Wendy's is replacing humans with AI next month

[StDragon]

38 minutes ago, Kisai said:

That said, I doubt this will result in very many jobs lost.

This technology won't be limited to fast food. Secondly, as it advances, so will the scope of the job duties and responsibilities it will be tasked with in the future.

OTOH, acting as a universal translator, at least I will understand what the call center agent is saying half-way around the world (until tier 1 is completely replaced by AI, followed by tier 2 later on).

[Mark Kaine]

6 hours ago, Alex Atkin UK said:

less tax being paid

ok yeah sure, but only because politicians are stupid / corrupt. 

 

DO an "AI tax" of... 50% ... problem solved!

 

[Donut417]

7 hours ago, Fasterthannothing said:

Summary

Starting in June Wendy's will roll out AI to their stores and begin the process of being completely automated.

 

Quotes

 

My thoughts

Well I guess it's official boys and girls AI has started replacing people's jobs in mass scale as do as June. The estimates say this system will displace 14 million workers just at Wendy's alone.

 

Sources

 https://www.techspot.com/news/98622-happening-ai-chatbot-replace-human-order-takers-wendy.html

It's just taking over the drive thru. Also I think some Mc Donalds were doing this for a while, and its been hit or miss. Im waiting for AI to take over food prep, because that means most likely a better more consistent experience. 

 

Also Fast Food place tend to be short staffed a lot and have ultra high turn over. This should help to an extent. Plus with rising costs, this hopefully will keep prices stable.

 

Years ago I read an article talking about how a lot less high schoolers are choosing to get in to the workforce. Considering these jobs are the jobs that they generally would have to take, it's not really that surprising that AI is taking over. Kids now days are being told to get an education and to hell with working these dead end jobs. Further more another industry that has issue with help is retail, if you can do fast food, you can do retail. Also Warehouses are also good places for these workers to find jobs, as long as they are 18+ years old. 

[Kisai]

2 hours ago, Donut417 said:

It's just taking over the drive thru. Also I think some Mc Donalds were doing this for a while, and its been hit or miss. Im waiting for AI to take over food prep, because that means most likely a better more consistent experience. 

 

Where the AI can work is allowing the person doing the ordering, use any language they know on the app, or the "drive thru" speaker understands. Which surprisingly enough even VOSK does a passable job on noisey-quiet audio.  Pair that with some logic to actually only recognize order requests and reject items that don't match the menu, and it's something that's fairly reasonable to do using just open source tools.

 

That said, the person preparing the order is where all the mistakes get made. I've had a fairly consistent experience from Wendy's using the Skip the Dishes app, with most of the mistakes being the wrong order size (eg getting a medium drink with a large fries when both should be large) and inappropriate order preparation (Eg putting the burger on the bottom of the bag and things like Chilli or Nachos on top (both which spill/leak if tilted or accidently crushed.)

 

Actually doing the food cooking and assembly is something that is doable, and has been doable for years, it's just not something any restaurant really wants to do because of the costs, and really that tech has been around since the 60's. The nature of the beast is that food sanitization requires proper care, and machines are pretty unsanitary, and get unsanitary pretty darn quick. Throw in food allergies that obnoxious "may contain tree nuts, peanuts, soy, milk, shellfish" warnings end up on everything. Even foods that have never been in the same room, just handled by the delivery machine.

 

 

2 hours ago, Donut417 said:

Also Fast Food place tend to be short staffed a lot and have ultra high turn over. This should help to an extent. Plus with rising costs, this hopefully will keep prices stable.

 

Because people know the jobs suck and are not prestige at all. Over in Japan, every job, even McDonalds and 7-11 are seen as having some prestige, because Japan still sticks to the "job-for-life, never get fired" type of attitude. US attitudes however are pretty much "These jobs suck, and are supposed to suck, and you are only supposed to work there to pay your student loans while you are going to college" type of attitude. McDonalds isn't a real job, it's a means to an end. Walmart isn't a real job. 7-11 isn't a real job. These attitudes continue to persist because the companies keep wanting to pay wages that nobody can actually live on.

 

Good luck trying to convince McDonalds to hire one full time cook in downtown NYC or LA at 100K/yr. The McDonalds and Walmarts try to get around employment laws by only hiring part-time workers so they don't have to pay them the benefits they would get as full time staff. That needs to change first, and the minute that changes, we'll see a strong push for automation by these companies.

