Is greed causing shrinkflation?
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- Опубліковано 11 кві 2024
- President Joe Biden and Sen. Elizabeth Warren (D-Mass.) are blaming corporate America for "shrinkflation," where a company charges the same amount for a product while reducing the product's size or quantity. Recently, Senator Bob Casey (D-Pa.) introduced the Shrinkflation Prevention Act, which declares shrinkflation a deceptive business practice and would forbid companies to engage in it.
Casey, Biden, Warren, and other like-minded politicians maintain that the underlying cause of shrinkflation is "greed." But, as Andrew Heaton explains, greed is pretty much constant across industries and time periods. Shrinkflation is just a passive-aggressive form of inflation, which we are struggling with largely due to government fiscal policy.
Written and starring Andrew Heaton.
Photo credit: captcreate, Flickr; Brett Jordan, Flickr.
"Of course, none of us are greedy, it’s only the other fellow who’s greedy." Milton Friedman
And fat
God dam hero.
If you like Friedman you gotta check out Karl Marx too, they go perfectly together
@@dontaskwhatkindofmusic Got any videos of him?
@dontaskwhatkindofmusic how does karl marx and friedman go together. They are complete opposites.
I thought shrinkflation was referring to the IQ of the oval office inhabitant
No, it's scientifically impossible to shrink lower than a quark
I like your style.
I think the word you are looking for is "implosion".
"You can have both" - Cotton Hill
That's not shrinkflation, that's defecation.
Andrew is the reason I watch Reason.
Andrew and Remy
I see what you did there.
Don’t forget about Nathan
He reminds me of Mayhem from Allstate😊
Well something like that does kind of exist you know of the Legion of Doom idea I think it's called the world economic Forum or something I mean if you listen to their speeches every year and they do kind of sound like a super villain convention
Bring back mostly weekly. That was great.
Hear hear!
Agree.
Never forget what Reason took away from us in 2018.
Now that you reminded me of it I have to rewatch all of mostly weekly.
@@armadillolover99 This guy left reason in 2018. It would be like jon stewart leaving his show.
This is the return to mid-2000s comedy we need.
Fr
such a well done video
I'm from the Dennis Miller Sam Kinison era and I approve this message!
Fuck that, 90's comdey would be better.
Sound economics doesn't make for good political messaging. Politicians don't care about being right. They care about being re-elected. Blaming greedy corporations is a great way to make yourself look like the good guy and make your opponents look like the bad guys.
until those greedy corporations begin lobbying for the politicians, then they can do whatever they want.
Same root cause as "shrinkflation" the bulk of consumers are economically ignorant morons.
Ironic isn't it, considering every one of them is owned by Larry Fink & co.
I guess there wasn't much greed around until Joe got elected
But it only works if you've crippled people's ability to reason their way out of a paper bag. Government schools are doing exactly what they're designed to do!
Inflation cannot be explained often enough. Inflation illiteracy in Venezuela allowed the government to control, expropriate and control more, they always blamed it on the private sector and businessmen. When they denounce companies, they are really denouncing themselves.
That’s why I’m getting very scared. The amount of people in America who fall for it….America isn’t doing too good 😢
@@misanthropicservitorofmars2116
This, one major reason, how we got in this mess is the ignorance and lack of intelligence of the common man. Go back 40 years and even 100 years, the common man was better educated than any k-12 student today. We have also been importing people that are illiterate.
A democracy can't survive when the voters can't think or understand.
@@misanthropicservitorofmars2116It's a religion. Can't fight it with logic. The current situation is ironically the child of Hegel via Marx and Marcuse.
@johnsmithers8913 A democracy is always reflective of the uninformed. Nobody has time to learn even half. And nobody is willing to let go of that power that would be the type to use it in the first place.
Inflation is basic economics and I learned about economics in highschool, in the 70s. It's probably been 20 years since the majority of high school students learned about economics. Multiply that by numerous subjects,. especially history, and voters have certainly become more clueless about reality less able to critically think.
“You CLEARLY forgot about my coffee gun!”
I love the libertarian horror movie sketch, watch it every couple weeks because of Andrew having different guns for everything
Coffee gun?? I'm still trying to figure out a Shower Gun.
Um, if your store is switching chicken eggs to quail eggs and keeping them the same price, you’re coming out ahead. Quail eggs cost way more than chicken eggs!
They’re absolutely delicious as well.
