lot of other stuff that is unclear (questions in the title? the article says inflation goes in reverse?), but that one thing neatly explains the vibe that might have driven the rest.
Perhaps if there was a tighter line pointing at corporations using 'apps'.
Traditional rental property corporations, were pre-existing, and also adopted the use of an 'app' that allowed them to raise prices over the inflation rate.
So, traditional corps, taking advantage of the new 'app-crime-for-free' model.
But really, where the logic broke down a little. Was all those 'crime-apps' are actually reducing prices for most part. So should help inflation not hurt it.
While some of the article’s leading point in apps doesn’t clearly connected to collusion to raise egg prices, it’s all valid. Tearing it all down is sore of you.
This is all a result of a lack of active market regulation. The government needs to step in actively to keep a free market from collapsing into one of the natural end states. But the US has consistently been far too passive and accepts greedy companies far too readily.
If a single company can sell almost 100% of an essential good, they need to atomatically lose the power to set their prices and margins independently. Let them go through a cumbersome govenment approval process for price changes or something to cap margins. Price fixing cartels need to be busted more aggressively.
> If a single company can sell almost 100% of an essential good, they need to atomatically lose the power to set their prices and margins independently.
The fallacy is assuming that the government will make everything cheap for consumers.
In practice, government regulation of prices just changes the game. Look at any market with rent control: There are numerous meta-games around building or not building new supply, landlords are incentivized to not fix units because they know tenants don’t want to give up their rent control and move, and a new market emerges where people illegally sublet their rent controlled apartments because it becomes attractive to take advantage of the market demand that landlords aren’t allowed to capitalize on.
The other fallacy in all of this is thinking that companies control both supply and demand. For nearly all commodities, there is a price where consumers won’t pay for it. If rents get too high, people move to a different city. If gas gets too expensive they start carpooling and looking for WFH jobs. If eggs are too expensive they eat something else. These choices make people angry as hell, but there’s no denying that these choices exist. Companies can’t push past these limits and force people to buy at any price. They still have to discover that point on the supply and demand curve.
> If rents get too high, people move to a different city.
With what money? It takes three months rent up-front to move (first+last month rent and a deposit equal to one month rent) up front. People _need_ a place to live and will spend every last dollar to not be homeless.
The government won't make things cheaper. The point of the regulation would be to actively encumbered the monopolist company and either give strong incentives to split up or make room for nimble competitors.
What. Are you advocating for monopolies? Obviously there is a point where people stop buying essentials. The point of capitalism is to deliver goods as cheaply as possible. If toothpaste costs $60 I would still buy it because I need toothpaste. But that extra money now goes to someone who isn’t producing, they are mooching. It’s a welfare check to a billionaire. In a monopoly pricing is fixed at maximum profit, which could make goods 10x or 100x for things with relatively inelastic demand.
The government does not make things cheaper, competition does. The government’s role is to protect competition. Otherwise companies will collude not to compete.
"But the US has consistently been far too passive and accepts greedy companies far too readily."
All companies are greedy. That's the reason for existence. Your point that monopolies and oligopolies need to be crushed is very valid though. I wish more mergers were rejected in the first place.
Regulating prices is a recipe for disaster though.
That's an assertion, not a statement of fact. Pricing in natural monopolies is a mature subject, and public utilities have been a thing for over 100 years. Also, pricing for medical procedures is regulated in Europe, and it works extremely well.
I feel that US companies are consistently more ruthless and cut-throat than companies in other countries I have visited. I see that as cultural rather than a pure economic issue.
One race-to-the-bottom phenomenon that (to me at least) appears to aggravate the impact of "corporate greed" is the social loop that goes as follows:
1. company decides to push the boundaries of the socially acceptable when it comes to cutting corners (e.g. screwing their customers, or employees, or environment, or debtors)
2. People don't like it, but rationalize this as being a natural consequence of incorporation and the profit motive. Hence while they grumble, there negative impacts to public perception don't actually cost the company as much as you might think
2b. Even if there's a boycott, there will be vocal minority that thinks it's all a bunch of whiny <target audience we're better than>. They'll actively harass or undermine said boycott or backlash, even if in a purely egotistical sense their interests are actually aligned with the boycotters
3. Social norm is reset; we all collectively expect even less from companies. That doesn't however mean the new norm is better or maintained, because as soon as there's some new major conflict between short-term profit and maintaining a decent reputation in public, we go back to step 1 from the new, lower baseline.
