The Lions
Politics • Culture • Education
A group of friends with mostly centrist or conservative viewpoints who share resources and ideas about the governance of Alberta and Canada and about world events and trends.
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August 19, 2024
price gouging is a nonsense narrative

clearly, the narrative is “record profits mean gouging!” but this is a ridiculously facile and illiterate claim.

it’s pure playing to the peanut gallery.

inflation drives the nominal value of everything, including profits, higher. if a company once had $100 in revenue and $5 in profits and these numbers grew to $150 and $7 in profits, sure, that’s “record profits” but if inflation was 50% in that period, it was a drop in profits in real terms. it was also a drop in margins. what was a 5% profit margin is now 4.7%. that’s the opposite of gouging, that’s margin contraction and lower real profits. and that is what we are seeing across the US right now. businesses are not gouging, they are taking it in the chin to protect the consumer.
https://boriquagato.substack.com/p/price-gouging-is-a-nonsense-narrative

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