At the same time, you need a dozen quail eggs to make 1 serving of scramble eggs on toast for 1.
🤣🤣🤣
That's kind of like the brains joke...
"how much for a pound of cow brains?"
"Dollar a pound."
"How about mice brains?"
"59¢ a pound."
"Wow... What about those Biden brains?"
"Billion dollars a pound."
"A billion dollars??? Is that how valuable the knowledge inside Biden brains are??"
"No... Don't you know how many Bidens you have to harvest before you get a pound of brains from them?"
@@nork22 The solution is obvious: switch to hummingbird eggs!
"If theaters raise their ticket prices, consumers might go mini-golfing... or whoring! I would!"
🤣🤣🤣
That about killed me.
Why choose? Now presenting mini-ghoring.
Companies just decided to be greedy yesterday!
"Is greed causing shrinkflation?" It's disgusting that there are still people so economically ignorant that politicians can get away with that nonsense. They do not believe that inflation is caused by "corporate greed". They know exactly what causes inflation. Blaming corporations is like blaming Mickey Mouse. Just like cartoon characters, corporations don't really exist.
Most people are aware of what causes inflation. Shrinkflation is the practice of reducing the quantity of product sold, rather than raising prices. It's purely a form of deception.
It wouldn't cost a single company a cent to ban shrinkflation, they'd probably save money not needing to redesign their packaging constantly.
Pretty ironic that you're so economically illiterate that you can't differentiate between the two, after spouting off about economic incompetence.
Mickey Mouse is part of the Marxist agenda.
Corporations are "people", dontchaknow....
I mean… corporations have owners you know. Extremely wealthy owners… who’s one and only incentive is to maximize profits... regardless if people go hungry. That’s kind of the definition of greed? Elon musk dropped 40 billion on a whim to buy twitter when he could have like idk ended homelessness or something. Surely that would increase profits.
Also I am embarrassingly a Disney theme park nerd and no we don’t blame Mickey Mouse, we blame bob chapek
@@karakaspar1791 And how exactly can $40 billion end homelessness? Is Musk just going to give it to homeless people as a handout?
My favorite is the people screeching about "record profits" not understanding that those are absolute numbers and that those "record profits" can't buy as much stuff as the previous year's lower profits.
I just hate the gaslighting. Like everything else in life, government is not the solution.
I liked seeing the argument shift from "This won't cause inflation" to "inflation is clearly the product of corporate greed"
@@TombaFanatic Inflation... the one thing our gov can't make trans
But the government allowed monopolies to be created in the last 50 years.
What other choice do we have?
@@karakaspar1791hilarious isn't it. People want the wild West to be the way.
Imagine seeing the federal government lock down corporation salaries during WWII just to see the companies introduce multiple other methods of paying their workers through insurance and other perks and think the government can actually stop the market from progressing.
If only the people that needed to watch this would watch this. The choir is well aware of basic economic principles. Still fun to watch. Preach on Mr. Heaton!
If only the people that need this had the cognative capacity to understand it. While intelligence is certainly not the only issue (I know plenty of intelligent people who are taken in by poor theory) it may be the largest and most difficult to overcome just due to the massive fraction of the population that simply cannot be educated beyond the most basic elementary school level.
@@TheDuckofDoom. i have a masters degree in accounting and I’m a cpa… this man has a very antiquated and naive understanding of economics. This entire video was straw man after straw man. No mention of monopolies stifling competition and swallowing small businesses whole. No mention of unrealized capital gains going entirely untaxed. No mention of the steady degradation of anti trust laws. The fact that he thinks that the government printing more money is the only thing that causes inflation shows his lack of understanding of the current economic system
@@karakaspar1791 I don't really care what title you claim. Argument from authority has no place in comments because anybody can, and does, claim to be anything. Arguments must stand entirely on their own legs. Besides that, accounting is only tangentially related to economic theory.
Adding and removing currency from active circulation (Mostly printing and cash savings) are the only two things that affect inflation by definition.(supply and demand)
eg. In 2009 the stimulous printing didn't cause a large jump in inflation because the financial shock also caused a large shift in personal saving habits which soaked up a lot of the stimulous printing.
The CPI is not inflation, it is only a way to estimate the effect of inflation on some arbitrary synthetic "consumer" subset of the market. (Setting aside the multitude of inherent flaws and politically driven manipulation of the CPI.)
