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Kamala Harris for Pres

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Safetydan said:
Meh. I'm not concerned with your lack of imagination. The arguments against patents are many and compelling.
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Arguments against patents typically center on corruption of the system, and not the supposed moral virtue of abolishing intellectual property rights you propose. There is a reason no system like you are proposing has ever worked, EVER, for an industrialized economy.
 
SoberasHotRod said:
I apologize for coming off as condescending, your response to my post did not make sense to me with the understanding that commodities are based on supply and demand. The article you posted was not specific to the food industry, so I'm still looking for evidence that profit margins have risen dramatically in the food industry. I purposefully use the word dramatic because margins for the food industry are relatively low, so even if they rose a little, I wouldn't think that was a bad thing.
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No problem! my tone is almost always condescending too.

My initial response to your post was more of a piggyback to say some things that I wanted to say and not a direct antagonistic response to you in particular. I could've done without quoting your post.

I have beef with the whole market, so I added a link showing that profit has outpaced costs in an unusual manner in the last 3 years. I'd have to dig in and find evidence for the food industry and I might not have time for that. Its not like I make the decision on who to go after for price gouging anyways. I'm open to the possiblity of that happening to say the least. I'm also open to there being no evidence for it. Feel free to do the research on your own time if you're curious.
 
SoberasHotRod said:
Thanks for posting the link. I'll check it out later when I have time, although from just what you've posted I have some BS alarms going on in my head. First of all as Al already pointed out these aren't monopolies.

A lot of the food industry, including some of the examples from your post are commodities, which almost by definition means they are priced based on supply and demand. Some of the other things, like corn and feed, are already managed by the government through subsidies and other programs. Most of the commodities, like meat, are tied in to a global market where it gets more complex. The US is one of the main exporters of meat for example, so as global economies add more meat to their diets and demand increases, our prices will go up. With commodities it's actually probably more beneficial to consumers to have major market share companies so that they can provide economies of scale.

The premise that large food Companies equal price gouging is a huge leap. It would be more convincing if they showed how these large food companies have unreasonable margins. Most of these companies have publicly available financial information, so why didn't they go there? Because they can't. Margins on food are way lower than other industries.

Here's an example of why I don't equate large market share to price gouging. Dean foods is a dairy company that owns the majority of fluid dairy sold in the US. They own something like 70% of the fluid dairy industry. A couple of years ago they declared bankruptcy because the demand for dairy went way down which no longer justified all of their assets. Dean foods should have increased prices with such a large market share to offset losses from asset underutilization, but they couldn't because the milk prices were set based on the market. Then on top of that Walmart builds their own milk processing plants and all of a sudden they go bankrupt.
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It is funny how people who do not get into the meat of the issue fall back on 2nd year college econ classes to make judgements. Don't get stuck on "a monopoly is a single company controlling everything". If you get into the economics of a few large companies controlling an industry, you would see the greatly reduced competition affects prices, and the ease at which price fixing can occur. Take pepsi and coke, both of whom raised their prices, literally within months of each other, in the past few years, way beyond any cost of materials for their product, and both of whom then saw windfall profits in the following couple of years. Profits on the back of price fixing across an industry dominated by 2 behemoths. Monopolistic practices begin to occur when an industry becomes dominated by a few very large companies. Technically this is an oligopoly, and it tends to follow the same economic forces that a monopoly does. It doesn't take it falling to a single company true "monopoly" to see the same market forces come to bear.



Damn it, Dan beat me to it again, and this time with more snark! Sonofabitch! +110 internets.

Safetydan

Post in thread 'Kamala Harris for Pres'

SoberasHotRod said:
Thanks for posting the link. I'll check it out later when I have time, although from just what you've posted I have some BS alarms going on in my head. First of all as Al already pointed out these aren't monopolies.

A lot of the food industry, including some of the examples from your post are commodities, which almost by definition means they are priced based on supply and demand. Some of the other things, like corn and feed, are already managed by the government through subsidies and other programs. Most of the commodities, like meat, are tied in to a global market where it gets...
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I think something to watch for is to see if Harris gets any post-DNC bump. It's pretty common for most candidates to see a bump in their polling post-convention and Harris is going to have an "introduction" of sorts at this thing. A good convention for Harris, Walz, and Dems might further unhinge the Mango Manchild.

