Companies set their prices to maximize profit, same as they always have. It’s neither new nor evil.
Yes, but the increase in costs is not directly correlated to the hike in prices. Corporations such as my local Kroger are making money hand over fist right now.
Prioritizing profit over the well being of your employees is absolutely morally wrong. “It’s always been done this way” is no excuse. This is the problem with unchecked capitalism. Ordinary people will justify all kinds of horrible shit in the name of some mega billionaire’s bottom line. Not that I think any other economic system is any better. These assholes have proven that they have to be regulated in order to save humanity. Look at the catastrophic damage caused by the news media, Facebook et.al. Oil companies destroying the planet. They have no impetus to change. The market will not magically protect the people or the earth from exploitation. There is no evidence that it ever has.
The idea is that wages are “sticky” and prices are flexible. Wages will eventually go up to mat h inflation, but because of inertia and contracts, it takes longer than adjusting prices. So in the short run, profits soar because firms benefit from the lag.
I agree that it’s a flawed system, but for moral reasons, not economic reasons. Strictly speaking, capitalism doesn’t address questions of morality or ethics.
I think it’s fair to say that millions of people being unable to afford basic health care or housing is a sign of a flawed system.
But I’m not economically savvy enough to know whether that has any connection with “a grown man making tens of millions for playing a children’s game” or whether that’s a complete non sequitur.
But it looks like you’re committing the fallacy of applying individualistic economic reasoning to the whole economy.
As an individual, I have a limited amount of money to spend, and any money I spend on one thing is used up and can’t be spent on something else. Thus, I’m mismanaging my money if I waste a lot of it on luxuries and frivolities while neglecting basic needs. But from a more macro perspective, money that is spent or paid doesn’t get “used up”: it doesn’t disappear, it just changes hands, and can then go on to change hands again and again.
These threads always seem to degenerate into debates on capitalism and economic theory. Which is fine I guess, but doesn’t really address the OP of “how rich people think”.
If I were to identify common themes among rich people I’ve been around, they seem to share the common thoughts to some degree:
1) By being wealthy, they are better than people who are not wealthy. This can manifest itself in a range of forms from smug entitlement and arrogant superiority to a sort of embarrassed paternalistic view on the “lower classes”. IOW, they can come across as an rich prick. Even if they aren’t intentionally trying to be a prick, their lack of understanding of “regular people problems” can make them seem sort of clueless and condescending.
2) They feel entitled to their wealth. Whether it’s by inherence, hard work, entrepreneurship, dumb luck, having awesome jump shot, or being more clever than whatever idiot they tricked to get it, wealthy people people by and large seem to strongly feel they did something right to earn their privilege. A correlation to this is other people are NOT entitled to it - the government, employees, etc.
3) Their wealth entitles them to have things their way. I suppose that if you are used to being able to get anything you want, you expect get everything you want. Whether it’s a celebrity berating waitstaff over the slightest mistake or inconvenience, a college friend of mine (and successful venture capitalist) starting a campaign to support and fund local politicians who support his views on schools, or Elon Musk’s teardown and rebuild of Twitter, wealthy people can be a major pain in the ass when they want something.
4) Wealth becomes a barometer for morality. Wealth becomes how wealthy people judge other people. It’s important to be from the “right family” or live in the “right neighborhood” and so on. One flaw in this sort of thinking is that the wealthy can often be tricked by someone who presents themselves as one of their own. This happened with Bernie Madoff, Enron, Elizabeth Holmes and others.
I don’t think this varies too much between different economic or government systems. Every system has people at the top and people at the bottom. Those at the top tend to feel they are justified being there and that they should enjoy the entitlements of their position.
Number 4 seems to go well beyond just rich people thinking that way. I’m still stunned by how many people assume Musk and Trump aren’t just brilliant, but highly ethical, just because they couldn’t be rich otherwise. It’s a large part of how you can “fake it until you make it.” The further you make it, the more gullible people seem to become.
Aren’t all of those things save #3 more or less relative to your own wealth level vs those below you?
I mean, every one of those things tends to apply to say… middle class vs. everyone below them, working class vs. actual poverty, and so on.
You know… “We don’t wear pajamas to Wal-Mart. That’s what TRASHY people do.” type commentary. Or expectations that your kids will marry someone who has a college degree, or that your kids will get graduate degrees, or whatever.