Stuff like increasing partisanship, and decreasing incentives for journalist (whether profession, citizen or influencer) to maintain their professional standing (as opposed to targeting clickbate) probably smears those gears nicely.
Many companies have historically clearly paid well over the odds to maintain their reputation, and done well doing so. It's just not true that nihilistic short term greed has always paid; obviously it didn't and still doesn't really. It profitable to do the little, but simultaneously also to do as many cheap things that materially affect public standing as possible.
By promoting the profit motive past a merely utilitarian means to an efficiency-optimizing end into a matter of national identity and point of distinction vs. in particular the USSR, we've shifted our culture beyond what's really rational. We (as a society) don't merely respect and understand the profit motive; we see it as a sign of merit - and significant enough merit that "winning" on that scale excuses a lot of other bad behavior.
I'm curious what you base that on. For instance, we've never really allowed literally cutthoat competition, nor things like fraud and we've generally not allowed misrepresentation. Governments intervene heavily and always have to set those kind of boundary conditions - but there are really lots of them. Economies of scale seem to be very, very common ever since the industrial revolution; and even more so in today's information-economy platform era.
I'm sure there are plenty of cases where significant competition is a natural end state, but how common those are in comparison? I'm curious.
> The government needs to step in actively to keep a free market from collapsing into one of the natural end states.
Which is what, exactly? The US is per capita richer than almost all EU countries by a huge margin (with a few small exceptions mostly enabled by regulatory arbitrage targeting US money), so forgive me if I don't take your seething commentary about the US economic apparatus very seriously.
Any free, unregulated market will eliminate competitors until they create an oligopoly or even a single monopoly. It's an immediate consequence of the rules of the market.
Algorithmic price fixing is certainly a not-insignificant part of the issue. But it's strange to see zero acknowledgement of the massive increase in money supply over the same time period. When doing causal analysis, we need to examine both the private sector and our government.
> But it's strange to see zero acknowledgement of the massive increase in money supply over the same time period.
Because when you look at inflation in the period of say ~2000 to ~2025 [1] it's really not very obvious that there's an increase in M2 from '08 onward.
Talking about M2 as a source of inflation is like shouting Red at a roulette wheel. Sure, sometimes the ball will land on Red but your shouting is a non-sequitur on the result.
They look pretty similar to me. Chaotic in the short term, but averaging positive between 0-1%. In other words, slow but consistent exponential growth. I didn't say anything about a discontinuity in '08, I'm not sure what point you're trying to make with that.
For money supply to be inflationary it has to increase demand or reduce supply for a given product.
It sounds neat but there’s little evidence of that occurring on more than a temporary basis during covid. But covid also caused supply shocks.
It seems that what happened is covid showed companies what they could get away with both because of decades of consolidation and because of new ways of colluding.
More dollars in circulation chasing the same supply of products = increased demand for those products, in dollar terms. I'm not looking specifically at the COVID spike (which, indeed, seems to be over from a monetary policy perspective), I'm looking at the longer term continuous exponential increase in money supply.
This graph is absolutely insane. As I am completely unfamiliar with what is represented, would you have some pointers on where to start to understand what it represents?
I'm particularly intrigued by the very sharp rise during the covid time, when the global economy was in taters.
ok, but does the increase in money supply explain the price collusion that businesses admit to doing? You're bringing up an issue that's not pertinent to companies criming.
I'm addressing the part of the article that uses inflation as a framing device. If inflation is the motivating issue, then we are turning a blind eye to the elephant in the room. I don't disagree with the criticisms of price collusion criming.
Increase in money supply only causes inflation if the money is spent on purchases of items with inflated prices (say, ferraris instead of basic food items).
When the basic food items become ferraris, people have no choice on that.
> Increase in money supply only causes inflation if the money is spent on purchases of items with inflated prices
The economy doesn’t work like that. You can’t inject money but only have it apply to specific sectors.
Everything is interconnected in the economy. If a lot of money comes into the market it will cause a lot of activity, changes in demand, new job openings that entice employees upward, increased wage demands for jobs, new hires requiring higher wages, rising costs to cover those wages, and the cycle goes on and on.
You can’t isolate the effects of inflation. At the scale of economies, inflation effects ripple through everything.