Grab your popcorn folks.
 
Regarding price gouging and some misconceptions, I saw this online and copied it to post here.





$47.61 for paper towels and TP at Target today.

Absolutely insane example of corporate greed and price gouging.

In fact, it made me so angry, I decided to do some analysis.

Many prices have increased by 50% or more since COVID, so I decided to put on my investment banking hat and spread some financials back to 2018 / 2019.

And man, was I ever surprised...

I started by looking at Target's annual revenue:

2018: $75.4 billion
2019: $78.1 billion
2020: $93.6 billion
2021: $106.0 billion
2022: $109.1 billion
2023: $107.4 billion
Last Twelve Months (LTM): $106.6 billion

Couple things I noticed. First, revenue has slipped a bit since 2022 and is continuing to do so in 2024 - not a great sign for the broader economy. Second, there's been big growth since 2018. They must be price gouging!

Well, I looked a bit deeper. Let's look at their cost of goods sold over the same period (the price they paid to buy the products they sold you).

2018: $53.3 billion (70.7% of sales)
2019: $54.9 billion (70.2%)
2020: $66.2 billion (70.7%)
2021: $75.0 billion (70.7%)
2022: $82.2 billion (75.4%)
2023: $77.7 billion (72.4%)
Last Twelve Months (LTM): $76.8 billion (72%)

Wow, so let me get this straight...

Target is making less money (28 cents) on every dollar of sales today than they were in 2018 (29.3 cents). Hmmmm. That's weird. Maybe they're not so good at this price gouging thing.

So, I decided to dig even deeper. They were prolly being evil and firing all of their employees so they could make up for the money they weren't gouging, right?

So, I looked at their operating expenses (the amount they pay to run the stores and the overall business):

2018: $15.7 billion (20.9% of sales)
2019: $16.2 billion (20.8%)
2020: $18.6 billion (19.9%)
2021: $19.8 billion (18.6%)
2022: $20.7 billion (18.9%)
2023: $21.6 billion (20.1%)
Last Twelve Months (LTM): $21.7 billion (20.3%)

Hmmmm. Very unusual behavior for someone price gouging me. Let's sum this all up by looking at their operating cash flow:

2018: $6.3 billion (8.4% of sales)
2019: $7.0 billion (9.0%)
2020: $8.8 billion (9.4%)
2021: $11.3 billion (10.7%)
2022: $6.2 billion (5.7%)
2023: $8.1 billion (7.6%)
Last Twelve Months (LTM): $8.1 billion (7.6%)

So, what this all means is that Target's making less overall profit on every dollar of revenue today (7.6 cents) than they were in 2018 (8.4 cents). And revenue has grown at an average (CAGR) of 7.3% per year since 2018 and operating cash flow has grown at 5.1% per year - both of which are pretty much in line w/ the overall rate of inflation during that period.

I guess I expected price gouging to be more profitable.

❌ NO PRICE GOUGING AT TARGET ❌

"Well Steve," you may say, "that's all fine and good, but even if Target isn't price gouging, Kimberly Clark and International Paper (both of whom are involved in the manufacture / marketing of paper towels and TP) sure as H3ll must be!"

Well Yes! Surely they are! I'll spare you all the numbers, but here's the summary:

Kimberly Clark:
5-year avg revenue growth: 2.0%
2018 Gross Margin: 69.7%
LTM Gross Margin: 64.0%
2018 EBITDA Margin: 12.1%
LTM EBITDA Margin: 15.6%

"A-HA! Look at that EBITDA margin!" you say, "They must be gouging!"

Well, the gross margin clearly says otherwise, and the five-year EBITDA CAGR is 6.6% - pretty much in line with inflation. Again, management is clearly bad at gouging.

❌ NO PRICE GOUGING AT KIMBERLY-CLARK ❌

"Well ok," you say, "I'm sure International Paper must be capturing all of that extra profit because they're the ones gouging then."

Let's take a look:

International Paper:
5-year avg revenue growth: 0.8%
2019 Gross Margin: 30.8%
LTM Gross Margin: 27.8%
2018 EBITDA Margin: 16.1%
LTM EBITDA Margin: 11.6%

Wowza, I guess IP is the worst price gouger of all since, well, they've basically been destroying value since before COVID began. You would think price gougers would be gouging to, I don't know, make more money and all. Well, IP made almost $3 billion of EBITDA in 2019, and a little over $2 billion over the last twelve months. Sigh.