 

2 hours ago, Donut417 said:

Years ago I read an article talking about how a lot less high schoolers are choosing to get in to the workforce. Considering these jobs are the jobs that they generally would have to take, it's not really that surprising that AI is taking over. Kids now days are being told to get an education and to hell with working these dead end jobs. Further more another industry that has issue with help is retail, if you can do fast food, you can do retail. Also Warehouses are also good places for these workers to find jobs, as long as they are 18+ years old. 

 

And the reason these jobs are being automated is because people don't want these jobs, they are seen as beneath them, and doesn't keep them out of poverty.

 

When "welfare"/"food stamps" becomes more attractive than working a slave-wages job, that job should no longer exist. Automate it, or get rid of it entirely.

 

 

[Sorenson]

Meanwhile in-n-out is still cheaper, has more employees per store, and manages to pay them all well with benefits. 

[williamcll]

Sounds like an overpriced vending machine.

[LAwLz]

Overall I think this is a step in the right direction when looking at functionality.

I live in Sweden, and we primarily talk Swedish here. A lot of people who work in fast food are typically immigrants who are not very proficient in Swedish however. As a result, it can from time to time be a bit challenging to order food through speech. In fact, where I live fast food stores have mostly replaced their order systems with touch screens and digital menus. The drive-thru and some local pizza places are basically the only times I have to actually say my order and have it interpreted by another human. I sometimes even park my car, go into the store and use the touch screen to order, and then go back out to my car.

 

It sounds like they have thought of the unique challenges of a drive-thru (motor sounds, kids in the back, radio, changing your mind, etc) so hopefully it will work well.

 

 

  

14 hours ago, Fasterthannothing said:

The estimates say this system will displace 14 million workers just at Wendy's alone.

No it doesn't. I am kind of shocked that nobody has pointed out this before me.

Wendy's has a total employee count of less than 15,000. There is no way this policy at Wendy's could result in even a fraction of a million of jobs lost, let along 14 million.

The 14 million number is an estimate from the world economic forum that looks at the global estimated job loss over the next 5 years based on a study of 673 million jobs.

 

It is very worrying that people don't seem to understand the basics of the numbers getting quoted and used. Hell, the study isn't even about AI specifically but I've seen people say "AI will take 14 million jobs", even though a large part of that will be lost to non-AI things. Some of the biggest contributors to those 14 million job losses are sectors like cashiers, ticket clerks, and Postal Service workers, which have very little or nothing to do with AI. Those jobs would have been lost anyway since it's driven by online services and sales, not necessarily AI.

 

It is very worrying that a study that says "ticket clerks and cashiers are going to lose their jobs because people order online instead" gets misconstrued to "Wendy is replacing Drive-Thru employees with AI and this will result in 14 million people losing their jobs".

[CarlBar]

11 hours ago, Kisai said:

Doesn't work, has never worked, and is the warcry of people trying to deregulate things.

 

Whilst the latter part is fair, Trickle down technically does work, but there's some fairly major complicating factors that the people using it as a warcry tend to gloss over. The very quick and dirty version is that the money does actually get spent, (either directly or as collateral for loans), and thus some of it makes it's way down to the basic average Joe. But a good chunk of that initial big Bonus/Dividends payout will end up in the pot for another companies Dividends/Bonus pot. When thats paid out the cycle repeats. Each time it does the % of the original amount that ends up in somebody's Bonus/Dividends pot decreases, but it can still take a large number of cycles for the majority to filter down. And when that cycle is typically on a yearly basis that means many years, potentially more than a decade can pass before the Majority trickles down, and it does so in bits and pieces, not in large easily noticeable sums.

 

Globalisation is also an issue there. Money made mostly in one nation cna end up eventually trickling mostly into the hands of the average joe's in another nation which makes the money appear to just disappear.

[suicidalfranco]

Expected. After the forced minimum wage laws, it was bound to happen.

Time to get a real job

[Brooksie359]

16 hours ago, OhYou_ said:

if you pay less on food, you have more income to spend, perhaps spending it on better education. 

the workers of wendys will just move to different jobs. they are not just unemployed for the rest of their life once they lose their McJob at wendys. 

