[yawnr]

It does really feel like the cat is out of the bag that producers anywhere in the supply chain of housing and food realized they could do whatever they want and we can all suck wind. Every significant expense I have is up more than 40% in the past two years.

[loandbehold]

Competition is supposed to drive prices down to the equilibrium level. Why is it not happening? Are produces colluding to fix prices? Why new players are not entering the market to take advantage of higher prices?

[friendzis]

Why would it happen? Competition is only supposed to drive prices down in free markets with relatively high elasticity. When producer/retailer sees that inflation is perfectly good excuse to raise prices now to account for future cost increases without sacrificing demand, they do exactly that. And why would you raise prices by lower magnitude or even lower them when elasticity is so low that lowering prices literally hurts profits?

Smart people can argue why elasticities are so low across the market, but IMO low elasticity is one of the major drivers behind equilibrium working a little bit differently than you would expect from high school level economics.

[astrange]

Housing has almost nothing to do with markets because Anglo countries run it by central planning. So they can't enter.

Construction is pretty high where it's been allowed.

As for food, it has fallen - eggs were high earlier this year and now aren't. This is mostly driven by gas prices and the occasional animal pandemic.

[Auracle]

Housing is (almost) just as bad in rural areas, where there's plenty of land to build new houses. It's just supply and demand.

[astrange]

This is supply and demand:

https://twitter.com/stuartbdonovan/status/166414741287168409...

Your new land has to be insurable, not in a fire/flood zone, get roads and utilities built out to it, and has to not already have local land-use busybodies zoning it R-1 or inventing brand new weird design requirements.

[nisegami]

>Your new land has to be insurable, not in a fire/flood zone, get roads and utilities built out to it, and has to not already have local land-use busybodies zoning it R-1 or inventing brand new weird design requirements.

At the same time, none of these things other than roads/utilities are a requirement in my country and housing is still rising in price much, much faster than anything else + wages.

[astrange]

They aren't requirements or you don't know they're requirements?

(Some countries like the UK don't have this because it's even _worse_. There are no written requirements of what's legal to build, because nothing at all is legal to build without convincing a planner to allow it.)

[bugglebeetle]

Because after several decades of deregulation and lack of anti-monopoly enforcement, there is effectively little competition in many sectors or stopping of collusion among firms.

[acyou]

Where I live, fuel, food, housing and other commodity prices are heavily controlled by a few central distributors. Those distributors are in turn controlled by, well, a few key corporations, including several levels of civil government.

New market entrants will conveniently be denied permits, or made to abide by the letter of the law, where other blessed groups are granted the grace of government officials looking the other way.

How is a new market entrant fuel distributor supposed to come in, when a single refinery exists to supply fuel? Same question, where a government monopoly sells electricity, how are we going to get competition?

Where I live, housing costs are triple or more in the city core as in the suburbs. But, gas prices are identical at every station, with zero apparent geographical variation! Same thing for grocery store prices, where food prices are identical in areas with 3x industrial and commercial leasing costs. For the gas, apparently, a tax on the commuters is what's balancing things out, but it doesn't add up.

What's more likely is that prices are being carefully centrally controlled, and have been for quite some time. And, this seems to be doing a great job of keeping inflation in check.

The above is not a criticism, just a statement of observation. The above scheme is working quite well for many people. It seems unfair to some.

Is there a formal economic theory that bases the generation of value off of the creation of economic inefficiencies? I definitely think we're there, and that the theory is correct. Efficient markets are not highly productive. What's highly productive is wasting a lot of energy and resources in various areas of activity. Where productivity means that you produce a lot. Wars, the Great Pyramids, "green" technologies come to mind.

Viewed this way, wage growth will happen if and when consumer spending is again considered to be a driver of economic growth. If we think that businesses are going to deploy cash more profligately than consumers, then cash will be (and should be) funnelled into businesses, so that they can drive economic activity.

For awhile now, Western consumers have been doing an awesome job of driving economic activity in other countries (exporting manufacturing economies). Western policy makers are super sick of this and it shows.

If you were given $100,000, what would you spend it on? And how would that drive further economic activity?

[sledgehammers]

Supply and demand mechanism can take years, decades to materialize a such stabilization. Wealth hoarders have the power to suck huge amounts of wealth out and destabilize the entire economy, just like has happened now.

"Capital in the Twenty-First Century" talks about this, great book.

[wnevets]

> Why is it not happening?

because it was a cold war fairy tale.

[deprecative]

Capitalism leads to monopolies and related economic structures. It's best for every large player to carve out territory whether it's geography or specialization niche. The fallacy is that this will be a meritocracy. It's not. It's wealth concentration. The haves will buy innovation and deprive the market of competition to themselves. This happens again and again and again.

[Fervicus]

We see less of these kinds of problems the closer we are to a free market. A pure free market is not realistic, but sadly our current flavor of capitalism has headed far away in the opposite direction.

[Ekaros]

To me it is increasingly critical to separate capitalism from free market. They have gone together for some time, but in the end capitalism aims to crush free market when it benefits the capital.

State is needed to stop too much consolidation from occurring and prevent monopolies where alternatives are sensible.

[Fervicus]

I don't agree. It is state intervention that causes consolidation and monopolies. A free market keeps monopolies in check.

[littlestymaar]

Because “the equilibrium price” has always been a fable.

[Fervicus]

Competition works when you have a free market. It doesn't work when you have government interventions, subsidies, price controls, and lobbying.

[hiddencost]

You're so close.

https://en.m.wikipedia.org/wiki/Capitalist_Realism

[aeneasmackenzie]

> The collapse of the Soviet Union, which Fisher believes represented the only real example of a working non-capitalist system

If it was working, why did it collapse?

There are lots of alternatives to capitalism but most of them are measured in mountains of skulls. No one has any difficulty imagining more, most people just noticed.

[kelseyfrog]

Maybe we don't live in a just world? Consider, for a second, that in the Cold War the bad guys won.

[harimau777]

Capitalism has it's own skulls. Violent strike breaking, banana republics, for profit prisons, etc.

[freitzkriesler2]

Yup mine too and on top of that everything has gotten smaller and shittier in quality too.

I really wish they would have met the banks collapse. That would have done wonders for fixing this inflation. Nope us wage slaves will continue to lose.

[astrange]

If the bank collapsed you'd lose because the bank has your paycheck in it.

[flangola7]

Deposits are insured for regular people amounts of money.

[astrange]

No, I mean your employer's payroll account, and their payroll processor's.

[diordiderot]

Physical and human capital is all still there. Who cares.

https://youtu.be/HuepiJcMKoQ

[astrange]

The human capital certainly wouldn't be there since they'd all quit when they don't get paid for weeks.

[freitzkriesler2]

Me thinks you need to look up what the FDIC does.

[astrange]

Your employer's payroll account is larger than $250k.