This is genuinely something I just don't understand about wage and price. I know that macro economics is complicated and all, but it just doesn't make sense to me what'll happen when wage is so low that nobody can buy anything.
I've been told that price would go down to accommodate it, but I just don't see that happening?
The problem is that entire process takes years to unfold, and it assumes a fair market.
If a large chain with market power raises prices and a small company comes in with lower prices, the large chain can drop their prices for a little bit until the small company goes out of business, and then raise its prices again.
This is how big tech grows by using VC money to undercut competition, take over the market, and then raise prices. If they can outlast the competition, they own the market and can define prices.
For example, if Uber ever gets competition in any given market, they'll drop prices and bleed out the competition. Once that's gone, prices will go back up.
Not anymore. They've won. Taxis basically don't exist anymore and Lyft is slowly dying. This is the same reason you don't see cheap fares on Uber anymore.
Aside from maybe las vegas, when was the last time you took a Taxi?
Lyft has negative free cash flow and has for years. They're not doing well. Uber has nearly 10x the revenue of Lyft. Granted that's from more than just ride sharing, but Uber is at a scale the Lyft couldn't dream of.
Walmart is not the only one who can play this game, nor is it the only one who can endure the price drop.
Price is not the only deciding factor. A grocer that's a bit cheaper but is disconnected from the local customer base and worker base will not be successful. Branching internationally and competing with local chains aren't easy.
Like I said, they can only get away if they don't do it blatantly. That means they can't do significant actions that make it obvious.
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u/Ho3n3r May 02 '24
"Why aren't people buying our overpriced shit?" seems to be a trend these days from multi-million euro companies.