You expect Wendy's to lower the price of their products and not just pocket the extra profits? How naive. If history has shown anything its that most of the time companies just take the extra profits for themselves and don't pass on the savings to customers or increase pay to employees. They just take that money and bring it to the top because they have the fiduciary duty to maximize profits as a publicly traded company so technically have to screw over their workers to maximize profits as much as they can get away with. 

[Donut417]

6 hours ago, Kisai said:

ot something any restaurant really wants to do because of the costs, and really that tech has been around since the 60's

The last info I saw said it's actually cheaper than hiring people in the long run. The issue is the upfront costs, which is hard for many restaurants to afford. I also seen that some White Castles are using the tech at their Fryer station to assist the human workforce. This has the benefit of reducing liabilities from fryer accidents while keeping things most consistent when it comes to food. Also you have to consider that a machine is going to use the exact amounts of ingredients that are suggested, the best a human can do is guesstimate. So in a way you would be saving on food cost as well. 

[Brooksie359]

11 minutes ago, CarlBar said:

 

Whilst the latter part is fair, Trickle down technically does work, but there's some fairly major complicating factors that the people using it as a warcry tend to gloss over. The very quick and dirty version is that the money does actually get spent, (either directly or as collateral for loans), and thus some of it makes it's way down to the basic average Joe. But a good chunk of that initial big Bonus/Dividends payout will end up in the pot for another companies Dividends/Bonus pot. When thats paid out the cycle repeats. Each time it does the % of the original amount that ends up in somebody's Bonus/Dividends pot decreases, but it can still take a large number of cycles for the majority to filter down. And when that cycle is typically on a yearly basis that means many years, potentially more than a decade can pass before the Majority trickles down, and it does so in bits and pieces, not in large easily noticeable sums.

 

Globalisation is also an issue there. Money made mostly in one nation cna end up eventually trickling mostly into the hands of the average joe's in another nation which makes the money appear to just disappear.

The vast majority of wealth is in the hands of a few with no real way to spend all of that money. Trickle down economics has never really worked and you would see way better results if you had the common people with more money because then they spend more which is way better for the economy in general vs a few people having way more money then they need and can even realistically spend. Also baffles me that we are so against goverment giving handout to common people but we are so ok with goverments giving huge subsidies to large cooperations with the excuse that it will create more jobs or eventually end up in the people's hands. That is cool and all but the problem is even when the goverment gives companies subsidies they will still turn around and automate everything as soon as they get a chance replace all of their workers and pocket the money. 

[CarlBar]

5 minutes ago, Brooksie359 said:

The vast majority of wealth is in the hands of a few with no real way to spend all of that money. Trickle down economics has never really worked and you would see way better results if you had the common people with more money because then they spend more which is way better for the economy in general vs a few people having way more money then they need and can even realistically spend. Also baffles me that we are so against goverment giving handout to common people but we are so ok with goverments giving huge subsidies to large cooperations with the excuse that it will create more jobs or eventually end up in the people's hands. That is cool and all but the problem is even when the goverment gives companies subsidies they will still turn around and automate everything as soon as they get a chance replace all of their workers and pocket the money. 

 

Don't confuse worth with money to spend, they are 2 very different things when it comes down to money flow. Trickle Down as a theory is about money flow. Worth is a whole other bag of worms.

[05032-Mendicant-Bias]

I remember when the clerk that collects toll at the motorways was replaced by a machine. That's good, it's a terrible job!

 

Wendy wants to automate task to transcribe verbal commands into orders... That's a job that you WANT to automate away! It fits the three D.

[Brooksie359]

6 hours ago, CarlBar said:

 

Don't confuse worth with money to spend, they are 2 very different things when it comes down to money flow. Trickle Down as a theory is about money flow. Worth is a whole other bag of worms.

Oh I am aware but like I said you would be much better off just letting the people near the bottom have a good disposable income. If you did that then you would see more spending which would be good for everyone. Compare that to trying to give extra money to companies assuming it would make its way down which it does to some extent but not very effectively. I mean sure companies that have more money can end up expanding and creating jobs but if your average Joe has more money to spend then those business and companies would make more profit as consumer spending would be still be able to expand and create more jobs while you still have more money in the hands of the average Joe. I just think it's weird how when inflation is a problem we always attack it at the consumer level rather than trying to attack it at the corporate profit level but when it comes to try and stimulate the economy now all of a sudden we should attack it at the cooperate level by giving them more money. I mean the majority of the inflation problem we had was simply companies raising prices to make record profits and blaming it on inflation and increase in costs which is totally not reflected in their profits. I mean if the cost of things had increased and they had to raise prices as a result you wouldn't see the record profits. Sure some cost increased due to covid and other issues but it wasn't to the point of the increase in prices to the extent they did. Granted it is a bit harder to target cooperate profits so I guess I can sorta see why we don't tend to do that but it still feels bad tbh. 

