Is greed causing shrinkflation? 

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

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

Andrew is the reason I watch Reason.

Bring back mostly weekly. That was great.

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.

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

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.

“You CLEARLY forgot about my coffee gun!”

Companies just decided to be greedy yesterday!

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!

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

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

"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.

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.

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.

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.

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”?

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

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!

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

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

I love how politicians lambast big corporations like those same big corporations aren’t the ones funding their political campaigns 😂

There was another factor of inflation not mentioned. Energy policy. Make energy more expensive, production and transport costs rise, which increases consumer prices.

What an excellent mix of information and hilarity.

This still fundamentally ignores how many businesses especially grocery stores increase their prices far beyond inflation.

And here i've been ordering coffee wrong this entire time.

My beef with the corporations is that they make the standard size smaller, and label the original as "family size." It is gaslighting, but thats just how marketing works. The government needs to stop printing money and get this shit under control.

On one hand, shrinkflation is a legitimate nuisance and so deceptive. I'm a nerd who has memorized most of my favorite products' net weights and I've still gotten punked from time to time. On the other hand, good luck legislating it away without either a ton of loopholes or an overbearing list of regulations.

Corporations are so greedy, they completely forgot to hike prices for, like, 30 years, between 1991 and 2021.

"INFLATION" "It's just inflation" OMG that had me rolling.

It's time to crack down on _GOVERNMENT_-GREED-FLATION_

You guys make such fun videos. I am truly thankful!!

unreal how many people think this. unreal. another stupid thing is: record profits... I'm sure in Venezuela where they add another 0 to the money every day the corporations have record profits every day

In a more perfect world, to vote, a grade of 85% or better on an Econ101 final would be required. Bonus requirement - Require an 80% or better on a Stats 101 final. Thereby making at actually possible for the average person to decern select valid claims of politicians, from lies, or perhaps worse, stupidity. Hi AOC!!

Ah yes the classic sun tzu tactic. “If people notice your crap economy blame rich people and/or corporations.”

It’s always a treat to see Andrew on reason

Yes, greed causes shrinkflation; people greedy for chips buy them despite being poor nutritionally, higher cost, and smaller servings. If nobody bought them, no retailer would waste shelf space and cost to stock them and suppliers would stop shipping them, and producers stop making them. Duh. Every supplier just wants a happy customer and does their best to offer them an acceptable product at a price they are willing to pay.

I mean both can be right. As a few companies in an industry increase their prices because of increased costs, others look around and say, “well their customers are still buying at that price so we can raise our prices too,” and because lots of industries have gotten more centralized since the last recession, there’s no competition to swoop in and get the price back down.

There's an excellent episode of The Political Oprhanage called "What Skinny Dipping Taught Me About Greed". If you want more Heaton (and who doesn't?) it's a great listen.

Honestly probably your best work so far, kudos heaton

This isn't anything new. I was complaining about shrinkflation when I was a kid in the 80's and early 90's. This isn't new.

Always good to see Andrew!

I love greed karma: where greedy suppliers meet greedy consumers and they negotiate prices. I especially like how very greedy suppliers try to price-gouge during emergencies, and find no takers except for the greediest buyers. It’s retail karma! If they misjudge greed, they have to drop prices for the less greedy. If that were illegal greedy sellers and buyers would deal under the table. A system based on greed is what causes people to work so hard to earn, spend, and produce, as well as sell. Greed for something else than what they have. Envy, however, should not be allowed to vote, except with their own money.

THANK YOU FOR THIS!! Sadly, Americans are too clueless to grasp the concept.

Yessssssss, I need more Andrew Heaton! Never shrinkflate Heaton!

Finally a plebian level explanation for all of us workers. So simple not even the politicians understand it.

Thing is with this inflation, there are a greater amount of dollars chasing the same amount of goods, but hardly any of those increased amount of dollars are going into the hands of ordinary people, _by government design!_

I remember when fruit by the foot felt like an actual foot, now it feels like a couple inches

I think we should also regulate size of packaging. No packaging can be more than 10% of the object it is holding. Potato chips are 70% air in the bag

Why doesn't this guy have more videos? This is great!

