By Philip Cross, December 8, 2022
Greedflation continues to circulate as the left’s main explanation for the surge of inflation in 2022. The idea is promulgated by leading collectivists such as NDP leader Jagmeet Singh and economist Jim Stanford. But the evidence cited is always anecdotal. The release of comprehensive data on corporate profits in Statistics Canada’s National Accounts for the third quarter allows us to scrutinize economy-wide trends and refute the idea that greedflation fuelled inflation.
Over the past four quarters, corporate profits rose 12.9 per cent. With overall nominal GDP growing 11.1 per cent, the share of profits edged up from 28.1 per cent to 28.5 per cent. So the end result of all the alleged unbridled avarice, canine cunning and financial swindling that corporate Canada was able to muster enabled it to grab just 0.4 cents more out of every extra dollar circulating in the economy over the past year. This explains nothing about inflation over same period.
The gain in profits is much less than the 18.2 per cent increase in government indirect taxes and close to the 11.3 per cent gain for mixed income (mostly farmers and unincorporated business). Although governments have profited the most from inflation — a $28-billion windfall, the fall economic update reported — collectivists never complain it’s greedy governments that fuel inflation.