Is greed causing shrinkflation?

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.

[chadr.]

"Of course, none of us are greedy, it’s only the other fellow who’s greedy." Milton Friedman

[zunalter]

I thought shrinkflation was referring to the IQ of the oval office inhabitant

[samuelpaulson]

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.

[danielrizzo]

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.

[itsallfunandgames]

This is the return to mid-2000s comedy we need.

[leftoverpastaz]

Bring back mostly weekly. That was great.

[bfcourage]

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!

[gomblebomble]

Companies just decided to be greedy yesterday!

[Ploxtifs_OldAndDeadAccountXD]

“You CLEARLY forgot about my coffee gun!”

[travisthompson]

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.

[nonyadamnbusiness]

"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.

[epicemmalee]

I just hate the gaslighting. Like everything else in life, government is not the solution.

[bite-sizedshorts]

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.

[kauboy]

"If theaters raise their ticket prices, consumers might go mini-golfing... or whoring! I would!"
🤣🤣🤣
That about killed me.

[Todd_Swank]

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.

[danielrizzo]

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”?

[Ploxtifs_OldAndDeadAccountXD]

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

[VortexStriker]

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!

[mc]

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

[scotts]

Some things were just meant for each other like Reason and Andrew, greed and free markets, President Biden and retirement homes.