'Greedflation' study finds many companies were lying to you about inflation
A recent study on “greedflation” — the idea that companies used the post‑pandemic inflation narrative to raise prices beyond their own cost increases — prompts debate over what actually drove the 2021–2022 price surge. Commenters weigh the roles of corporate market power, weakened competition, supply chain shocks, and massive money supply expansion, and argue over whether firms simply acted rationally in response to demand or exploited a crisis at consumers’ expense. Many see the episode as evidence that market forces alone do not reliably protect consumers, especially in concentrated industries.
What “greedflation” means in the thread
- Interpreted not as “inflation is caused only by greed” but as: some firms with market power raised prices more than their cost increases, using general inflation/pandemic/war narratives as cover.
- Supporters point to studies (OECD/IMF/IPPR etc. linked in thread) showing profits rising faster than costs, especially in concentrated sectors like energy.
- Skeptics argue this is just standard profit-maximizing behavior under changed conditions, not a distinct phenomenon.
Market forces, competition, and concentration
- One camp: if markets were competitive, excess price hikes would be disciplined by rivals or new entrants; the fact they weren’t is evidence of weak antitrust and heavy consolidation.
- Others stress basic supply and demand: supply shocks + inelastic demand (energy, staples) make large price increases both possible and “market-consistent.”
- Debate over monopolies vs oligopolies and monopsony power (e.g., large retailers as dominant buyers), and whether “free market efficiency” was oversold.
Alternative explanations: money, demand, and risk
- Some emphasize massive money-supply expansion, pandemic savings, and post‑pandemic demand surge; with “more dollars chasing fewer goods,” higher prices are expected.
- Others highlight consumer psychology: widespread “inflation” headlines gave firms cover to test higher prices; competitors followed when they saw no demand collapse.
- Another line: during COVID chaos, firms embedded large “risk premiums” into prices because their future costs were highly uncertain.
Evidence, methods, and disputes
- One side notes public-company data show profit margins rising faster than input costs in some sectors; energy cited as a case where costs didn’t increase proportionally.
- Critics question study access/interpretation of corporate books and warn against activist framing. Some equate “greedflation” with unsound populist economics.
Ethics and distributional impact
- Multiple comments stress that whatever the mechanism, higher prices hurt low‑income households most, especially for essentials.
- Others argue firms not raising prices would instead cut labor or investment; empathy alone can’t “solve” inflation.
Conspiracy vs emergent behavior
- Broad agreement that no grand cartel is needed: individually rational, profit‑maximizing responses to shocks, in concentrated markets with soft consumer resistance, can collectively look like “greedflation.”