Econ 101 taught that 'greedy corporate companies can cause

Posted on: June 30, 2024 at 18:40:54 CT

inflation'?

I think that you have at least a couple of errors in your analysis, Doc.

The first would be a couple of false premises. Namely, that they can pay a stupidly high amount of money in salaries & just pass along the cost to the consumers (including via their advertisers who you probably believe will just pass the increased cost on to comsumers by raising their prices to make up for the stupid increase in advertising costs (because Brady doesn't increase viewership concomitantly).

Another error is in looking at only one part of the equation and ignoring the rest.

Henry Hazlitt's classic book, Economics in one lesson is a good book in re: that 2nd error that explains that common phenomenon quite well. Fwiw, he wrote for the NY Times back when they were a very good newspaper.

If interested, it should be at your local library or can be read online: https://archive.org/search?query=title%3A%28economics+in+one+lesson%29+

Regarding making stupid decisions and just passing the costs along to the consumers:
I'm sure you recognize the folly in that line of reasoning if you take a look at your own practice as a small businessman. Do you really think that you could hire someone at a ridiculously high salary and just pass the expense along in increased prices to your customers? The more you raise your prices the more cats are tossed in the trash or buried in the yard, I would guess... or some will go to another vet who hasn't raised his prices. How would you make up for the lost revenue, raise prices some more?

As I mentioned in the original post, your wish to make money (aka greed) is probably pretty constant. That is pretty much true for all business owners (& their employees and their clients). It would in no way, manner or form cause inflation to suddenly start shooting up. Do many/most/all business owners suddenly have a big jump in greed that causes inflation to go from zero % to 5% or 10% or more? What keeps inflation low in some years or decades and much higher in others? Could we perhaps chart the greed of people to be going up and down like the consumer price index?

In general, business owners will try and set prices to maximize profits at any given time. Even if they suddenly became more greedy it wouldn't behoove them to raise prices sans some change in their evaluation of the market conditions because they have already set them at what they believe will bring them the highest profits.