The teaching of economics and socioeconomic policies has to deal with the topics around inflation and economic inequality for centuries. Greedflation has become a newly coined term for the rise of inflation due to greedy firms who use a window of opportunity to achieve extra profit margins or windfall profits. At a time of perceived price rises in many sectors, sectors that have no cost increases might still try to push prices higher simply because almost everybody else does so. Higher profits then show up in the reporting season of enterprises quoted at the stock exchange and the increase in inequality between wage earners and shareholders will rise. Greedflation is a summary term for it. The ECB European Central Bank has mentioned this and Reuters has reported on it as well end of June 2023. Since then a wait and see strategy has been adopted. Now in February 2024 we witness the wider spread of extraordinary profits of big firms not only in the fossil energy sector but also bog banks. The economies and societies suffer huge losses and a massive redistribution of capital. Subsidies introduced to lower the shock of the coronavirus crisis and the Russian aggression are unpopular to be scaled back. Employees and their trade unions have a hard time negotiating adequate wage increases whereas most companies use the momentum of seemingly general price rises to push profit margins. The translation of this mechanism to the political economy risks to jeopardize the support for capitalism and market forces in general. Another wave of increasing inequality endangers the survival of democratic societies. Countries with only a short experience of the functioning of market economies are at a particular risk. Germany’s decline into dictatorship in the 1930s after the severe economic crisis should be remembered as a major threat. Greedflation is a very serious and very real threat which we have to address with economic and social policies rather than waiting until the European elections have passed. Time to act, the thinking has been done. Evidence accumulates to make the political case.
