ECONOMY

Sellers don’t like moderate consumption

«We have high profit margins in many branches of commerce and industry because competition does not work everywhere well and openly,» Economy and Finance Minister Giorgos Alogoskoufis told Skai Radio last week, expressing a view that coincides with those of many left-wing analysts. In the collective pay pact negotiations between unions and employers in coming weeks, we shall see whether this apparent merging of views will also take a practical application. Both sides know and hope that by maintaining a high rate of consumption, a crisis will be avoided, at least as regards its worst aspects. But beyond the previously noted similarity of views, there is serious disagreement on the deeper causes of inflation. The government, as one might expect, prefers the scenario of «imported pressures.» Prices of oil, cereals and raw materials have been steadily on the ascent for more than a year now. Such rises have inflated cost structures and been passed on to the consumers of most goods and services. This development has a direct negative impact on incomes. Alogoskoufis’s admission leads to the conclusion that the two main factors of production, capital and labor, do not enjoy equitable positions in the productive process. If the big producers and distributors can readjust their prices without obstacles, they are certain to do it. They are few and it is so much easier for them to coordinate their moves. By contrast, consumers’ only defense is to reassess their spending. Unlike many of their foreign peers, we Greek consumers can react effectively, in view of the high profit margins enjoyed by the manufacturers. A little moderation in consumption is painless anyway.