@@karakaspar1791show us your math? Your analysis would need to account for global competition and the need to keep corporations and high value individuals with incentives, then their earnings and purchases from earnings can be taxed. You may be onto something, but your analysis typically leads to corporations and individuals fleeing and actually reduces tax base. Look at Malaysia corporate tax for a recent example. It basically boils down to game theory maths
@@TheDuckofDoom. thats fair lol I only mentioned my credentials because you mentioned education. But I suppose you’re right. But no, Accounting is applied economics. It’s directly related. I’m a tax accountant so my job is unquestionably a mixture of both. I’d be happy to explain my thoughts if you would indulge me! Here it goes lol
If we’re talking about inflation in the context of it being a problem then it should follow that what we are talking about is an unsustainable cpi when wages don’t keep pace with inflation. Inflation is a good thing when wages and wealth accumulation increase at a relatively similar rate. Right now where at Great Depression ratios.
What you said is right but your line of thinking stops before its logical conclusion. Follow the money. So the government prints more money to stimulate the economy and disperses it in various ways (increasing salaries of police officers/teachers/usps workers, creating infrastructure jobs, investing in medical/environmental research, small business loans). Then, in a healthy economy with proper corporate and antitrust regulations, the money would provide working class consumers with more buying power leading to a more favorable cpi. Once the money is spent, leverage to shifts the owning class. Then it would be taxed back to the us treasury to be reinvested into the economy again. Everyone gets wealthier and the country becomes a nicer place to live. Inflation increases bc everyone’s wealth increases meaning that the value of the US dollar increased.
PROBLEM IS… we do not have proper antitrust regulations and too many people are living paycheck to paycheck 😅 soooo when the money is spent it goes straight to the retained earnings of corporations aka to the shareholders stock portfolio. Which would be all fine and good if the majority of the stock market wasn’t owned and controlled by such a small number of untra rich people who also are coincidentally ceos of the very same monopolies
Once these people reach a certain threshold of wealth, they have no incentive to care about cpi because they have such few competitors because they have made barriers to entry entirely insurmountable without extreme luck. Supply and demand goes out the window when you have unlimited supply. Artificial scarcity is entirely in their power.
None of this is arbitrary. If you or your parent/grandparent’s net worth is below about $10 million, you are a working class consumer. Over 10m are an owning class “producer” but trust me…. They usually do not produce anything, I’ve been working 70hour weeks for the last month preparing their tax returns. You go to work for a paycheck and then pay taxes on your earnings. Then you spend it or it goes into your 401k which you draw from in retirement. For them, they do not ever have to touch their wealth. You get taxes on your equity (property taxes) but people with large amounts of wealth will see their net worth grow by millions in a single year and it goes completely untaxed. Then it just keeps growing and growing leading to inflation. Not the good kind like I explained above. The bad kind that actually devalues the US currency and makes the cpi unrealistic for most people. Then they can’t afford necessities and turn to crime, get put in prison, and then create a cycle of generational poverty
Sorry for the novel lol I literally cannot stop myself 😂
I am starting to believe that to be qualified to be on a congressional committee on ANYTHING regarding financial matters, you MUST have never had to have at any point take an Econ course, because that would undermine the entire operation of systemically transferring wealth and power from the people to the federal government
If wealth is being transferred to the federal government, why is the debt going up?
If you've taken an Economics course I'd be delighted if you can explain that to me.
I did one in college and the only explanation that springs to my mind is that wealth isn't going to the government but somewhere else instead. My pet theory (maybe you can find evidence to disprove it) is that the very rich are getting wealthier.
Have a nice day.
@@eldrago19Because government is spending more than they are taking in - that may be why debt is increasing.
Stupidity is the easy answer here. And normally it would be the right one. Unfortunately, this is too stupid even for this lineup of schmucks. This is just politicking, through and through. Our congress-critters are well aware that inflation is a problem. But by banking on the stupidity of the general populace, they attempt to shift blame away from their policies and onto their favorite whipping boys: Big Business
Big Business doesn't actually see any huge negatives from this press, BTW. So they keep supporting leaders who hand them free money and create market barriers against competition. It's a lose-lose for everyone!
@@eldrago19 when I say “federal government” I mainly mean the people who run it.
It’s no longer for the people by the people, it’s for the people by a select few individuals with connections.