Also, eggs are a terrible indicator. Did everyone forget about the bird flu? It’s a supply problem.
It appears that the crux of the article is that a lot of price fixing is going on through the use of programs that suggest or encourage pricing among a few players, to the advantage of all the players and the disadvantage of the customer.
Crackdowns do take time in the US but there is hope. See e.g.:
The current administration, however, plans to let M&A run wild. Oligopolies don’t need an app for uncoordinated price fixing. The fact that there’s a cartel that controls 97% of the frozen potato market is wild. This will only get worse without breakups.
> cartel that controls 97% of the frozen potato market
This is a weird and emotionally loaded statement. Properly stated, the top four frozen potato producers have 97% of the market share.
That doesn't sound odd? In a mature market with very little technology innovation (potatoes) and very little geographic specificity (frozen), how many companies would you expect? How many laundry detergent companies are there? How many cereal companies are there?
How was this different in the past, except going back to before the interstate highway system?
Actually, there’s still a chance the current administration can do something about it. But there’s a zero chance the previous administration did anything about it.
The previous administration didn’t do anything either. They, oh oops, studied for 3.5 years, and launched processes in the last 4 months of the 4 years. Oh my, I need to reelect them to see it happen!
The New Deal, which Bernie was resurrecting, was meant to break monopolies up, to promote completion and make price fixing impossible. the democrats voted against that as they are controlled by the big companies too. this is easy MAGA exists, and won.
Lina Khan led the most antitrust-focused DoJ in a century, which went after Apple, Google, Nvidia, Realpage, airlines, and dozens of other companies.
MAGA give zero fucks about antitrust, and antitrust or lack thereof has nothing to do with the creation of MAGA. That's such an absurd argument I have no idea how to even respond to it. The cornerstone of MAGA has always been nativism & reactionary politics.
I'm very, very tired of leftists shamelessly lying about anything and everything they can just to smear the Democrats.
> These companies have been hiking prices for years, but really started to turn the screws during the post-covid inflationary period
The only one I found a time series for quickly is Lamb Weston: Their margins steadily went down after 2019, then surged quite substantially, and by the end of 2024 were more or less back at their 21/22 low points [1]
Additionally there's apparently a class action suit against the companies mentioned which was filed in November 2024 [2]
I don't know enough about this market to judge whether something shady happened, but it seems like both of those facts are relevant to this article.
Margins aren’t an objective measurement. Margins are easy to manipulate through shell companies and other costs.
Just look at PBMs. They all supposedly have small margins. However, once you peel back the layers, you see rebates and kickbacks and all kinds of illegal schemes to hide the real income.
What is your hypothesis in this case? Something like "margins went down because of accounting shenanigans they only figured out a few years ago, surged so much because of price fixing that the accounting shenanigans were not good enough to cover it anymore, and then they figured out new accounting shenanigans to manipulate margins down to the previous low. And all of that in a way that overstated COGS or understated value of goods produced, because gross margins basically show the same pattern? I'm not in the potato business or an accountant, but curious to learn if you know more about this.
> Josh Saltzman, owner of the DC sports bar Ivy and Coney. Ten years ago, Saltzman charged $3 for fries; now it's $6 – and Saltzman's margins have declined. Saltzman has a limited number of suppliers, and they all get their potatoes from Big Potato, and they bundle those potato orders with their other supplies, making it effectively impossible for Saltzman to buy his potatoes from anyone else.
I understand there will be a demand for French fries from consumers, but you don’t have to serve them. This is something I appreciate about Greek cuisine. There are so many wonderful foods spawned from input constraints. Sugar was a luxury in Greece during the 20th century while honey was more readily available, so you see many desserts sweetened with honey. The Lenten and nativity fast call for essentially a vegan diet, so there are numerous recipes that don’t require animal products and are cheap to make. Eggs and lemons were readily available, so they created avgolemono soup, which is a modest, yet delicious dish.
The overall American cuisine seems unwilling to adapt. The tricky bit is, that’s probably correct from a business standpoint. I’ve heard, “If we don’t sell hamburgers at airport restaurants, they’ll fail.” from a consultant in the airport terminal industry. It’s as if we’ve grown to expect seasonal fruit and vegetables year round as a mindset for our cuisine. Surely, there’s room to be more flexible with what we eat, which would allow business owners to serve food based on what’s readily available and cheaper for them to serve.
