The problem here is you're looking at the system as individual parts instead of the entire system.
Lets imagine an entire economic system that was steady state. Why would profitability have to increase?
Instead we have a system that profit must increase, and profit must increase in every component of the system constantly due to inflationary practices.
>He found that in 2021, corporate profits could account for about double that, nearly 60% of inflation, meaning it was not costs driving inflation. It was corporate profits. Now, some economists hear this and think this is proof that companies were just using inflation as an excuse to gouge customers.
You're talking about "profits" when you should really be talking about "costs".
At a macro level, in a large company/business, your employees expect raises for a variety of reasons (inflation, quality of life, promos, etc). A new product or feature may require hiring additional employees. If an employee exits, you may need to spend more money to hire a replacement. In addition to all of that, there are contractual obligations with vendors, your customers may be trying to eliminate product (or leave entirely), etc.
All of that raise the cost to run the business. If you want to keep your margin you need to raise your prices, cut expenses, or both.
Lets imagine an entire economic system that was steady state. Why would profitability have to increase?
Instead we have a system that profit must increase, and profit must increase in every component of the system constantly due to inflationary practices.