Socialists and progressives have long promoted the myth that corporate greed, not the trillions of dollars the government produced and spent during the pandemic, is to blame for the skyrocketing inflation rate. Economics majors never understood that argument, but even the average individual can understand how absurd it is now that companies are cutting their prices drastically.
Over 5,000 products, including milk, meat, bread, drinks, fresh fruit and vegetables, peanut butter, snacks, yogurt, coffee, diapers, and pet food, will have their prices reduced, according to a recent announcement from Target.
The business said that “these price decreases will collectively save Americans millions of dollars this summer.” Target is here to help customers save more money because we understand that they are under pressure to make the most of their budget.
And Target isn’t the only one. The supermarket delivery service Amazon Fresh has revealed price reductions on over 4,000 products, potentially saving customers up to 30%. This comes after Walmart reduced the prices of almost 7,000 different products in a move that was quite similar. The massive supermarket chain Aldi has also reduced the cost of thousands of items.
For families, all of this is fantastic news. More importantly, however, it represents the final blow to the Left’s absurd “greedflation” theory, which put the blame of high prices on the greed of business executives.
It was always absurd that, despite an explosion in prices, corporate greed did not grow dramatically between 2020 and 2021. Additionally, while some industries have significantly higher inflation than others, firms in those sectors are not inherently more greedy.
However, to continue holding onto the idea that “corporate greed” was the primary cause of inflation would mean making the absurd concession that companies like Amazon and Target have suddenly stopped being greedy and started being giving and nice. Naturally, this makes no sense. Their goal has always been to maximize profits, and now it is.
In actuality, “corporate greed” has never and will never be the cause of prices. They are the result of a multitude of market variables.
Businesses are cutting prices now, not because they’ve suddenly developed compassion, but rather because they think that since consumers have cut down on their spending, cutting costs would entice them to spend again and will result in higher profits than they would have from maintaining high prices.
This brings up another major fallacy in the “greedflation” story, which is the incorrect assumption that businesses should always charge the highest price in order to maximize profits. That is untrue. Businesses frequently benefit more from reduced prices when they sell more units overall than they might at a higher price.
However, it appears that the numerous prominent individuals who promoted this theory—including Sens. Elizabeth Warren (D-MA) and Bernie Sanders (I-VT)—don’t comprehend these fundamental economic facts. You would think that they would abandon this ludicrous hypothesis now that companies are lowering prices and “greedflation” is not even close to being credible. However, this assumption oversimplifies the motivation behind it—namely, that it stemmed from genuine conviction rather than mere political manipulation.
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