Shrinkflation also in the end bites companies in the ass. I want to be clear the costs are going up and must be accounted for BUT those companies which address this via shrinkflation damage their brand. When their brand is a zero quality brand anyway and based solely on price then it does not matter but when any level of quality is associated with the brand it is the start of the death march. When I see prices go up I will grumble but I will also make certain when I spend my money I am getting the quality I demand. When a company decides to cannibalize their quality/value to stay cheap then they will lose the consumers who care about quality. Friendly's, the restaurant chain, has been learning this the hard way as they have consistently reduced portions and quality for well over a decade to maintain price and now NOBODY wants to go there because it simply isn't worth it for what you get.

glad to see another video about basic economics. most people still don't understand it.

The explanation is so simple, even I can understand.

When all hope seemed lost, Heaton returned to save us with dry humor and basic economics.

This is the first time I’ve ever seen this guy in a video and I cannot get enough!

You forgot about cost push inflation. Rising fuel prices, government mandated wage increases, and such things also contribute to inflation.

This reminds me of that Mostly Weekly Series. LOVE IT :D

It was such a wild ride the day I understood that supply & demand also applies to our dollars...

Any manufacturer that uses automation just can't change the size of their package or container. To do this may require expensive retooling. In the short term it may be more economical to keep the package and put less in it and change the stated weight.

So, if a company still makes a quart of ice cream just like they used to are they not going to be allowed to also sell a 1.5 pint Ice cream in it's new "convenience" size? It's stupid. It's almost like politicians don't actually care about anything other than the message to voters.

Replacing regular eggs with quail eggs is something I would absolutely expect to happen in Austin, TX.

Remember not long ago, when all coffee was sold in one pound bags. Then 12 ounces, and now 10 is just as common as 12. It's not corporate greed. It political greed.

TLDR: Its inflation, but some instead of increasing cost reduce the size of the product.

Companies are doing Americans a favor. Most need to go on a diet anyway.

Reason is KILLING IT! Great videos.

Heaton is an absolute gem

Prices and wages are sticky in the down direction: if inflation raises prices, the prices won't go down even if cost go down.

Happy belated birthday. I guess the post office failed to get the invitation to me. Great video.

I like how you took "I slept in my suit and haven't looked in a mirror today" and made it your brand

The example of television prices is a good one

“The first lesson of economics is scarcity: There is never enough of anything to satisfy all those who want it. The first lesson of politics is to disregard the first lesson of economics.” Thomas Sowell

Prices are rising for other government-caused reasons as well. For example here in Colorado the price of eggs has soared because our legislature decided to mandate that all eggs sold in Colorado be free range. This is because our legislature values chickens more than residents of this state.

There are a lot of angry comments here using the same flawed logic. "How dare you defend greedy corporations! You just want poor people to suffer!" Economics is more complex than rich vs poor. We have to think about what actually works in terms of alleviating poverty (everyone wants to help the poor. No one actually wants the rich to become richer). Insults and slogans aren't useful. If you have a problem with this video, please use logic to explain your position.

And they call other people ‘Conspiracy theorists’ 😂

Dear Dems, If greed is the cause of inflation, then why don't companies simply double their prices tomorrow? Why charge $4 for something if you can make more money selling it for $20?

Finally more videos like this and less like the roundtable

You teased a video idea about concentrated corporate power and anti-trust laws. I'd really like to see that.

There isn't enough competition. And the government has allowed too many mergers and acquisitions. And it's too hard to start new businesses. Big companies are taking advantage of the situation.

I can't believe that, in 2024, we still need to explain what the fuck inflation is and how it works.

Andrew Heaton is the main reason for Reason to exist

Kind of weird how these companies that are always trying to maximize their profits didn't do this before. It's almost like they want to sell things as cheaply as they can so they can move large volumes for more profits than smaller volumes.

1:46 to 2:40 - Agreed. It's a good idea but it won't fix the underlying problem.

The Hershey nickel bar isn’t around anymore for a reason.

Shrinkflation has made it easier for me to budget as a one person household and not eat as much crap or waste half the bag of something.

Pretty unique style

Joe Byron is just noticing Shrinkflation, where has he been. It has been going on for years.