And that doesn’t mean that the money being funneled into the federal government is being used for the benefit of the taxpayer, it’s being used to design a half-million dollar trash can
Why is there never a legislation about limiting the “public spending” and the amount of money printed? Is the government the only one who is allowed to be “greedy”?
Nobody ever asks how we'll pay for it when it comes to "defence" spending, but will wail when it comes to social spending.
Yep
Great point.
There is. That’s what spending caps and debt ceilings are about. The problem is that our government is choosing to ignore them, and, by continuing to re-elect them, we’re letting them do it.
One of my least favorite Obama moments was in 2009 when things were so bad, he lectured Americans on how they needed to be “skipping trips to Las Vegas” and even said something to the effect of “You, the people are NOT the federal government. You must tighten up the purse strings when things are tough”. I get he was making a joke but it was so tone deaf, especially to me since I had just been laid off.
Shrinkflation didn't just start recently. I first noticed it around 1975. Yes, it's inflation, but shrinkflation was the food industry's attempt to hide it. I worked at a convenience store back then and noticed when candy bars went up in price. They went to 15 cents with a label that said "Still the same size!" Then later on, they made them a bit smaller with a label that said "Still the same price!" Then they raised the price and made them a bit larger with a label that said "New larger size!" They repeated this crap until now candy bars are over $1 each. That initial huge jump in inflation was caused by Nixon taking us off the gold standard in 1971. He put in wage and price freezes to delay the effects. This made people blame the huge jump in inflation on Jimmy Carter.
When other people want more, it’s greedy. When you want more, it’s basic fairness. There is no difference between you wanting a higher salary, more vacation, and cheaper groceries than a company wanting to pay a lower salary, give less vacation, and more expensive groceries. In fact, the company is made of people whose salary and vacation depends on charging more for groceries and having employees take less vacation! Economics forces us to remove the moral salience of greed and treat it equally and logically as a rational aspect of much economic behavior.
Also worth considering that the numbers just don’t work out when we want big corporations (in low wage sectors) to simply pay employees more. Quick example: Walmart has 2.1 million employees, 1.6 million in the US, so let’s say 1.6 million full time employees (40 hour/week * 52 weeks). If they raised everyone’s wage by $1/hr, let’s say it costs $1.10/hr because of payroll tax and other costs. That’s $1.10/hr * 2080 hr/yr * 1.6 mil employees = $3.66 billion per year. Their profits were $11.7 billion in 2023, so profits decrease by 31% with the $1 wage increase. They would no longer be a profitable business increasing wages by only $4/hr! This isn’t to say Walmart should or shouldn’t do anything, but only that demanding they pay more is not like asking someone with a billion dollars to give an extra dollar. It’s like asking someone with $12 dollars to give $4
The problem is that the majority of Americans lack even the most basic economic literacy. Such elementary concepts as supply and demand, or the relation between printing trillions of dollars and rising inflation, are completely lost on them. It's not that any of this is particularly hard to understand, but rather that our people have been indoctrinated, not educated.
In a way it's a function of our loss of "real" morality. Go back a few decades, and we understood that we all were competing for our self interest. No one really thought another person was more greedy than themselves.
Now, everyone is trying to bend their own greed into a virtue. If society or another group doesn't give them privileges then the other person is morally bad.
Asking for $4, or threatening for it?
Good ideas don't require force!
@@bisbee1678 it’s true people lack basic economic literacy. I’m amazed sometimes at how people can have such strong opinions on economic issues all while having zero understanding of how anything works. And many of those people have the self awareness to admit they don’t. I don’t think it’s a matter of being indoctrinated. Economics was offered as an AP course to seniors in my high school so it’s not like most people would ever learn it
@@dustinabc hmm I don’t think I follow what you mean that good ideas don’t require force. Like if paying people a certain amount was a good idea we wouldn’t have to mandate it by law (under threat of force)? I didn’t intend for my comment to endorse anarchy lol
I love how politicians lambast big corporations like those same big corporations aren’t the ones funding their political campaigns 😂
This. I bet that politicians phone up their corporate donors prior to a speech like this and say don't worry, "We still love you, and by the way, we will make that modification to the Bill that you wanted. No bad feelings, it's just politics, you know".
Some things were just meant for each other like Reason and Andrew, greed and free markets, President Biden and retirement homes.
What an excellent mix of information and hilarity.
Most selfish business group is pharmaceuticals.