#3, too - I think it actually has less it do with wealth and more to do with spending money. I like to cruise and there is an area with larger cabins and a butler, concierge, its own pool, bar restaurant etc. The people staying in this area feel the need to constantly tell everyone they are staying there whether it’s relevant or not - they ask what time is breakfast, someone says what time the buffet opens and they say " Oh no, I’m staying in the Haven, we have our own restaurant." They expect the butler to pack and unpack their suitcases for them - if they expected the butler to draw their bath, I wouldn’t be surprised. They go on and on about how this is the only way to cruise and they’d rather take one cruise in this section rather than three in a less expensive cabin - and some of them will then tell you two minutes later how they have saved for five or even ten years to be able to book in this area. It costs more than I want to spend - but the people saving for 5 or 10 years clearly aren’t wealthy.
LOL…maybe EVERYONE actually thinks that way and it’s only when someone gets really wealthy they actually have enough influence and power that it annoys everyone else.
Their revenue may be up, but their profits are actually lower.
Here’s what I’m talking about.
the average CEO to worker pay ratio was 324 to 1, up 23% from 2019, or nearly twice the rate of inflation. CEO earnings grew 18%, 4 times the rate of wage growth. S&P 500 profits rose by 17.6% in 2021. Profit margins crested at 15.5% in 2022, the most profitable year since 1950, while corporations issued [more than $300 billion]
(Wages and Employment Do Not Have To Decline To Bring Down Inflation - Center for American Progress) in stock buybacks to institutional shareholders like Kapito’s BlackRock. The timing with price inflation is uncanny.Companies have 3 choices when they receive cost increases. They can absorb and take a hit on their margins. They can pass through and share the pain with customers. Or they can put an additional mark-up above and beyond the rate of cost increase, padding their margins at the expense of customers. Up and down the value chain, this profit-driven model is responsible for over 50% of consumer price inflation. And without profit inflation, price increases would be tracking more closely with wage growth.
You don’t get to check out of moral accountability because “capitalism.”
That’s not even getting into the vast amounts of plastic waste. I’m not even that much of a tree-hugger but the amount of plastic bags that goes out of that store every day makes me cringe. It’s why I won’t do grocery delivery except in rare cases.
That does not address your claim that “Corporations such as my local Kroger are making money hand over fist right now.”
Still sounds very much to me like the same rich people argument how CEOs and institutional investors (ie investment banks, hedge funds, private equity firms, etc) deserve to reap all the profits and criticizes the workers for wanting wage increases or customers for wanting affordable products they need.
And the individual investors and retirees who are also shareholders? It’s not just CEOs. The largest stockholder in Kroger is Vanguard, which holds a very large amount lot of funds in people’s retirement accounts.
I’d argue that it’s a different type of investor. The most money-grubbing, screw’em all practices are used by companies looking to pump share prices, to the benefit stock traders and CEOs looking for multi-million incentives. That sort of volatile, high P/E stock is likely only held by retirees in an index fund, not as something they’re counting on for dividend income.
I want my shares of KR to pay dividends, sure, but I don’t much worry about the share price and it doesn’t help me if Rod McMullen makes $56 million a year instead of the $10 million he does now. I could buy TSLA for that.
Most retirees’ holdings ARE held in index funds, aren’t they?
This attitude is widespread, and has been for centuries. Here’s Adam Smith, father of free markets and the invisible hand, on the virtues accorded to wealth:
This disposition to admire, and almost to worship, the rich and the powerful, and to despise, or, at least, to neglect persons of poor and mean condition, though necessary both to establish and to maintain the distinction of ranks and the order of society, is, at the same time, the great and most universal cause of the corruption of our moral sentiments. That wealth and greatness are often regarded with the respect and admiration which are due only to wisdom and virtue; and that the contempt, of which vice and folly are the only proper objects, is often most unjustly bestowed upon poverty and weakness, has been the complaint of moralists in all ages.
…
We frequently see the respectful attentions of the world more strongly directed towards the rich and the great, than towards the wise and the virtuous. We see frequently the vices and follies of the powerful much less despised than the poverty and weakness of the innocent…The great mob of mankind are the admirers and worshippers, and, what may seem more extraordinary, most frequently the disinterested admirers and worshippers, of wealth and greatness.
Italics are of course mine, but yeah, the false equivalence between “rich” and “admirable” is not new.
I grew up in a strict household, where you didn’t “backtalk” the adults. This concept was literally my first argument with the grown-ups in my family, at age 11. Young me was flabbergasted at their insistence that anything successful/popular/profitable was, by definition, good. It was hard to reconcile, until my teen years provided the ready explanation that adults were unsophisticated know-nothings best ignored. 
Pertaining to some discussion upthread. The latest study indicates that money does buy happiness, but not if you equate money with success, and there are diminishing returns as you make more.