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Comment by lupusreal | Hacker News Reader

The premise seems to suggest that companies were previously less greedy but suddenly became substantial more so in a span of only a few years. That's a hard pill to swallow. I think they've been greedy, charging as much as they think they can, for about as long as they have existed.

Rather, economic circumstances changed and the amount of money they can get away with charging increased.

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Think of it as accidental collusion. They'd explicitly collude to raise prices if they could. But with anti-collusion laws they can't. Raising prices in isolation would be disastrous. Taking advantage of an opportunity to raise prices together was a gold mine.

One typical approach to pricing in competitive industries is that one company will take a risk and raise their prices, then watch to see if competitors follow. If most other companies respond by also raising prices then the price increase sticks. But if competitors hold prices steady then the first company will fold and quickly roll back the price increase.

The effects are somewhat similar to collusion, but this is completely legal because the companies aren't communicating directly.

Its an example of the 'shock doctrine' at work. They had an opportunity to be greedy and blame the price increase on "inflation", but the prices on may items far exceeded what supply-side increases required to maintain margin.

It seems totally plausible to me that the pandemic let them try out some pricing strategies that they previously thought would harm them, and all kinda at the same time, shifting the competition landscape toward “we’re all increasing our profit margins at once” such that they could get away with it. They maybe could have done the same thing at any time, but didn’t.

People running companies don’t know everything about what will happen when they change something, and don’t have the resources to try out every idea. They definitely don’t perfectly optimize profit.

I dunno - it's not like it's a random few years in history.

look at all the streaming services simultaneously raising prices, adding or increasing ads, _and_ reneging on account sharing..

The pandemic altered a lot of spending and consumption habits (and minted some trillionaires in the process) - tendency is for corps (or boards) to want to see growth above all, so if you have the massive uptick some saw in a global pandemic how do you keep adding annual growth if not by shrinkflation or similar?

You are correct - the level of greed is the same, and price inflation is due to greed now - not supply chains or other covid related excuses.

This is economic stratification, afaict.

Pricing out the lower classes, is part of capitalism. The relatively affluent can afford increased prices to the point that it has outpaced a larger and larger portion of the population. In American Capitalism, if you can get efficient enough, industry will always cater and price to a higher paid customer base than the mean.

I recently had the displeasure of having dinner with an old woman who is quite wealthy because her husband sold a medical clinic. She praised the increase in food prices, saying that food was unfairly cheap for too long and we're finally paying what food is worth. I about threw my plate in her face.

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