[wseaton]

Point 1. If you want a living wage learn a living skill. Not Burger Kings responsibility to compensate you for bad life choices. 

 

Point 2. Fast food joints are hyper competitive, so in a respect savings with automation will trickle down to customers. 

 

Point 3. Our recent high inflation isn't a mystery. Its the result of massive federal stimulus during the pandemic. Larry Sumners and every other economist has been crystal clear on this. Inflation doesn't just happen. Its still amusing when I see comments that we should have more govt money printing, but less inflation. I always try to divide by zero as well. 

[LAwLz]

19 hours ago, Brooksie359 said:

You expect Wendy's to lower the price of their products and not just pocket the extra profits? How naive. If history has shown anything its that most of the time companies just take the extra profits for themselves and don't pass on the savings to customers or increase pay to employees. They just take that money and bring it to the top because they have the fiduciary duty to maximize profits as a publicly traded company so technically have to screw over their workers to maximize profits as much as they can get away with. 

What history are you referring to?

In Sweden, we have had a lot of debate regarding food prices, so I have been going through the biggest local supermarket financial statements recently.

I can confidently say that when they introduced the self-checkout service and were able to cut down on personnel, those savings went straight to customers. They did not pocket that change. At least over time.

We can see this because in their financial statement we can see that it was a big upfront cost but their margins on food products stayed the same. Then after a few years, their margins were lower. Their personnel cost was lower too, but from what I can tell reading their financial statements it seems like they lowered their prices to be more competitive with other stores.

 

Supermarket chains are a bit different than fast food chains because with supermarkets, they often time sell the exact same thing as their competitors and there are few ways to be competitive other than lowering prices, but I think the price is still a big selling point for some fast-food chains. As a result, I expect fast-food chains to pass on savings in one form or another to customers. It's important to remember that sometimes companies make more money by lowering their prices, and this will probably enable Wendy's to reduce their staffing cost. It opens up the possibility to make their product more appealing to customers by lowering their prices.

 

 

12 hours ago, Brooksie359 said:

I just think it's weird how when inflation is a problem we always attack it at the consumer level rather than trying to attack it at the corporate profit level but when it comes to try and stimulate the economy now all of a sudden we should attack it at the cooperate level by giving them more money.

I think you've been getting too much of your financial education on echo-chamber subreddits.

1) In the US they clearly didn't stimulate the economy at the corporate level. The US government were handing out massive checks to people (not companies) like candy during the pandemic and it is one of the major reasons why we have this high inflation to begin with. 

 

2) Inflation is a rather complicated thing, and pinning all the blame for it on "companies just want to make more money" is quite dumb and shows a lack of understanding. 

 

 

12 hours ago, Brooksie359 said:

I mean the majority of the inflation problem we had was simply companies raising prices to make record profits and blaming it on inflation and increase in costs which is totally not reflected in their profits.

No, inflation can be caused by several things, but the normal cause is a because of a feedback loop containing four different components, and no individual component is the "cause", they all lead into each other.

 

 

Increase in general buying power and Production costs go up     →      and demand rises

 

                         ↑                                                                                                   ↓

 

 Workers get paid more                     ←                           Firms raise prices and demands from workers

 

 

 

When people get higher salaries, product costs go up and so do people's spending power.

When people have more spending power, they tend to buy more things, which means demand goes up.

When demand goes up, prices generally increase (since there are more buyers but the same amount of stuff to go around) and companies try to counteract this by for example demanding more from workers or hiring more.

When this happens, workers expect to get paid more (more experience, higher production output, etc), and thus their salaries gets increased. And now we're back to square one with higher production costs.