Now if absolutely every type of food is experiencing price gouging, that’s hard to get around. But I think there’s some middle ground, which requires serving different food items.
Does anybody know whats stopping ethical and slightly less greedy companies from outcompeting these conglomerates? Its a question I keep coming back to because if the market were efficient then competitors should be able to use that same data to undercut big potato (or big whatever). This never seems to happen.
I’m just guessing, but it likely requires scale in order to become profitable. Building up the necessary network, infrastructure and logistics, while getting up to speed on all the regulatory requirements, would require a lot of difficult work. VCs also wouldn’t fund something that merely becomes profitable, without a chance of making stupid amounts of money. The number of “founders” who would want to make this their carrier is constrained by that limited prospect as well, in addition to “selling potatoes” not being very sexy. And the price-fixing cartel would try to thwart you at every step.
That's called "barrier to entry" to a market (or "un-leveling the field of play"). Actually, that's what any significant corp use first to forbid any new competitor to compete (and that's the reason of the need of "disruption", meaning changing the field of play instead of trying to level it for all players).
Examples:
- laws and regulations provide great barrier for newcomers
- brand recognition (would you better by a know cigarette brand or unknown cheapest one?)
- technical and/or financial and/or IP investment, either because the INDUSTRIAL process need costly tools (so you need to be big from the start) or because you need some really specific know-how
Monopolies. They may not all have the 100% marketshare to convince regulators they legally constitute a monopoly, but in practice one can't compete on price with vertically-integrated conglomerates that already own the lion's share of the market, and have an existing relationship with all of your potential suppliers/logistics/retailers...
This is the answer. On paper, we have laws preventing monopolists from abusing their power. In reality, it's easy to disguise any predatory pricing or "special offers," running at or near a loss in your upstart competitor's market until they go out of business.
The only way you win is either major disruption (which is usually not possible), or having a bankroll comparable in size to the incumbent. But anyone with enough cash to enter the market is doing so for a return-on-investment, with just as much profit motive as the existing players.
>Does anybody know whats stopping ethical and slightly less greedy companies from outcompeting these conglomerates?
I like this question because it inspires the thought of an "incrementally more ethical firm". Ethics can be roughly characterized as constraints on behavior, therefore if two firms, all else equal, differ then the ethical one is naively at a natural disadvantage, having fewer degrees-of-freedom in any situation. The classic response is that cooperation between firms is itself a powerful advantage, and that ethical behavior ought to yield advantages to cooperation that outweigh the cost of behavioral restrictions.
I believe that the equation changes when ethical behavior itself is successfully attacked and associated with weakness. What happens to a bank if everyone believes it will fail? It fails. What happens when everyone believes that morality is weakness? Morality IS weakness. At that point the reputation and cooperation effects are erased, and only the loss of freedom remains. At that point the culture shifted from the "cooperate-cooperate" Nash equilibrium to the "defect-defect" one. (Religious belief tends to unequivocally favor "cooperate-cooperate" and can therefore both resist this transition and assist in the reverse transition, which adds to religion's social utility.)
Perhaps, given economies of scale, it's difficult for smaller more ethical companies to compete even with the price-fixed conglomerate product.
There are some more ethical companies, too. In N Out french fries are $2.30, certainly due to the fact that they own their supply chain and cut potatoes in house.
It's not like there's an open market you can actually just sell your frozen potato product on. The supply chain between producers and consumers is a web of vertical integration and deals between large oligopolistic companies.
If you can finangle a wedge of the market, they can just buy you, or apply local pricing pressure in lock-step based on their data broker recommendations.
By time a market is lopsided enough to incentivize startups to replace them, the established monopoly has built up a warchest of funds that is able to squash most any potential competition.
And even assuming companies don't resort to skeevy tactics to prevent competition, the companies that incentivize profit the most are going to have the most capital to expand and have the highest growth out of any potential competitors and fully saturate the market the fastest.
From what I can tell, market theory assumes it's easy to enter a market or that people with money to spend somehow want to use it to compete knowing that they're doomed to drive the industry back to "normal profit." Nobody investing money actually wants to throw money at something that will obviously drive a return to normal profit by competing, and do so within a few years after significant capital expense. They want to invest in something that will drive margin growth. Instead, the only reason people do it is to get a buyout offer from established businesses in the same market. Unless you're Mark Cuban.
