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by Frank Shostak
The “greedflation” commentators are at it again, claiming that corporate profits are driving inflation. That is a logical impossibility.
"When have corporations not been greedy?"
is the correct answer for helping knuckleheads understand why corporate greed doesn't drive inflation.
you gotta ask, what else changed? something else besides greed must have happened for them to be able to act on raising prices.
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Yep, businesses charge what the market will bear. So, what made the market able to bear higher prices?
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Some markets have high entry costs and or limited access to entry. For example the refining of rare earths is not viable unless you subsidise production with government funding.Failure to subsidise production leaves you subject to the risk of crippling supply chain disruptions. Another example is where free markets are boosted by government led investment in strategic infrastructure supply chains- the classic example here is where you build electricity power supply provided to all comers at the lowest possible price- using government investment in the design and construction of large electricity generation. China has done this with huge success- private enterprise in China can buy electricity supply at half the price that Chinas major competitors pay. This gives Chinese manufacturers and produers huge advantage including the now strategically vital AI data centres. Only governments have the power, motive and mandate to produce mass scale electricity power generation programs which trigger huge economic advantage for all power consuming productive businesses. Governments thus provide a significant economic impetus when they understand that free markets are not the only mechanism driving wealth creation. Sadly neoliberal Libertarian fundamentalists dont get it and so western civilisation is losing its 5 centuries hegemony and dominance over the rest of the world. Chinas mixed mercantile economy is trouncing the crony capitalists of the west. Trump- get on your knees and Beg for rare earths- without them you military monetary industrial combine is fucked.
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