Sunday, September 24, 2023

Your Kleptocratic Government and You

It's not like THEY have trouble paying their rent: 

"This is a really dangerous situation right now, to start telling companies how to conduct their business," Mr. Lander said. "Remember that these are companies that have shareholders that they have to answer to, and so they can't go around pricing groceries as acts of charity."

While grocers have been accused of price-gouging and profiteering, Mr. Lander explained what's behind their record profits.

He gave the hypothetical example of a grocer who buys a product for $1 from a supplier, then sells it for $2. That's an "extreme" markup, he said, "but just so you'll see my point." So if the the supplier starts selling the product for $2, the grocer will mark it up to $4.

"[As a grocer,] I haven’t done a single thing differently. I take whatever my cost is and I double it, turning it out the door. But my profits have gone up, and the reason it’s gone up is because the supplier has increased the prices on me,” he said.

In June, the House of Commons agriculture committee recommended a windfall profits tax if a forthcoming report by the Competition Bureau found grocers were profiteering. That report found major grocers’ profit margins increased "by a modest yet meaningful amount over the last five years."

Margins generally increased by one or two percentage points since 2017, the report said, adding that this translates to about an extra $1–$2 on each $100 Canadians spend on groceries.

“The Canadian grocery industry is a low-margin business. Grocers make relatively little on each item, but make their profits in volume,” the report said. “That means that even small changes in margins can be meaningful.”

The Bank of Canada said in a June report that grocers and other retailers are not guilty of price inflation. It said retail price spikes are largely due to "global freight and energy" cost increases as well as industrial inputs like chemicals, plastics, lumber, and metals, along with costs associated with labour and commercial services such as trucking.

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Canadians consider federal anti-trust enforcement “lacklustre” and “ineffective,” says a Department of Industry report. The anti-trust Competition Bureau has acknowledged failures in permitting consolidation in key sectors like grocery retailing: “Large corporations are gaining too much control.”

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 (Sidebar: but Romania DOES know how to deal with its dictators.) 

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