 

That is the leading cause of inflation. That is also why every economist in the world will tell you that when seeing very high inflation, it is important to not just raise everyone's salaries because that will just increase inflation even more (by increasing production costs, not because companies just want to chase more profits). Hell, even Swedish unions (which are extremely common and powerful, not like in the US) say this. (Original language, and Google Translate) :

Quote

Our assessment is based on many different factors, of which the companies' profitability is an important one. No one benefits from salary increases that are not in balance with the development in the companies and the economy in general. It is even the case that the wage earners may lose out if it goes so far as to affect jobs.

In the 80's we saw exactly this, when high wage increases caused prices to increase even more and that gave us a price increase in society that wiped out the wage increase in the members' wallets. Different groups negotiated separately and competed with each other to get a higher percentage. The companies' ability to sell their goods and services deteriorated because costs increased significantly more in Sweden than in competitor countries. We had a situation that was not good for either the employees, the company or Sweden as a country. 

 

-snip-

 

Because what happens if wages increase more than the companies can bear, is that the companies compensate the increase in costs with higher prices and then we risk that the price rise, inflation, "eats up" the wage increases and we are left without so-called real wage increases.

 

 

 

[Alex Atkin UK]

Why do production costs go up if more people are buying?  Higher demand is supposed to make production cheaper due to economy of scale.

 

I can even understand things like energy prices going up as a means to discourage consumption of a finite resource, but that's a terrible way to do it as then people on low incomes can't even afford the basics.

 

I also get shortages can mean spending more on sourcing what you need to produce the product, but that is clearly not the case if they then have record profits.  That's just plain profiteering.

[LAwLz]

1 hour ago, Alex Atkin UK said:

Why do production costs go up if more people are buying?  Higher demand is supposed to make production cheaper due to economy of scale.

I didn't say it did. I said production cost goes up when employee salaries goes up.

 

But there is a scenario where prices goes up by more people buying and that's when the supply doesn't grow at the same rate as demand, which is pretty common in the short term. 

 

 

1 hour ago, Alex Atkin UK said:

I also get shortages can mean spending more on sourcing what you need to produce the product, but that is clearly not the case if they then have record profits.  That's just plain profiteering.

Please note that it's not enough to just look at a single number to determine the financial status of a company. It usually doesn't help that the number that gets thrown around the most is revenue even though that doesn't show how good or bad of a financial situation the company is in. 

Record profits doesn't mean a company are overcharging for their products either. As I said earlier, lowing prices can sometimes lead to more sales, and thus possibly higher profits. 

[HAL90000]

On 5/10/2023 at 1:38 PM, OhYou_ said:

good. 
less overhead

cheaper food

less money going to food

more money going to education and bettering your life

education and bettering your life going to self worth

self worth going to image

image going to physical shape

physical shape going to eating healthier

eating healthier going to not eating wendys. 

Inflation continues to spiral. Alphaghetti now $14/can
Learn to hunt raccoons and start fire by rubbing two sticks together

Become feral human kind of like Tarzan

 

Bad

Don't use brain

Reject objective reality

Live in a forest of delusion

Believe that less money in the public's pockets and less tax revenue=better education

Can't even afford Wendys

End up doing unspeakable things to afford Alphaghetti

[wanderingfool2]

It will be interesting to see what happens when people are replaced by AI.  Having been in a family that has multiple different orders when going to a fast food chain, about 50% of the time they get something wrong on the order.

 

The most annoying is when they add cheese to a hamburger that's meant for the lactose intolerant...when that happens about 90% of the time I watch the cook in the back just scrap off the cheese (at which point I refuse the order).

 

The jest of what I'm saying, when you subtract items that normally are on fast food items I find they often will make the mistake.  As a note as well, always ask for a receipt as sometimes they tack on an extra item or ring in an item without the combo pricing.

 

9 hours ago, LAwLz said:

Supermarket chains are a bit different than fast food chains because with supermarkets, they often time sell the exact same thing as their competitors and there are few ways to be competitive other than lowering prices, but I think the price is still a big selling point for some fast-food chains. As a result, I expect fast-food chains to pass on savings in one form or another to customers. It's important to remember that sometimes companies make more money by lowering their prices, and this will probably enable Wendy's to reduce their staffing cost. It opens up the possibility to make their product more appealing to customers by lowering their prices.

  I actually avoid some fast food chains because the pricing is so crazy compared to other fast food chains (I was looking at the pricing at Five Guys as an example and the total cost came out to more than getting a burger at a sit-down restaurant so I went nope and got a cheap burger somewhere else).  There will be the pressure I think needed to keep the cost relatively low.

