Margins need to be up in order to pay for the increased cost of capital.

You don’t pay costs out of margin. That’s what‘s left after costs.

Own capital costs are exactly the thing that margins pay for.

If they were paying lots for capital, they'd have lower margins.

Only if it’s debt financed.

Adding in that the economy was partially parked up through COVID and the risks of being shut down by the government turn out to be much higher than people realised hitherto. Margins need to go up in that sort of environment to push everything back to how things were pre-pandemic, otherwise nobody will bother. Not many are crazy enough to put lots of money into low-margin businesses that are at high risk of being shut down. Capitalists are greedy but not stupid.

Not quite right.

I'd argue the reason you want higher margins in a higher interest rate environment is the "risk free rate" is now higher.

If the risk free rate is basically 0%, you'll invest in a risky business that makes 5% margin. If the risk free rate is 5%, now you want the risky business investment to have 10% margin to be worth the same investment.

>There is room for workers wages to go up but right now the higher prices are mostly benefiting investors and owners.

Hence we're getting levels of labor action across the board not seen for generations. The system is working, albeit slowly.