The Greedflation hypothesis - EP186

05/02/23 • 36 min

Economics Explored host Gene Tunny talks about the “greedflation” (greed + inflation) hypothesis with his colleague Arturo Espinosa from Adept Economics. They discuss whether greedy corporations might be responsible for high inflation rates in advanced economies such as Australia and the United States. Gene talks about how the excessive fiscal and monetary stimulus during the pandemic has been a major contributor to higher inflation.

Please get in touch with any questions, comments and suggestions by emailing us at [email protected] or sending a voice message via https://www.speakpipe.com/economicsexplored.

What’s covered in EP186

[00:01:28] Australia's high inflation rate.
[00:06:57] UK windfall tax on oil and gas companies.
[00:10:27] Greed inflation hypothesis.
[00:13:29] Markups as a contributor to inflation.
[00:16:20] Industry concentration and inflationary pressure.
[00:21:11] Inflation outbreak and COVID stimulus relationship.
[00:25:45] Problems with Covid stimulus.
[00:27:58] Excessive stimulus and inflation.
[00:32:35] Corporate power and antitrust.

Links relevant to the conversation

Greedflation articles:

Blaming inflation on greedy business is a populist cop out

Profits and Inflation in Mining and Non-Mining Sectors | The Australia Institute's Centre for Future Work

Underlying Australia's inflation problem is a historic shift of income from workers to corporate profits

Corporate profits have contributed disproportionately to inflation. How should policymakers respond? | Economic Policy Institute

'Greedflation' is the European Central Bank's latest headache amid fears it's the key culprit for

price hikes

How Much Have Record Corporate Profits Contributed to Recent Inflation? - Federal Reserve Bank of Kansas City

Cost-Price Relationships in a Concentrated Economy - Federal Reserve Bank of Boston

Inflation is being amplified by firms with market power

Chris Murphy’s economic modeling on stimulus and inflation in Australia:

https://onlinelibrary.wiley.com/doi/full/10.1111/1759-3441.12382

UK windfall profits tax:

What is the windfall tax on oil and gas companies? - BBC News

Energy Profits Levy Factsheet - 26 May 2022 - GOV.UK

RBA on sources of inflation in Australia:

Box C: Supply and Demand Drivers of Inflation in Australia | Statement on Monetary Policy – February 2023 | RBA

Charts:

Australian bank deposits

Australian money supply (M3)

Thanks to Obsidian Productions for mixing the episode and to the show’s sponsor, Gene’s consultancy business www.adepteconomics.com.au.

Full transcripts are available a few days after the episode is first published at www.economicsexplored.com. Economics Explored is available via Apple Podcasts,

Please get in touch with any questions, comments and suggestions by emailing us at [email protected] or sending a voice message via https://www.speakpipe.com/economicsexplored.

What’s covered in EP186

[00:01:28] Australia's high inflation rate.
[00:06:57] UK windfall tax on oil and gas companies.
[00:10:27] Greed inflation hypothesis.
[00:13:29] Markups as a contributor to inflation.
[00:16:20] Industry concentration and inflationary pressure.
[00:21:11] Inflation outbreak and COVID stimulus relationship.
[00:25:45] Problems with Covid stimulus.
[00:27:58] Excessive stimulus and inflation.
[00:32:35] Corporate power and antitrust.

Links relevant to the conversation

Greedflation articles:

Blaming inflation on greedy business is a populist cop out

Profits and Inflation in Mining and Non-Mining Sectors | The Australia Institute's Centre for Future Work

Underlying Australia's inflation problem is a historic shift of income from workers to corporate profits

Corporate profits have contributed disproportionately to inflation. How should policymakers respond? | Economic Policy Institute

'Greedflation' is the European Central Bank's latest headache amid fears it's the key culprit for

price hikes

How Much Have Record Corporate Profits Contributed to Recent Inflation? - Federal Reserve Bank of Kansas City

Cost-Price Relationships in a Concentrated Economy - Federal Reserve Bank of Boston