 

Actually in general I could see it being as a way to bolster profits without having to raise the prices...but generally would be hard to tell since the market strategy Wendy's takes could differ depending on what the goals are of the board.  (Trying to gain extra profits quickly or just trying to minimize expenses for the future)

 

27 minutes ago, LAwLz said:

Please note that it's not enough to just look at a single number to determine the financial status of a company. It usually doesn't help that the number that gets thrown around the most is revenue even though that doesn't show how good or bad of a financial situation the company is in. 

Record profits doesn't mean a company are overcharging for their products either. As I said earlier, lowing prices can sometimes lead to more sales, and thus possibly higher profits. 

This 100%.   It's like how Linus went on about how the grocery stores made record profits...it's a naive approach to just look only at a singular number and profess there is a problem without trying to figure out why.

 

Like in that example, grocery stores made roughly the same margin...as a hypothetical to bring your point home.  If bread is bought for $1 at a grocery store, and the store sells the bread for $1.50.  Then "inflation" hits and the grocery store buys the bread at $2 they mark it up by the same %, so it's $3.  Their claim as well was that people also purchased more items that already had built in higher margins.

 

A good example of "revenue" as a number is Lucid Motors, they had $150 million in revenue Q1 2023 a growth of 3x since 2022...the problem for every vehicle sold they spend about 3.3x the amount making the vehicle...although even in this case it's not a great measure as they are just "starting" so they haven't hit the stage where the full economy of scales applies (or in that case whether or not they even would be able to hit it is the better question) [If they keep their revenue growth as it is, without somehow miraculously reducing costs...they will be bankrupt within a year]

 

9 hours ago, LAwLz said:

No, inflation can be caused by several things, but the normal cause is a because of a feedback loop containing four different components, and no individual component is the "cause", they all lead into each other.

Important to note that lots can also feed into the feedback loop to make it accelerate at crazy levels.

 

Overall I'd argue that the 4 components don't really paint the picture as well of what caused the recent trend.

-People went into lockdown, causing issues with processing, transportation and selling of staple items; causing a shortage (and massive spoilage)...plus factor in a drought in California that has created more concern regarding staple items (if you produce half the amount of crop you still will have to try sell it to make a profit...so you increase price to the vendors)

-Front-line workers needed a raise to work in pandemic level conditions

-A rise in frontline worker wages meant raising overall pricing to maintain margins + raising pricing because the baseline pricing also increased (due to similar reasons).

-This in turn mean everyone everywhere wanted raises to compensate for the higher prices, mixed in with a surge of Covid money that allowed for spending on non-essentials.

-Stores had issues staffing as people expected higher wages, which lead to raises, which then the cycle continues

 

I know it's very similar to yours but I'd argue that a lot of what happens with inflation can happen at the staple item level and not necessarily demand for items (unless you were referring to demand for higher wages); which then quickly bubbles up as people value themselves more.

 

In general inflation as we saw it can happen in many ways, but can greatly be driven by spending at the country level as well (which is what we saw happen with Covid relief money)

[Brooksie359]

11 hours ago, LAwLz said:

What history are you referring to?

In Sweden, we have had a lot of debate regarding food prices, so I have been going through the biggest local supermarket financial statements recently.

I can confidently say that when they introduced the self-checkout service and were able to cut down on personnel, those savings went straight to customers. They did not pocket that change. At least over time.

We can see this because in their financial statement we can see that it was a big upfront cost but their margins on food products stayed the same. Then after a few years, their margins were lower. Their personnel cost was lower too, but from what I can tell reading their financial statements it seems like they lowered their prices to be more competitive with other stores.

 

Supermarket chains are a bit different than fast food chains because with supermarkets, they often time sell the exact same thing as their competitors and there are few ways to be competitive other than lowering prices, but I think the price is still a big selling point for some fast-food chains. As a result, I expect fast-food chains to pass on savings in one form or another to customers. It's important to remember that sometimes companies make more money by lowering their prices, and this will probably enable Wendy's to reduce their staffing cost. It opens up the possibility to make their product more appealing to customers by lowering their prices.

 

 

I think you've been getting too much of your financial education on echo-chamber subreddits.

1) In the US they clearly didn't stimulate the economy at the corporate level. The US government were handing out massive checks to people (not companies) like candy during the pandemic and it is one of the major reasons why we have this high inflation to begin with. 