Though the above is only true to a point - obviously if the margins get high enough or product deviates sufficiently existing businesses with related interests will step in: witness Costco's chicken business.
So maybe the question is less why isn't there more competition and more so why haven't restaurants vertically integrated their potato supply? The main theory I'd have is that price increases haven't negatively impacted their margins or revenues sufficiently yet.
Looking at expansion of local grocery "co-operative" in European country, well it might not have shareholders, but customers that bought in. And it is still expanding monster. Going to places where it really makes not much sense for entity that should offer shopping for local customers...
I'd add though that companies don't have to be "ethical and slightly less greedy" to compete on price. Competing on price is a natural way to gain market share. Nobody would say that Bezo expressed ethics and less greed when he said "Your margin is my opportunity"
Companies should charge the real equilibrium price of a product. It's an important signal to lower or increase supply. However, they should not create a coordinated scarcity or otherwise artificially force a higher price than the equilibrium price. This can only happen through (illegal!) cartels or too much market power (which the government is supposed to prevent).
As usual ee cannot ask for better people but need a system that makes the wrong people do the right thing.
My take: at scale, "more ethical" and "less greedy" are illusions. Corporation are not people, they are systems where, to succeed at large scale, being less greedy and more ethical is detrimental. Therefore, these good corporations are filtered out. Add to this the fact that each time, you need more and more initial investment to enter a market: you need to operate in larger scale with more and more technological investments. So, as the time passes, it is also harder to have ethical corporations operating in a market.
Because there is collusion in the supply chain as well. The grocery stores won’t place your product, the distributors won’t distribute it or will charge you more, the farmers will charge you more. This is why horizontal and vertical consolidation were made illegal a century ago. Anti-competitive behavior has to be policed at every level.
An oligopol often has some kind of moat due to anti competitive behaviour. E.g. the potatoe argument from the article, where McCain makes it hard to buy potatoes from anybody but them as they are part of a packaged deal.
What do you mean "free stuff". This isn't about giving potatoes away for free but about reducing margins and competing on price. "Your margin is my opportunity" seems to work well in many cases
This is naive and wrong. An example of this is Google Fiber and ironically Tesla. When Google Fiber came out, ISPs lobbied to sue Google and local governments to prevent Fiber from being available in their areas instead of competing. When Tesla tried to sell direct to consumer, dealerships sued to prevent it. Entrenched companies will always use the system to prevent competition. Regulatory capture is a term for a reason.
I will continue to shout this at clouds and hope something changes:
As tech industry practicioners, we are some of the only people in the country who have both the desire to affect positive change, AND the agency to do so. Don't work for these companies. If your company does business with these companies, criticize it and encourage your coworkers to do the same.
It's possible that the folks who find themselves working at Potatotrac are not genius leetcoders who can get a new FAANG job anytime they want. They're probably just ordinary people trying to make enough money to buy an occasional $10 potato for their family.
It's also unlikely that the person working on the Russet Quality Calculator feature has any knowledge about the market shares of each customer and their boardroom deals.
Readit News
Then, there is a switch to the most traditional of businesses with the most traditional business models. Who, the author argues, are engaging in price gauging. In the second paragraph he claims that apps cause this inflation ("so much of inflation can be attributed to a crime, done with an app"), then goes on to list a couple of traditional companies who are, he argues rising prices above inflation. And who he partially blames for inflation.
None of the examples he gives support the case he is trying to make in his title. Apparently being an "App" has absolutely zero to do with getting away with financial misdeeds.
None of the questions raised by the title are even investigated. And the core argument, that traditional companies are causing inflation, is never argued for. The last paragraph portraits a stunning lack of economic knowledge, as companies raising prices in line with inflation obviously would not lower prices after the source of the inflation is gone. The source of the inflation being gone does not cause inflation to reverse. And so the fair market price would not get lower, getting something so basic wrong seems ridiculous for someone leveling serious accusations at companies.
He is saying that the traditional businesses use an app that allows for a legal way of price gauging.
> The last paragraph portraits a stunning lack of economic knowledge, as companies raising prices in line with inflation obviously would not lower prices after the source of the inflation is gone.
The author claims, that these companies raise prices more than inflation based cost increases in production would allow for.
