Yeah many people don’t realize that inflation is “price increase year over year” and think it means “current price.” Like lowering inflation will make their groceries cheaper
Price decreases are actually negative inflation and have all sorts of whacked out effects on an economy. It was a concern during COVID due to the huge drop in consumer spending forcing some prices to start to decrease.
Right, but the messaging doesn’t teach consumers that, it’s just “I’ll lower prices, vote for me!” But regardless, the fact that corporations are so driven towards quarter over quarter growth and immediately fail upon needing to lower prices demonstrates how broken the free market is
Economics 101 has taught the supply/demand curve forever. Really it’s the barriers to entry lesson that’s much more important.
It’s rare that prices are based on costs. We’re not Amish. Prices are based on what companies can get you to pay and how easy it is for them to prevent too much competition. (If it’s just a little competition, all sides will implicitly agree that higher prices are better for all of them).
Scary this has to explained but this is a good eli5.
Yeah many people don’t realize that inflation is “price increase year over year” and think it means “current price.” Like lowering inflation will make their groceries cheaper
Price decreases are actually negative inflation and have all sorts of whacked out effects on an economy. It was a concern during COVID due to the huge drop in consumer spending forcing some prices to start to decrease.
Right, but the messaging doesn’t teach consumers that, it’s just “I’ll lower prices, vote for me!” But regardless, the fact that corporations are so driven towards quarter over quarter growth and immediately fail upon needing to lower prices demonstrates how broken the free market is
In another 20 years business school is going to be SUPER easy.
One class: Number Must Go Up Always.
Lesson 1: Number go down? Fire as many people as possible that aren’t executives.
Lesson 2: Number still go down? Cut quality.
Lesson 3: Number stillllllll go down? Buy competition, repeat lesson 1 and lesson 2.
Profit.
Sadly it seems that’s business school now, as that seems to be the playbook of every MBA that moves into a leadership role
Economics 101 has taught the supply/demand curve forever. Really it’s the barriers to entry lesson that’s much more important.
It’s rare that prices are based on costs. We’re not Amish. Prices are based on what companies can get you to pay and how easy it is for them to prevent too much competition. (If it’s just a little competition, all sides will implicitly agree that higher prices are better for all of them).