There was another factor of inflation not mentioned. Energy policy. Make energy more expensive, production and transport costs rise, which increases consumer prices.
This still fundamentally ignores how many businesses especially grocery stores increase their prices far beyond inflation.
Ummm, grocery stores have, quite possibly, the lowest profit margins in the economy, 2.2%.
And here i've been ordering coffee wrong this entire time.
"INFLATION"
"It's just inflation"
OMG that had me rolling.
On one hand, shrinkflation is a legitimate nuisance and so deceptive. I'm a nerd who has memorized most of my favorite products' net weights and I've still gotten punked from time to time.
On the other hand, good luck legislating it away without either a ton of loopholes or an overbearing list of regulations.
It's a nuisance, but is it deceptive? Maybe the first time someone buys a product, but we all start relating our satisfaction to cost.
In the end, consumers look at the weight they are getting from competitive products to make their decisions.
You guys make such fun videos. I am truly thankful!!
My beef with the corporations is that they make the standard size smaller, and label the original as "family size." It is gaslighting, but thats just how marketing works. The government needs to stop printing money and get this shit under control.
Corporations are so greedy, they completely forgot to hike prices for, like, 30 years, between 1991 and 2021.
In a more perfect world,
to vote, a grade of 85% or better on an Econ101 final would be required.
Bonus requirement -
Require an 80% or better on a Stats 101 final.
Thereby making at actually possible for the average person to decern select valid claims of politicians, from lies, or perhaps worse, stupidity. Hi AOC!!
... and a test on the Federalist Papers.
Though with that grade, you'd know Reason has completely misunderstood what a profit margin is (it doesn't rise when people just spend more stuff because it is proportional to revenue).
@@eldrago19 Gee you're tough :)
OK, OK.
Add that a grade of 95% or better,
and a dissertation of Hazlitt's evisceration of Keynesian Economics,
is required to hold Federal Office, including to hold a Senate seat, or judgeship.
Getting rid of poll taxes and landownership requirements was fine. But a basic intelligence test really should be required to vote. Tbh, this is the reason some of our best citizens are the legal migrants who become naturalized citizens... they had to work for it and prove their worth.
Our Founding Fathers knew the folly of hereditary rule. They would be ashamed to see what the recipients of their sweat, blood, and tears have done with their great gift.
The implausibility of that is why we were created as a republic. Our lives are not meant to be subservient to the will of the majority.
unreal how many people think this. unreal. another stupid thing is: record profits...
I'm sure in Venezuela where they add another 0 to the money every day the corporations have record profits every day
Obviously the average Venezuelan corporation is 100 times greedier than Disney or Apple
Yeah, I noticed how all the "record profits" were in nominal terms, not percentages. So the "record profits" are actually just another example of the effects of inflation.
@@OmegaTouthere is actually a graph in this video at 5:17 showing after tax profits propositional to GDP. On this graph they are higher than they've been since 1947. Hope it helps.
@@OmegaTou The video actually did pretty poor job of explaining the effect of pent up demand and stimulous money, and any reasonable business adjusting prices in anticipation of the market effects of inflation rather than strictly syncronized with it.
@@eldrago19 except that inflation had been consistently understated for decades. One consequence of understating inflation, is overstating GDP, so I highly doubt that graph is accurate to reality.
It's time to crack down on _GOVERNMENT_-GREED-FLATION_
Yes, greed causes shrinkflation; people greedy for chips buy them despite being poor nutritionally, higher cost, and smaller servings. If nobody bought them, no retailer would waste shelf space and cost to stock them and suppliers would stop shipping them, and producers stop making them. Duh.
Every supplier just wants a happy customer and does their best to offer them an acceptable product at a price they are willing to pay.
Honestly probably your best work so far, kudos heaton
There's an excellent episode of The Political Oprhanage called "What Skinny Dipping Taught Me About Greed". If you want more Heaton (and who doesn't?) it's a great listen.
I mean both can be right. As a few companies in an industry increase their prices because of increased costs, others look around and say, “well their customers are still buying at that price so we can raise our prices too,” and because lots of industries have gotten more centralized since the last recession, there’s no competition to swoop in and get the price back down.
Exactly. It's bizarre that this guy has gone all in on denying this. These companies are enjoying monopoly pricing powers and have no interest in increasing supply, which would only demish profits.
