As a seasoned entrepreneur with a sociological perspective, I find myself regularly confronting the perplexities of economic inequality. A recent Dutch newspaper article (source: NRC) caught my attention and sparked deep concern within me. It shed light on a burgeoning phenomenon known as ‘greedflation’, an economic trend that threatens to widen the chasm between the affluent and the rest. This trend is particularly alarming in the wake of a global pandemic when societies worldwide are striving to regain stability. In the following paragraphs, I aim to dissect the concept of greedflation and ponder upon its potentially drastic implications.
Now, don’t get me wrong – I’m not advocating for a socialist approach where income is equally distributed. However, it’s essential to address the unfair developments happening right in front of our eyes.
During the pandemic, some organisations made huge profits while others struggled to stay afloat. Governments stepped in and spent tons of money to keep businesses running, hoping to prevent massive job losses. Unfortunately, many of the companies that were saved with public funds are now abusing the current inflation situation to boost their profits even more. This just doesn’t feel right.
So, who’s losing in this inflation mess? It’s us, the regular folks, who have to pay more for stuff at the supermarket and for our energy bills, while our paycheques don’t go up enough to cover these higher costs. And who’s winning? It seems like businesses are the ones cashing in, taking advantage of the situation by raising their prices and making more money.
One of the leading Dutch banks, Rabobank, did a study to see what greedflation means for people in the Netherlands (source: Rabobank). They found that a significant portion of the inflation rate (11.8% last year) is actually because businesses are just increasing their profits. Without those profit increases the inflation rate would have been 2.4 percentage points less. And that’s making things even more unfair for us.
Another article on NU.nl reported that Dutch supermarkets claim to lower prices, but consumers are still paying more. This is confirming the feeling of unfairness by consumers. Data showed a 13.2% average price increase in April 2023, higher than the same period in 2022. Marketing expert Paul Moers highlighted that supermarkets are lowering prices for B-brands while maintaining A-brand prices, affecting only a small fraction of their product range. Retail expert Michel Kregel called the price reductions deceptive.
“We see that, for example, sunflower oil has become more expensive due to the war in Ukraine. However, the fact that soap for men costs much more is not justifiable. Manufacturers and producers seize every opportunity to pass on the costs to the consumer.” – Retail expert Michel Kregel
This whole greedflation thing has made people talk more about how unequal everything is. We were already dealing with inequality before the pandemic, and now it’s just getting worse. But businesses don’t seem to care since they’re just making more money. This just keeps making the rich richer and leaves the rest of us struggling.
What’s even worse is that this greedflation is making it harder for central banks to control inflation. They’re trying to keep things from getting worse, but the cycle of high prices and people wanting more money just keeps going. The only way to break this cycle is if people like us refuse to pay these crazy high prices or simply can’t afford them anymore.
As a sociologist, I believe that greedflation is a severe problem that needs to be addressed to maintain societal balance. It’s not about advocating for a completely equal distribution of wealth, but rather finding a fair and just system that allows everyone a chance to succeed. It’s crucial to strike a balance where the wealthy can continue to prosper for their positive contributions, but not by exploiting their position at the expense of others. We must work towards preventing the rich from unjustly accumulating more wealth, ensuring that companies don’t abuse their position, and making sure that the rest of society isn’t left behind in the process.
This post has primarily drawn from Dutch sources, but it seems likely that this issue isn’t exclusive to the Netherlands. What steps can we as individuals take to counteract greedflation? Have you noticed similar trends in your own country? Please feel free to share your thoughts and observations in the comments section below, as I believe an open and engaging discussion can help us better understand the issue at hand.