Wow – she has zero understanding of economics.
She has a Ph.D. in Sociology, and was an economic policy advisor to Sen. Elizabeth Warren – yet she is an economic illiterate who does not understand the basics of microeconomics.
In free or relatively free markets, prices are determined by what the market will bear – this is known as the market clearing price.
Costs are determined by the market price. If you can’t make your widget at a cost that can sell at the market clearing price, your business fails. This is economics 101.
Note – many companies announce price hikes, claiming that “their costs have risen”, which is false but a convenient way to soften their messaging about raising prices as it implies that prices are not within their control. This, based on Owens’ other posts, has confused her. Note that a company with monopoly pricing power can indeed raise prices above what would be a free market price.
An AI assisted summary
⚖️ How Markets Actually Set Prices
- Market clearing price:
In competitive markets, the price is determined where supply equals demand. This is the equilibrium price—the point at which buyers are willing to purchase the quantity sellers are willing to supply. - Costs are constraints, not determinants:
A company’s costs don’t dictate the market price. Instead, firms must align their cost structures so they can profitably sell at the prevailing market price. If they can’t, they exit the market. - Price signals:
Prices communicate scarcity and value. Rising prices signal strong demand or limited supply; falling prices signal oversupply or weak demand.
💼 Why Companies Blame “Rising Costs”
- Narrative framing: Firms often justify price hikes by citing higher input costs (labor, raw materials, energy). This is partly PR—customers are more accepting of increases framed as “out of our control.”
- Cost-push inflation: While costs don’t set the market price, they can shift the supply curve. If costs rise, fewer firms can profitably supply at lower prices, nudging equilibrium upward.
- Strategic cover: In oligopolistic or concentrated industries, “rising costs” can serve as a coordinated excuse for price hikes, even when demand-side dynamics are the real driver.
Housing: Market clearing prices (set by demand and supply constraints) often far exceed construction costs. Builders must adapt costs to fit what buyers can afford, not the other way around.
Healthcare: Providers cite “rising costs” to justify higher prices, but the real determinant is market power and demand inelasticity.
Generational shifts: Younger consumers face markets where symbolic assets (housing, education, healthcare) are priced at clearing levels far above historical cost benchmarks, forcing lifestyle adaptation.