@@benjamindover4337 you and @techguy651 might want to rewatch 3:49 - 4:33
Companies can only effectively charge ‘monopoly’ prices if the government is actively restricting (if not outright blocking) the entry of competitors through exclusive grants, patents, special regulatory privileges, or tariffs and quotas.
If we want more competition, the government needs to stop granting monopoly privileges and leave the free market to its own devices.
It’s always a treat to see Andrew on reason
Ah yes the classic sun tzu tactic. “If people notice your crap economy blame rich people and/or corporations.”
Yessssssss, I need more Andrew Heaton! Never shrinkflate Heaton!
Always good to see Andrew!
THANK YOU FOR THIS!! Sadly, Americans are too clueless to grasp the concept.
This isn't anything new. I was complaining about shrinkflation when I was a kid in the 80's and early 90's. This isn't new.
And as a conservative I completely agree with the Shrinkflation ban. It’s been too long.
This reminds me of that Mostly Weekly Series. LOVE IT :D
I love greed karma: where greedy suppliers meet greedy consumers and they negotiate prices. I especially like how very greedy suppliers try to price-gouge during emergencies, and find no takers except for the greediest buyers. It’s retail karma! If they misjudge greed, they have to drop prices for the less greedy. If that were illegal greedy sellers and buyers would deal under the table. A system based on greed is what causes people to work so hard to earn, spend, and produce, as well as sell. Greed for something else than what they have.
Envy, however, should not be allowed to vote, except with their own money.
Yet the whole of the Democrat party seems to always run on envy. And the stupid party seems to follow them as if they were shackled together.
Why doesn't this guy have more videos? This is great!
glad to see another video about basic economics. most people still don't understand it.
Finally a plebian level explanation for all of us workers. So simple not even the politicians understand it.
Shrinkflation also in the end bites companies in the ass. I want to be clear the costs are going up and must be accounted for BUT those companies which address this via shrinkflation damage their brand. When their brand is a zero quality brand anyway and based solely on price then it does not matter but when any level of quality is associated with the brand it is the start of the death march.
When I see prices go up I will grumble but I will also make certain when I spend my money I am getting the quality I demand. When a company decides to cannibalize their quality/value to stay cheap then they will lose the consumers who care about quality. Friendly's, the restaurant chain, has been learning this the hard way as they have consistently reduced portions and quality for well over a decade to maintain price and now NOBODY wants to go there because it simply isn't worth it for what you get.
It also damages economy of scale and any end uses like recipes that have been built on a standard sales unit of the product. I buy the one pound container because I need one pound not 14 ounces. The price per pound/ounce is also a consideration, but the total sticker cost is almost irrelevent. Though I can look around and see that I am in a minority.
Happy belated birthday. I guess the post office failed to get the invitation to me. Great video.
The explanation is so simple, even I can understand.
This is the first time I’ve ever seen this guy in a video and I cannot get enough!
I think we should also regulate size of packaging. No packaging can be more than 10% of the object it is holding. Potato chips are 70% air in the bag
Thing is with this inflation, there are a greater amount of dollars chasing the same amount of goods, but hardly any of those increased amount of dollars are going into the hands of ordinary people, _by government design!_
The second half of what you said contradicts the first.
How?
When all hope seemed lost, Heaton returned to save us with dry humor and basic economics.
Reason is KILLING IT! Great videos.
You forgot about cost push inflation. Rising fuel prices, government mandated wage increases, and such things also contribute to inflation.
I remember when fruit by the foot felt like an actual foot, now it feels like a couple inches
So, if a company still makes a quart of ice cream just like they used to are they not going to be allowed to also sell a 1.5 pint Ice cream in it's new "convenience" size? It's stupid.
It's almost like politicians don't actually care about anything other than the message to voters.
Could come with a warning label: "Inflation-General's warning: this product could be less than what you'd expect." 😂
@@Kaede-Sasaki Could put that label on the money too.
Any manufacturer that uses automation just can't change the size of their package or container. To do this may require expensive retooling. In the short term it may be more economical to keep the package and put less in it and change the stated weight.
Remember not long ago, when all coffee was sold in one pound bags. Then 12 ounces, and now 10 is just as common as 12.
It's not corporate greed. It political greed.
Replacing regular eggs with quail eggs is something I would absolutely expect to happen in Austin, TX.
I like how you took "I slept in my suit and haven't looked in a mirror today" and made it your brand
Heaton is an absolute gem
It was such a wild ride the day I understood that supply & demand also applies to our dollars...
