What "Greed" Really Is

The latest inflation figures are once again at record highs, driven by food and energy costs and corporate greed? The ability of companies to raise prices above their rising costs has even given rise to the term “greed”.

For small businesses like Remedy Organics, a plant-based wellness beverage company in Englewood Cliffs, New Jersey, it's all about pricing power and who has it. “We are seeing price increases [on our products] across the country at select retailers,” Remedy CEO Henry Kasindorf said. Prices for Remedy's beverage line have risen 10% to more than 25% at some retailers, according to Kasindorf. (A 12-pack of company wellness shakes sold on Remedy's website costs $64.99.)

Kasindorf, who joined the company a few years later his wife, Cindy Kasindorf, founded in 2017, says they've been surprised by some retailers' price increases that have taken place over the past of the last two months. Remedy is monitoring the speed of sales at these retailers to understand the impact of price increases on sales: early indications show that sales are not affected, but Kasindorf admits that "it may be too early for the say".

Despite its own reluctance to raise prices, Remedy says it is seeing substantial cost increases across its entire production process, from bottles and packaging to key ingredients. This is partly due to external factors - a key ingredient is derived from sunflowers from the Ukrainian region. The company was able to find other suppliers, but at a higher cost.

Retailers themselves face higher costs. Kasindorf says Remedy is seeing more price increases in California, which he attributes to raising the state's minimum wage to $15 — other states have also increased their minimum rates. They are also experiencing higher distribution costs as distributors raise wages to address labor shortages and rising fuel prices.

The June Consumer Price Index showed inflation rising 9.1%, the largest gain in 1981. The day before the Bureau of Labor Statistics released this reading of inflation, the White House downplayed the data, noting it was already dated." Falling gasoline and food prices in recent weeks seem to point to a better July reading. p>

The concept of greed centers on corporate profits and their excessiveness. A June study by the Roosevelt Institute, a New York-based think tank that focuses on "reducing corporate power," shows that U.S. corporate margins and profits grew last year at the fastest annual rate. fast since 1955. Annual net profit margins ranged between 5.5% between 1960 and 1980 and averaged 6% during the 2010s, according to the study. But in 2021, margins jumped to 9.5% among the cohort of 3,698 companies examined.

But others dispute the very existence of greed, saying we simply see supply and demand at work. Billions of stimulus dollars pumped into the economy have created a demand shock, while the Russian invasion of Ukraine and other supply chain crises have limited stocks - cars, for example . Greedflation is a misnomer in the eyes of Alan Wink, managing director of capital markets at EisnerAmper LLP, a New York-based accounting firm. He says everyone in the supply chain, from small to large companies, is going through a period of rising costs.

"We're in a crazy time right now where everyone can raise prices because other competitors are doing the same thing," Wink says. "There's no business keeping prices low, because they can't -- they're fighting for their own survival."

And isn't maximizing your profit margin the whole point of capitalism? "I almost think that whether we like it or not, we're kind of denigrating the morals of corporations if they go for an improved marketplace...