Inflation is being amplified by firms with market power

Chris Murphy’s economic modeling on stimulus and inflation in Australia:

https://onlinelibrary.wiley.com/doi/full/10.1111/1759-3441.12382

UK windfall profits tax:

What is the windfall tax on oil and gas companies? - BBC News

Energy Profits Levy Factsheet - 26 May 2022 - GOV.UK

RBA on sources of inflation in Australia:

Box C: Supply and Demand Drivers of Inflation in Australia | Statement on Monetary Policy – February 2023 | RBA

Charts:

Australian bank deposits

Australian money supply (M3)

Thanks to Obsidian Productions for mixing the episode and to the show’s sponsor, Gene’s consultancy business www.adepteconomics.com.au.

Full transcripts are available a few days after the episode is first published at www.economicsexplored.com. Economics Explored is available via Apple Podcasts,

Previous Episode

The Invisible Hand: economic, religious, or mystical concept? w/ Dan Sanchez, FEE - EP185

The Foundation for Economic Education’s Dan Sanchez argues that the invisible hand is a legitimate economic concept and not a religious or mystical one, as some critics of economics claim. Dan and show host Gene Tunny discuss the efficient organization of economic activities by the market mechanism in a decentralized way, without the need for a central planner. The conversation turns to TikTok and economic engagement with China.

Please get in touch with any questions, comments and suggestions by emailing us at [email protected] or sending a voice message via https://www.speakpipe.com/economicsexplored.

What’s covered in EP185

Introduction to this episode [0:06]
Dan’s article on the “invisible hand” [2:06]
The production of a pencil is like an orchestra without a conductor [5:25]
Is the invisible hand the hand of God? [8:34]
What is the problem with central planning? [12:27]
Central planners don’t like the idea of economic laws because they circumscribe their utopian dreams [15:45]
Dan’s views on big tech [19:23]
Is there a case for regulation or a ban on TikTok? [23:32]

Links relevant to the conversation

Dan’s bio: https://fee.org/people/dan-sanchez/

Dan’s Twitter handle: @DanSanchezV

Dan’s article on “How Atheist Anti-Capitalists miss the point”:

https://fee.org/articles/how-atheist-anti-capitalists-miss-the-point/

Von Mises book on the economic calculation problem

https://mises.org/library/economic-calculation-socialist-commonwealth

Article about problems with Soviet shoe production:

https://www.econlib.org/archives/2009/09/soviet_shoes.html

Bio of 19th century British free trade advocate Richard Cobden who Dan mentions:

https://en.wikipedia.org/wiki/Richard_Cobden

Thanks to Obsidian Productions for mixing the episode and to the show’s sponsor, Gene’s consultancy business www.adepteconomics.com.au.

Full transcripts are available a few days after the episode is first published at www.economicsexplored.com. Economics Explored is available via Apple Podcasts, Google Podcast, and other podcasting platforms.

Next Episode

Gov’t wellbeing budgets & frameworks: useful or useless? w/ Nicholas Gruen - EP187

Show host Gene Tunny talks with Dr. Nicholas Gruen, CEO of Lateral Economics, about the increasing focus of governments on wellbeing. For instance, former NZ PM Jacinda Ardern rebranded the national budget as a Wellbeing Budget, Wales has a Futures Generations Commissioner, and Australia is developing a new wellbeing framework, Measuring What Matters. Gene and Nicholas discuss the limitations of the current top-down approaches and platitudes, and consider potential solutions for better integrating wellbeing into policymaking.

Please get in touch with any questions, comments and suggestions by emailing us at [email protected] or sending a voice message via https://www.speakpipe.com/economicsexplored.

What’s covered in EP187

What is the “well-being agenda”? (2:44)
The “Easterlin paradox”. (5:08)
How do you make these judgments? How do you measure well-being? (10:50)
How is this relevant for policy? Should governments be tracking this broader measure? (28:36)
Is complexity a plus or a minus in the Treasury wellbeing framework? (33:39)
Why do you need a framework? (40:02)
Good examples of programs which could improve wellbeing. (44:29)
The importance of being connected to family and friends. (53:42)