 

2) Inflation is a rather complicated thing, and pinning all the blame for it on "companies just want to make more money" is quite dumb and shows a lack of understanding. 

 

 

No, inflation can be caused by several things, but the normal cause is a because of a feedback loop containing four different components, and no individual component is the "cause", they all lead into each other.

 

 

Increase in general buying power and Production costs go up     →      and demand rises

 

                         ↑                                                                                                   ↓

 

 Workers get paid more                     ←                           Firms raise prices and demands from workers

 

 

 

When people get higher salaries, product costs go up and so do people's spending power.

When people have more spending power, they tend to buy more things, which means demand goes up.

When demand goes up, prices generally increase (since there are more buyers but the same amount of stuff to go around) and companies try to counteract this by for example demanding more from workers or hiring more.

When this happens, workers expect to get paid more (more experience, higher production output, etc), and thus their salaries gets increased. And now we're back to square one with higher production costs.

 

That is the leading cause of inflation. That is also why every economist in the world will tell you that when seeing very high inflation, it is important to not just raise everyone's salaries because that will just increase inflation even more (by increasing production costs, not because companies just want to chase more profits). Hell, even Swedish unions (which are extremely common and powerful, not like in the US) say this. (Original language, and Google Translate) :

 

 

 

I am not sure about how grocery stores work in your country but in the US they are subsidized so it's very hard to really tell what causes the prices and even then cost at grocery stores has only gone up tbh. Also when self checkout became a thing I didn't really see my grocery store prices change at all but again I do think that might have something to do with goverment subsidies. Also naming the one time in the entire US history where the goverment gave out stimulus money to the people rather than businesses isn't really a good point against the trend of the goverment generally giving stimulus to cooperations rather than people. Also its not like it was possible to give out money to businesses to counteract covid unemployment issues especially when you had to shut a bunch of stuff down. The only viable option was to give people money and ironically we had the record low rates of poverty when this was happening. Also the whole scarcity argument is total bs when we have a huge issue of people throwing out perfectly good food at grocery stores and restaurants because they couldn't sell them all. I mean they even do this at clothing stores to where they rip up clothes they can't sell. Like you said sometimes selling more at lower prices also results in good products so I see no reason why companies had to increase prices. They didn't have to they just did because they could. I mean yes I get that in a free market companies will increase prices as much as they can get away with but I am saying that you could easily tackle inflation if you deincentivize increasing prices or incentivize them to keep prices relatively the same rather than increase interest rates and screwing over people's spending power and increasing unemployment. 

[LAwLz]

4 hours ago, wanderingfool2 said:

Overall I'd argue that the 4 components don't really paint the picture as well of what caused the recent trend.

The person I was responding to seemed to talk about things in a historical perspective, so my expiation was about inflation in general.

The situation we are in today is extraordinary and doesn't generally follow the usual trends for a variety of reasons.

 

 

 

2 hours ago, Brooksie359 said:

Also naming the one time in the entire US history where the goverment gave out stimulus money to the people rather than businesses isn't really a good point against the trend of the goverment generally giving stimulus to cooperations rather than people.

I was giving that example since you said we never attack inflation at the consumer level in your post. We did during covid and it did arguably more harm than good.

We tackle inflation at multiple levels, but in general, the economy is steered by corporations (since those are the ones in charge of the jobs), and as a result that's the best way to adjust the economy. 

 

 

Honestly, your entire post reads as someone who has been reading too many posts written by people who have no education regarding economics. I barely have any higher level education in economics and even I can see through a lot of errors in your posts, which feels like someone parroting what they've heard others complain about.

 

 

2 hours ago, Brooksie359 said:

The only viable option was to give people money and ironically we had the record low rates of poverty when this was happening.

But it's not sustainable in the long term. The solution to poverty isn't to have the government print a ton of money and hand it out to everyone. That would cause hyper inflation in the long term. Oh wait... That's almost the situation we are in because of it. It's extremely short-sighted to look at the stimulus check and go "wow, that could have solved poverty".

 

2 hours ago, Brooksie359 said:

Also the whole scarcity argument is total bs when we have a huge issue of people throwing out perfectly good food at grocery stores and restaurants because they couldn't sell them all.