Prices and wages are sticky in the down direction: if inflation raises prices, the prices won't go down even if cost go down.
Corporate profits shouldn't go up, either. But they are. They're setting records.
1:46 to 2:40 - Agreed. It's a good idea but it won't fix the underlying problem.
You teased a video idea about concentrated corporate power and anti-trust laws. I'd really like to see that.
I appreciate the argument, and that directly addressing shrinkflation is a band-aid response that fails to treat the wound. But a conversation needs to be had about mega-corporations (Unilever, Nestle, PepsiCo, Proctor & Gamble, etc.) and atrophied anti-trust legislation, not a throw-away line at the end of the video which actually would give credence to the accusation of greed. They aren't wrong about the underlying cause, it is greed, but specifically it is greed that isn't hampered by effective competition.
Literally taught in econ101. If a market is very price sensitive, ie raising prices causes a big drop in demand, then you simply make the product smaller(reduce costs). Econ101 always gave the candy bar example. Shrinkflation is simple basic economics response to inflation like price increases are.
Finally more videos like this and less like the roundtable
TLDR: Its inflation, but some instead of increasing cost reduce the size of the product.
More hats to you, sir.
Prices are rising for other government-caused reasons as well. For example here in Colorado the price of eggs has soared because our legislature decided to mandate that all eggs sold in Colorado be free range. This is because our legislature values chickens more than residents of this state.
There isn't enough competition. And the government has allowed too many mergers and acquisitions. And it's too hard to start new businesses. Big companies are taking advantage of the situation.
And 3 companies: Black Rock, State Street, and Vanguard have shares in most businesses, including competitor businesses. As such, there is collaboration instead of more competition.
This was legitimately just an imsanely simple and concise breakdown of a concept most people tend to not understand.
Ironically enough, capitalism as a system relies and promotes empathy a ton, because it requires having a good mental model of what other people want and how they behave. (Yes, it also disproportionately favours people with sociopathic/psychopathic tendencies, but those aren't what the majority of people think they are. The successful CEO knows what people want and doesn't let their own internal biases affect that, i.e. good theory of mind, high dissociation) The great irony is that most crystal collar CEO's have a much deeper and more honest understanding of their consumers than vice versa, because their job depends on it and the consumer's doesn't. Most consumers literally never need to ask "hey, if I were in that situation what would I do? Is this action actually unreasonable, or do I just not like it because its hurting me?" because its just not a part of their job or life.
Is it kinda shitty that companies 'shrinkflate'? Yeah, kinda, but they still say exactly how many Oz you're getting on the box and its not like its unnoticable either, so at worst you're getting a couple % less value than you think until you notice it and either are okay with it, *_or stop buying it._* The main difference between 'shrinkflation' and inflation is one asks for consent, and the money printers go brrrrrrrr
Pretty unique style
One liners are great
Amazing video. I am curious about how someone can logically and ethically figure out when anti trust needs implemented though so id be curious about that video idea spoken about in the last minute
I would think, if in support of small businesses and anti-oligopoly, that an automatic breakup would occur at the 5% market share (allows 20 megacorporations to dominate in same field without being broken up). It would be like a fine-you'd still have to pay it/be broken up, unless you go to court and win. No stays.
@@Kaede-Sasaki but how do you determine the boundaries of the market? I'm guessing a federal agent would think "I don't care about global market, just national market" but then why are we just counting the citizens that currently buy from this company? That seems problematic what about the people that were not purchasing because they didn't like the "oligopoly" options? They are just waiting for someone else to step in.
Market percentage is a system that exists in our minds and therefore I'm not sure how objective we can be. We also don't know why it would be the point of "this will make everything better"
@@partydean17
Market share is already calculated. We could use that.
The example of television prices is a good one
I'm not sure you made a strong rebuttal to the final argument: record high profit margins. If margins are, in fact, higher than usual, that suggests that they DID raise prices more than they need to (unless they're in some kind of industry where most of the costs are fixed). If just raw profits are hitting records, then your argument works: more commerce = more dollars made.
Ok dude! I have to know. They seem to be from another skit that just fits the video but are those short cutaways apart of a bigger, maybe less funny, but still good video you makin?
Well, a belated "Happy Birthday", Andrew.