Two important clarifications because I feel like this video, while reaching the correct conclusion, fails to properly represent or understand the opposing view. 1. With respect to "greedflation", the assumption isn't that greed has increased, rather that greed has remained the same, but companies are taking advantage of the fact that consumers are expecting inflation to increase prices more than is needed to offset their costs. In economic term, the high inflation environment typically reduces the price elasticity of demand (because consumers expect prices to increase, and don't know how much of an increase to expect), and thus prices rise more than just the costs. The term "greedflation" is a bit of a misnomer because it's not so much driven by "greed" but rather by the market responding over time to the change is PEoD. 2. With respect to increased corporate profit margins, there is a difference between "increased profits" and "increased profit margins". I'll give you the benefit of the doubt and assume that this wasn't done on purpose to mislead, and instead attempt to clarify for your edification. Profit margin is the percentage of each dollar of revenue that is profit - i.e. the amount left over after costs are taken out, while profit is the sum of the amount left over. For example, if a bag of chips costs $2 to make and sells for $5, the profit is $3, and the profit margin is 60%. Regardless of how many bags of chips are sold at this point, the profit margin stays the same, but the profits will increase or decrease with the quantity sold. If the cost of the chips then increases to $3 and the price increases to $8, then the profit margin is now 62.5% which means that the company is making more on each bag of chips - the profit *margin* increased. In business it's a bit more complex because there are both fixed and variable costs, so we break down the profit margins into two components - gross margin which is the profit margin after accounting for the costs of good sold, and operating margin which is the profit margin after accounting for everything else. When people say that profit margins are increasing, they mean that gross margin, or operating margin is increasing, or both are increasing. Now, here's the key point - since gross margin only factors in the costs of goods sold, then in general it stays about the same regardless of quantity. However operating margin effectively ameliorates fixed costs over all units sold, so in general, for a given gross margin, increasing the quantity sold will increase the operating margin, even if the price stays the same. So if operating margin is increasing, then it doesn't say whether increased prices above cost factor it, while if gross margin is increasing, it does imply that the company is increasing prices above the increase in their costs. So which are actually increasing in companies at this time? The answer is that both operating margin and gross margin are increasing, hence people's accusation of "greedflation". Now given that this "greedflation" is occurring, is the solution big government getting in and doing price fixing? Absolutely not! The only thing that will temper these price increases is consumer behavior changes that increase the price elasticity of demand. If you keep buying something regardless of how high the price goes, why should the company lower the price? You are clearly willing to pay the higher price.

I'm reminded of the lemon rant in Portal 2.

People who work for corporations and buy things from corporations wanting to pay less whilst getting paid more...there is an argument there that greed in corporations is the cause, if you see corporations as a collection of humans trying to make a living.

Shrinkflation has been going on for a long time. In the 70s, a normal bag of potato chips was 16 oz. In the 80s, it was 14 oz. Now it is 9 1/2 oz, and the "party size" bag is 16 oz.

I cant find any other cause and its kinda making me lose hope for the future of america.

I think Hershey used to sell candy bars for a nickel. The size of the bar would change but it remained a nickel.

More hats to you, sir.

Literally taught in econ101. If a market is very price sensitive, ie raising prices causes a big drop in demand, then you simply make the product smaller(reduce costs). Econ101 always gave the candy bar example. Shrinkflation is simple basic economics response to inflation like price increases are.

Duh. It is the same reason we pay more than any other industrialized nation for healthcare and our life expectancy is dropping.

The corporations are making more profit in money that is worth less.

I've got a hunch that it's a non-negligible cost to resize packages for foodstuffs. If I'm not wrong on that, then putting a smaller amount into the same size container would reduce costs that would otherwise almost certainly get passed on to the consumer.

Record layoffs and price increases. But also somehow posting record profits ..ask yourself .. how are BOTH possible simultaneously ?! Aren't they mutually exclusive of each other ? ..

Companies commitment is to their stockholders, not their customers. It is more important for them to be profitable than it is for them to give you a good deal.

This channel must of been hearing me argue with my coworker. When he said it all i could think of its just normal inflation and i was so confused by him