That's just supply and demand? People get mad that when there's an oil shortage, that oil companies raise prices above the cost of production, but they're happy to see oil companies' margin collapse when there's an oil glut.
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More on Potatotrac:
https://fingfx.thomsonreuters.com/gfx/legaldocs/byprmmxmwve/...
https://ia800109.us.archive.org/34/items/gov.uscourts.ilnd.4...
There's a lot of other stuff that is unclear (questions in the title? the article says inflation goes in reverse?), but that one thing neatly explains the vibe that might have driven the rest.
Traditional rental property corporations, were pre-existing, and also adopted the use of an 'app' that allowed them to raise prices over the inflation rate.
So, traditional corps, taking advantage of the new 'app-crime-for-free' model.
But really, where the logic broke down a little. Was all those 'crime-apps' are actually reducing prices for most part. So should help inflation not hurt it.
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If a single company can sell almost 100% of an essential good, they need to atomatically lose the power to set their prices and margins independently. Let them go through a cumbersome govenment approval process for price changes or something to cap margins. Price fixing cartels need to be busted more aggressively.
The fallacy is assuming that the government will make everything cheap for consumers.
In practice, government regulation of prices just changes the game. Look at any market with rent control: There are numerous meta-games around building or not building new supply, landlords are incentivized to not fix units because they know tenants don’t want to give up their rent control and move, and a new market emerges where people illegally sublet their rent controlled apartments because it becomes attractive to take advantage of the market demand that landlords aren’t allowed to capitalize on.
The other fallacy in all of this is thinking that companies control both supply and demand. For nearly all commodities, there is a price where consumers won’t pay for it. If rents get too high, people move to a different city. If gas gets too expensive they start carpooling and looking for WFH jobs. If eggs are too expensive they eat something else. These choices make people angry as hell, but there’s no denying that these choices exist. Companies can’t push past these limits and force people to buy at any price. They still have to discover that point on the supply and demand curve.
With what money? It takes three months rent up-front to move (first+last month rent and a deposit equal to one month rent) up front. People _need_ a place to live and will spend every last dollar to not be homeless.
All companies are greedy. That's the reason for existence. Your point that monopolies and oligopolies need to be crushed is very valid though. I wish more mergers were rejected in the first place.
Regulating prices is a recipe for disaster though.
That's an assertion, not a statement of fact. Pricing in natural monopolies is a mature subject, and public utilities have been a thing for over 100 years. Also, pricing for medical procedures is regulated in Europe, and it works extremely well.
Black and white oversimplification that muddies the water.
You really can't think of two companies with incredibly different levels of "greed"?
https://en.wikipedia.org/wiki/Dodge_v._Ford_Motor_Co.
1. company decides to push the boundaries of the socially acceptable when it comes to cutting corners (e.g. screwing their customers, or employees, or environment, or debtors)
2. People don't like it, but rationalize this as being a natural consequence of incorporation and the profit motive. Hence while they grumble, there negative impacts to public perception don't actually cost the company as much as you might think
2b. Even if there's a boycott, there will be vocal minority that thinks it's all a bunch of whiny <target audience we're better than>. They'll actively harass or undermine said boycott or backlash, even if in a purely egotistical sense their interests are actually aligned with the boycotters
3. Social norm is reset; we all collectively expect even less from companies. That doesn't however mean the new norm is better or maintained, because as soon as there's some new major conflict between short-term profit and maintaining a decent reputation in public, we go back to step 1 from the new, lower baseline.
Stuff like increasing partisanship, and decreasing incentives for journalist (whether profession, citizen or influencer) to maintain their professional standing (as opposed to targeting clickbate) probably smears those gears nicely.
Many companies have historically clearly paid well over the odds to maintain their reputation, and done well doing so. It's just not true that nihilistic short term greed has always paid; obviously it didn't and still doesn't really. It profitable to do the little, but simultaneously also to do as many cheap things that materially affect public standing as possible.
By promoting the profit motive past a merely utilitarian means to an efficiency-optimizing end into a matter of national identity and point of distinction vs. in particular the USSR, we've shifted our culture beyond what's really rational. We (as a society) don't merely respect and understand the profit motive; we see it as a sign of merit - and significant enough merit that "winning" on that scale excuses a lot of other bad behavior.