People who work for corporations and buy things from corporations wanting to pay less whilst getting paid more...there is an argument there that greed in corporations is the cause, if you see corporations as a collection of humans trying to make a living.
I'm reminded of the lemon rant in Portal 2.
Welcome back to Reason Mostly Every 6 Years, HEATON!
I've got a hunch that it's a non-negligible cost to resize packages for foodstuffs. If I'm not wrong on that, then putting a smaller amount into the same size container would reduce costs that would otherwise almost certainly get passed on to the consumer.
1:30 had fun triggering a Starbucks barista over the weekend when I ordered a "16 oz" plain old coffee. The eye roll was almost audible but I was having fun.
liked at the Falling down reference.
Shrinkflation has been going on for a long time. In the 70s, a normal bag of potato chips was 16 oz. In the 80s, it was 14 oz. Now it is 9 1/2 oz, and the "party size" bag is 16 oz.
I think Hershey used to sell candy bars for a nickel. The size of the bar would change but it remained a nickel.
Companies are doing Americans a favor. Most need to go on a diet anyway.
Can confirm, I lost 60 lbs during “shrinkflation”. Coincidence? I think not!
Can confirm, currently barely able to afford food and losing weight because of it
@@Tufhhuyy Cmon man! That is just the bidenomics' universal health care plan at work , jack!
Ah yes, the classic "Maduro diet"
Thank you thank you thank you for a MUCH needed laugh Andrew and Reason folks....now let's get those greedy bastards!! 😅
Andrew Heaton is the main reason for Reason to exist
And they call other people ‘Conspiracy theorists’ 😂
Kid: Daddy, Daddy, the Libertarian said that we’re awful! Is it true? Delta CEO: Hmmm, He is a sharp guy…
Kind of weird how these companies that are always trying to maximize their profits didn't do this before.
It's almost like they want to sell things as cheaply as they can so they can move large volumes for more profits than smaller volumes.
Two important clarifications because I feel like this video, while reaching the correct conclusion, fails to properly represent or understand the opposing view.
1. With respect to "greedflation", the assumption isn't that greed has increased, rather that greed has remained the same, but companies are taking advantage of the fact that consumers are expecting inflation to increase prices more than is needed to offset their costs. In economic term, the high inflation environment typically reduces the price elasticity of demand (because consumers expect prices to increase, and don't know how much of an increase to expect), and thus prices rise more than just the costs. The term "greedflation" is a bit of a misnomer because it's not so much driven by "greed" but rather by the market responding over time to the change is PEoD.
2. With respect to increased corporate profit margins, there is a difference between "increased profits" and "increased profit margins". I'll give you the benefit of the doubt and assume that this wasn't done on purpose to mislead, and instead attempt to clarify for your edification. Profit margin is the percentage of each dollar of revenue that is profit - i.e. the amount left over after costs are taken out, while profit is the sum of the amount left over. For example, if a bag of chips costs $2 to make and sells for $5, the profit is $3, and the profit margin is 60%. Regardless of how many bags of chips are sold at this point, the profit margin stays the same, but the profits will increase or decrease with the quantity sold. If the cost of the chips then increases to $3 and the price increases to $8, then the profit margin is now 62.5% which means that the company is making more on each bag of chips - the profit *margin* increased.
In business it's a bit more complex because there are both fixed and variable costs, so we break down the profit margins into two components - gross margin which is the profit margin after accounting for the costs of good sold, and operating margin which is the profit margin after accounting for everything else. When people say that profit margins are increasing, they mean that gross margin, or operating margin is increasing, or both are increasing. Now, here's the key point - since gross margin only factors in the costs of goods sold, then in general it stays about the same regardless of quantity. However operating margin effectively ameliorates fixed costs over all units sold, so in general, for a given gross margin, increasing the quantity sold will increase the operating margin, even if the price stays the same. So if operating margin is increasing, then it doesn't say whether increased prices above cost factor it, while if gross margin is increasing, it does imply that the company is increasing prices above the increase in their costs. So which are actually increasing in companies at this time? The answer is that both operating margin and gross margin are increasing, hence people's accusation of "greedflation".
Now given that this "greedflation" is occurring, is the solution big government getting in and doing price fixing? Absolutely not! The only thing that will temper these price increases is consumer behavior changes that increase the price elasticity of demand. If you keep buying something regardless of how high the price goes, why should the company lower the price? You are clearly willing to pay the higher price.
I just love Andrew's suits.