Again, you are missing the biggest picture. You get caught up in some minor detail and then use that to explain situations that are completely unrelated.

Believe it or not, but companies generally don't like to throw away products that they could otherwise sell because that's the same as flushing money down the toilet. If they throw away products they do it for a reason. Do you think they would throw away a perfectly good high-demand item if their shelves were empty and customers asked for said item? Of course not, they would try and sell it.

 

You finding some article about a store throwing out expired or damaged fruits does not mean there isn't a scarcity of let's say eggs.

 

 

2 hours ago, Brooksie359 said:

Like you said sometimes selling more at lower prices also results in good products so I see no reason why companies had to increase prices.

I feel lost. Who said anything about increasing prices? What increased in price? Do we have any evidence of it increasing in price?
I feel like you just threw out this whole "they increase prices" out of the blue without establishing what we are talking about or providing any evidence for it. 

We were talking about Wendy's and whether or not their potential lower staff expense will result in lower prices for customers. I feel like you let your mind wander off into some other conversation without establishing that in our conversation.

 

 

2 hours ago, Brooksie359 said:

I mean yes I get that in a free market companies will increase prices as much as they can get away

 

In a free market, competitors will also decrease prices to try and get a selling point to customers. In general, the free market incentivizes lowering prices, not really "increasing them as much as they can get away with". But it's a hugely complicated subject and trying to get all the nuance of it into a single post is near impossible, which is why I think it's bad to try and paint companies in the light you are doing right now and blame them for several things when they are merely a part of a much larger system with several moving, interconnected, parts.

 

 

2 hours ago, Brooksie359 said:

but I am saying that you could easily tackle inflation if you deincentivize increasing prices or incentivize them to keep prices relatively the same rather than increase interest rates and screwing over people's spending power and increasing unemployment. 

How do you propose we do that? Please remember that one of the biggest driving factors of increased prices is an increase in salaries, as explained by one of the largest unions in Sweden earlier.

By the way, increased interest rates hit really hard to companies too. They have loans too. Maybe I am misunderstanding you, but it sounds like you think that increasing interest rates is something that only affects consumers and that's why you are so pissed that's the tool often used to try and regulate inflation. If this is what you think then you have severe knowledge gaps that I think you need to correct before we can continue with this conversation. 

Maybe start by looking into why central banks use interest rates to manage inflation. It's not to punish consumers and give companies a free pass, I'll tell you that much because it often hits even harder on companies than consumers.

[Donut417]

2 hours ago, Brooksie359 said:

deincentivize increasing prices or incentivize them to keep prices relatively the same rather than increase interest rates and screwing over people's spending power and increasing unemployment. 

As long as unemployment remains low and spending remains high inflation will continue. Wall Street is bracing for a recession but even the Federal Reserve is not so sure it's going to happen. The reason for increased interest rates and trying to increase unemployment is so that the economy does fall in to a recession and the prices stabilize. The Chairman of the US Federal Reserve stated that we are in unknown territory because some how consumer spending is remaining high even with all the stuff they have been trying. As long as spending is high inflation will continue. 

[Alex Atkin UK]

10 hours ago, LAwLz said:

I didn't say it did. I said production cost goes up when employee salaries goes up.

 

But there is a scenario where prices goes up by more people buying and that's when the supply doesn't grow at the same rate as demand, which is pretty common in the short term. 

 

 

Please note that it's not enough to just look at a single number to determine the financial status of a company. It usually doesn't help that the number that gets thrown around the most is revenue even though that doesn't show how good or bad of a financial situation the company is in. 

Record profits doesn't mean a company are overcharging for their products either. As I said earlier, lowing prices can sometimes lead to more sales, and thus possibly higher profits. 

Thanks, I know there is a lot a nuance in this.  This was highlighted for example with Elon Musk, he was never "rich" in a "money in the bank" sense, it was all assets and by their nature an asset is only worth what the market will pay for it right now, today.  So you can lose it all in seconds.  That is often also how they value a business which is grossly misleading.

 

That said, given money is only a made-up asset to begin with, the whole financial system is quite a bizarre thing when you really think about it.  If enough people decide money isn't worth anything at all then suddenly it becomes so.  Its why I will never understand why some people hoard money, putting others into poverty.  As money has to hold value for enough to work, if the rich end up with all the money, the poor would have to find another barter system and then suddenly those rich people hold nothing of value at all.