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What is that natural end state? Natural monopolies are exceedingly rare, almost all monopolies are the result of government intervention.
I'm sure there are plenty of cases where significant competition is a natural end state, but how common those are in comparison? I'm curious.
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Which is what, exactly? The US is per capita richer than almost all EU countries by a huge margin (with a few small exceptions mostly enabled by regulatory arbitrage targeting US money), so forgive me if I don't take your seething commentary about the US economic apparatus very seriously.
> Inflation has lots of causes, it's true.
https://fred.stlouisfed.org/series/M2SL
Algorithmic price fixing is certainly a not-insignificant part of the issue. But it's strange to see zero acknowledgement of the massive increase in money supply over the same time period. When doing causal analysis, we need to examine both the private sector and our government.
When you use M2 as denominator for egg prices, we're at the same place we were in early 2016: https://fred.stlouisfed.org/graph/?g=1DcVw
Because when you look at inflation in the period of say ~2000 to ~2025 [1] it's really not very obvious that there's an increase in M2 from '08 onward.
Talking about M2 as a source of inflation is like shouting Red at a roulette wheel. Sure, sometimes the ball will land on Red but your shouting is a non-sequitur on the result.
[1]: https://fred.stlouisfed.org/series/CPALTT01USM657N
They look pretty similar to me. Chaotic in the short term, but averaging positive between 0-1%. In other words, slow but consistent exponential growth. I didn't say anything about a discontinuity in '08, I'm not sure what point you're trying to make with that.
Edit: here they are both plotted side by side in those units: https://fred.stlouisfed.org/graph/?g=1DcZr
It sounds neat but there’s little evidence of that occurring on more than a temporary basis during covid. But covid also caused supply shocks.
It seems that what happened is covid showed companies what they could get away with both because of decades of consolidation and because of new ways of colluding.
This graph is absolutely insane. As I am completely unfamiliar with what is represented, would you have some pointers on where to start to understand what it represents?
I'm particularly intrigued by the very sharp rise during the covid time, when the global economy was in taters.
Why would one cause of a phenomenon explain another cause?
The hypothesis "both wood and plastic burn" doesn't require wood to explain to existence of plastic.
When the basic food items become ferraris, people have no choice on that.
The economy doesn’t work like that. You can’t inject money but only have it apply to specific sectors.
Everything is interconnected in the economy. If a lot of money comes into the market it will cause a lot of activity, changes in demand, new job openings that entice employees upward, increased wage demands for jobs, new hires requiring higher wages, rising costs to cover those wages, and the cycle goes on and on.
You can’t isolate the effects of inflation. At the scale of economies, inflation effects ripple through everything.
Also, eggs are a terrible indicator. Did everyone forget about the bird flu? It’s a supply problem.
Crackdowns do take time in the US but there is hope. See e.g.:
https://www.justice.gov/opa/pr/justice-department-sues-realp...
https://www.washingtonpost.com/business/2024/11/20/potato-ca...
This is a weird and emotionally loaded statement. Properly stated, the top four frozen potato producers have 97% of the market share.
That doesn't sound odd? In a mature market with very little technology innovation (potatoes) and very little geographic specificity (frozen), how many companies would you expect? How many laundry detergent companies are there? How many cereal companies are there?
How was this different in the past, except going back to before the interstate highway system?
MAGA give zero fucks about antitrust, and antitrust or lack thereof has nothing to do with the creation of MAGA. That's such an absurd argument I have no idea how to even respond to it. The cornerstone of MAGA has always been nativism & reactionary politics.
I'm very, very tired of leftists shamelessly lying about anything and everything they can just to smear the Democrats.
The only one I found a time series for quickly is Lamb Weston: Their margins steadily went down after 2019, then surged quite substantially, and by the end of 2024 were more or less back at their 21/22 low points [1]
Additionally there's apparently a class action suit against the companies mentioned which was filed in November 2024 [2]
I don't know enough about this market to judge whether something shady happened, but it seems like both of those facts are relevant to this article.
1. https://www.macrotrends.net/stocks/charts/LW/lamb-weston/pro...
2. https://www.hbsslaw.com/cases/frozen-potato-products-antitru...
Just look at PBMs. They all supposedly have small margins. However, once you peel back the layers, you see rebates and kickbacks and all kinds of illegal schemes to hide the real income.