❌ NO PRICE GOUGING AT INT'L PAPER ❌

So, maybe this means the inflation we've been dealing with hasn't been about corporate greed and price gouging after all. Maybe it has had something to do with, oh, I don't know, government spending and stimulus run amok or something.

So, rather than going on populist rants about implementing price controls for the greedy corporations (which, you know, have never worked out so well in the past), maybe we should consider some price controls for government spending.

That's a novel idea.



p.s. And for those of you who say "Hey, wait a minute, your receipt says "Bounty" - that's not Kimberly Clark, that's P&G! They must be price gouging!"

Procter & Gamble:
5-year avg revenue growth: 4.4%
2019 Gross Margin: 48.6%
LTM Gross Margin: 51.4%
2019 EBITDA Margin: 20.4%
LTM EBITDA Margin: 23.7%

Gross margin up? Yep. EBITDA margin up? Yep. Good management? Yep. Price gouging? Nope.
 
LogGrad98 said:
It is funny how people who do not get into the meat of the issue fall back on 2nd year college econ classes to make judgements. Don't get stuck on "a monopoly is a single company controlling everything". If you get into the economics of a few large companies controlling an industry, you would see the greatly reduced competition affects prices, and the ease at which price fixing can occur. Take pepsi and coke, both of whom raised their prices, literally within months of each other, in the past few years, way beyond any cost of materials for their product, and both of whom then saw windfall profits in the following couple of years. Profits on the back of price fixing across an industry dominated by 2 behemoths. Monopolistic practices begin to occur when an industry becomes dominated by a few very large companies. Technically this is an oligopoly, and it tends to follow the same economic forces that a monopoly does. It doesn't take it falling to a single company true "monopoly" to see the same market forces come to bear.



Damn it, Dan beat me to it again, and this time with more snark! Sonofabitch! +110 internets.

Safetydan

Post in thread 'Kamala Harris for Pres'

SoberasHotRod said:
Thanks for posting the link. I'll check it out later when I have time, although from just what you've posted I have some BS alarms going on in my head. First of all as Al already pointed out these aren't monopolies.

A lot of the food industry, including some of the examples from your post are commodities, which almost by definition means they are priced based on supply and demand. Some of the other things, like corn and feed, are already managed by the government through subsidies and other programs. Most of the commodities, like meat, are tied in to a global market where it gets...
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It's funny how people who aren't in an industry talk to someone with first hand knowledge like he doesn't know what he's talking about. FWIW, I do have first hand knowledge of P&L statements for many food companies I've worked with.

Could you please send a link on the Pepsi and Coke example you shared? Specifically I'm looking at understanding significant increases in profit margins and not just revenue.

There are already laws against collusion and price fixing. If what you are all alluding to is true, that big companies work together to increase costs for consumers, then all Kamala Harris needs to do is to enforce the laws that have already been put in to place.
 
RandyForRubio said:
Regarding price gouging and some misconceptions, I saw this online and copied it to post here.





$47.61 for paper towels and TP at Target today.

Absolutely insane example of corporate greed and price gouging.

In fact, it made me so angry, I decided to do some analysis.

Many prices have increased by 50% or more since COVID, so I decided to put on my investment banking hat and spread some financials back to 2018 / 2019.

And man, was I ever surprised...

I started by looking at Target's annual revenue:

2018: $75.4 billion
2019: $78.1 billion
2020: $93.6 billion
2021: $106.0 billion
2022: $109.1 billion
2023: $107.4 billion
Last Twelve Months (LTM): $106.6 billion

Couple things I noticed. First, revenue has slipped a bit since 2022 and is continuing to do so in 2024 - not a great sign for the broader economy. Second, there's been big growth since 2018. They must be price gouging!

Well, I looked a bit deeper. Let's look at their cost of goods sold over the same period (the price they paid to buy the products they sold you).

2018: $53.3 billion (70.7% of sales)
2019: $54.9 billion (70.2%)
2020: $66.2 billion (70.7%)
2021: $75.0 billion (70.7%)
2022: $82.2 billion (75.4%)
2023: $77.7 billion (72.4%)
Last Twelve Months (LTM): $76.8 billion (72%)

Wow, so let me get this straight...