I understand there will be a demand for French fries from consumers, but you don’t have to serve them. This is something I appreciate about Greek cuisine. There are so many wonderful foods spawned from input constraints. Sugar was a luxury in Greece during the 20th century while honey was more readily available, so you see many desserts sweetened with honey. The Lenten and nativity fast call for essentially a vegan diet, so there are numerous recipes that don’t require animal products and are cheap to make. Eggs and lemons were readily available, so they created avgolemono soup, which is a modest, yet delicious dish.
The overall American cuisine seems unwilling to adapt. The tricky bit is, that’s probably correct from a business standpoint. I’ve heard, “If we don’t sell hamburgers at airport restaurants, they’ll fail.” from a consultant in the airport terminal industry. It’s as if we’ve grown to expect seasonal fruit and vegetables year round as a mindset for our cuisine. Surely, there’s room to be more flexible with what we eat, which would allow business owners to serve food based on what’s readily available and cheaper for them to serve.
Now if absolutely every type of food is experiencing price gouging, that’s hard to get around. But I think there’s some middle ground, which requires serving different food items.
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Examples:
- laws and regulations provide great barrier for newcomers
- brand recognition (would you better by a know cigarette brand or unknown cheapest one?)
- technical and/or financial and/or IP investment, either because the INDUSTRIAL process need costly tools (so you need to be big from the start) or because you need some really specific know-how
- ...
The only way you win is either major disruption (which is usually not possible), or having a bankroll comparable in size to the incumbent. But anyone with enough cash to enter the market is doing so for a return-on-investment, with just as much profit motive as the existing players.
I like this question because it inspires the thought of an "incrementally more ethical firm". Ethics can be roughly characterized as constraints on behavior, therefore if two firms, all else equal, differ then the ethical one is naively at a natural disadvantage, having fewer degrees-of-freedom in any situation. The classic response is that cooperation between firms is itself a powerful advantage, and that ethical behavior ought to yield advantages to cooperation that outweigh the cost of behavioral restrictions.
I believe that the equation changes when ethical behavior itself is successfully attacked and associated with weakness. What happens to a bank if everyone believes it will fail? It fails. What happens when everyone believes that morality is weakness? Morality IS weakness. At that point the reputation and cooperation effects are erased, and only the loss of freedom remains. At that point the culture shifted from the "cooperate-cooperate" Nash equilibrium to the "defect-defect" one. (Religious belief tends to unequivocally favor "cooperate-cooperate" and can therefore both resist this transition and assist in the reverse transition, which adds to religion's social utility.)
There are some more ethical companies, too. In N Out french fries are $2.30, certainly due to the fact that they own their supply chain and cut potatoes in house.
If you can finangle a wedge of the market, they can just buy you, or apply local pricing pressure in lock-step based on their data broker recommendations.
And even assuming companies don't resort to skeevy tactics to prevent competition, the companies that incentivize profit the most are going to have the most capital to expand and have the highest growth out of any potential competitors and fully saturate the market the fastest.
Though the above is only true to a point - obviously if the margins get high enough or product deviates sufficiently existing businesses with related interests will step in: witness Costco's chicken business.
So maybe the question is less why isn't there more competition and more so why haven't restaurants vertically integrated their potato supply? The main theory I'd have is that price increases haven't negatively impacted their margins or revenues sufficiently yet.
I'd add though that companies don't have to be "ethical and slightly less greedy" to compete on price. Competing on price is a natural way to gain market share. Nobody would say that Bezo expressed ethics and less greed when he said "Your margin is my opportunity"
Companies should charge the real equilibrium price of a product. It's an important signal to lower or increase supply. However, they should not create a coordinated scarcity or otherwise artificially force a higher price than the equilibrium price. This can only happen through (illegal!) cartels or too much market power (which the government is supposed to prevent).
As usual ee cannot ask for better people but need a system that makes the wrong people do the right thing.
The customers who buy the product with the lowest price.
A very low price is much easier to achieve if you can make use of economics of scale.
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However even in this case customers, or Big Potato buyers, can simply ally and create a new supplier where they are shareholders.
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As tech industry practicioners, we are some of the only people in the country who have both the desire to affect positive change, AND the agency to do so. Don't work for these companies. If your company does business with these companies, criticize it and encourage your coworkers to do the same.
Airbnb or Uber, on the other hand...