Target is making less money (28 cents) on every dollar of sales today than they were in 2018 (29.3 cents). Hmmmm. That's weird. Maybe they're not so good at this price gouging thing.

So, I decided to dig even deeper. They were prolly being evil and firing all of their employees so they could make up for the money they weren't gouging, right?

So, I looked at their operating expenses (the amount they pay to run the stores and the overall business):

2018: $15.7 billion (20.9% of sales)
2019: $16.2 billion (20.8%)
2020: $18.6 billion (19.9%)
2021: $19.8 billion (18.6%)
2022: $20.7 billion (18.9%)
2023: $21.6 billion (20.1%)
Last Twelve Months (LTM): $21.7 billion (20.3%)

Hmmmm. Very unusual behavior for someone price gouging me. Let's sum this all up by looking at their operating cash flow:

2018: $6.3 billion (8.4% of sales)
2019: $7.0 billion (9.0%)
2020: $8.8 billion (9.4%)
2021: $11.3 billion (10.7%)
2022: $6.2 billion (5.7%)
2023: $8.1 billion (7.6%)
Last Twelve Months (LTM): $8.1 billion (7.6%)

So, what this all means is that Target's making less overall profit on every dollar of revenue today (7.6 cents) than they were in 2018 (8.4 cents). And revenue has grown at an average (CAGR) of 7.3% per year since 2018 and operating cash flow has grown at 5.1% per year - both of which are pretty much in line w/ the overall rate of inflation during that period.

I guess I expected price gouging to be more profitable.

❌ NO PRICE GOUGING AT TARGET ❌

"Well Steve," you may say, "that's all fine and good, but even if Target isn't price gouging, Kimberly Clark and International Paper (both of whom are involved in the manufacture / marketing of paper towels and TP) sure as H3ll must be!"

Well Yes! Surely they are! I'll spare you all the numbers, but here's the summary:

Kimberly Clark:
5-year avg revenue growth: 2.0%
2018 Gross Margin: 69.7%
LTM Gross Margin: 64.0%
2018 EBITDA Margin: 12.1%
LTM EBITDA Margin: 15.6%

"A-HA! Look at that EBITDA margin!" you say, "They must be gouging!"

Well, the gross margin clearly says otherwise, and the five-year EBITDA CAGR is 6.6% - pretty much in line with inflation. Again, management is clearly bad at gouging.

❌ NO PRICE GOUGING AT KIMBERLY-CLARK ❌

"Well ok," you say, "I'm sure International Paper must be capturing all of that extra profit because they're the ones gouging then."

Let's take a look:

International Paper:
5-year avg revenue growth: 0.8%
2019 Gross Margin: 30.8%
LTM Gross Margin: 27.8%
2018 EBITDA Margin: 16.1%
LTM EBITDA Margin: 11.6%

Wowza, I guess IP is the worst price gouger of all since, well, they've basically been destroying value since before COVID began. You would think price gougers would be gouging to, I don't know, make more money and all. Well, IP made almost $3 billion of EBITDA in 2019, and a little over $2 billion over the last twelve months. Sigh.

❌ NO PRICE GOUGING AT INT'L PAPER ❌

So, maybe this means the inflation we've been dealing with hasn't been about corporate greed and price gouging after all. Maybe it has had something to do with, oh, I don't know, government spending and stimulus run amok or something.

So, rather than going on populist rants about implementing price controls for the greedy corporations (which, you know, have never worked out so well in the past), maybe we should consider some price controls for government spending.

That's a novel idea.



p.s. And for those of you who say "Hey, wait a minute, your receipt says "Bounty" - that's not Kimberly Clark, that's P&G! They must be price gouging!"

Procter & Gamble:
5-year avg revenue growth: 4.4%
2019 Gross Margin: 48.6%
LTM Gross Margin: 51.4%
2019 EBITDA Margin: 20.4%
LTM EBITDA Margin: 23.7%

Gross margin up? Yep. EBITDA margin up? Yep. Good management? Yep. Price gouging? Nope.
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Doing this amount of work to bring actual data to the discussion is appreciated. Thank you.
 
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