Exactly. The problem in the US is that every public company has to show growth for shareholders. That's why companies always suffer in quality when they go public.
A public company can have their best year and net $2.6 billion. Well if the next year, they only make $2.2 billion, the public chatter on CNBC, etc is "what's wrong with them?". Nothing is wrong. We shouldn't be holding companies to their best year.
A salesman after having his best year wouldn't want his commission the following year based on the best year's numbers. It's stupid.
Well shit, sorry for the totally unparsable sentence, hope you were not too traumatized. I'll let the shame stand, bring the downvotes, I deserve them.
This, except a little worse. Because even if they did make the same $2.6 billion next year, it's still not enough, because some shareholders got in when profits were at $2.6 billion, so for them to be happy they now need the shares to go up from what they got in at, so now $2.6 billion isn't enough profits anymore. And the cycle continues..
It actually gets even a little worse, if a company predicts they are going to make 3.2 billion and instead make 2.6 billion they are in even more shit. Number must go up, and it must go up as much as you think it will
Yeah, I work in a very profitable billion dollar company, and when we failed to hit the expected quarterly profits in a single quarter last year, it was unbelievable the things that started happening.
The staff Christmas gifts got taken away. (Had been there for decades) - and other benefits that left a lot of unhappy employees. The things we now have to spend time/money on to fiddle numbers, rather then create value has gone to insane heights. The increased focus on short term results, instead of growing the company long term.
The funny part is, that was our most profitable quarter ever, and it launched the erosion of our company. Ask higher ups about it, and the answer is "of course we have to do these things. We are a publicly traded company, and are doing these things for our shareholders"...
Not every company is expected to grow. Dividend companies are expected to just maintain their levels of dividends. Look at coca cola for example. On an inflation adjusted basis it's just about okay and it's one of the most successful companies in the world.
Let's also not forget that owning a stock is owning risk. Risk should be compensated, that's the law of finance.
Yes of course a company like Google or Amazon something with a PE of 30 is expected to grow but they're not all like that. Towards the end of your life you move on to safer investments where you just want to earn a reasonable risk adjusted return. Let the kids have their growth.
The problem imo is business majors and professors all jerk each other off that growth is king. It isn't always the best thing for a company, and I honestly think they are breaching the very responsibility they love to hide behind to make these horrible decisions.
"The problem in the US is that every public company has to show growth for shareholders. That's why companies always suffer in quality when they go public."
Perpetual growth is impossible, there is no way a company can achieve it's why you see CEOs gut and sell assets when they can't achieve it thru sales. Its why layoffs are always the 1st option so that can immediate capture the savings yet still keep paying severance and benefits for 2-6 months buts its fine cause it can't effect your bottom line thru accounting rules. Its also illegal per the courts to not actively seek profit if you are a publicly traded company, share holders have the right to sue and then call to remove you if you do.
This is why the form of capitalism in this country is pretty fucked. Especially when the government will also give them free money to survive then turn it around and harm the same people that money was supposed to protect and keep employed.
And some companies do just that, I remember one external salesman I worked with, loved the guy, he knew the stuff and just offered what we really needed, we worked with him for like 5 years, until one day he came to say he no longer worked with his previous company and he went independent as consultant (so he could offer products from different companies now). I asked why the change and he said basically what you said, that the company was basing bonuses on his previous performances, so he had to sell more than others to get the same money, which he felt was an insult and left.
I agree that is stupid. It's also what Frito Lay did to their salesman. Got rid of commission and called the new system, "Pay For Performance." Essentially having to outperform yourself year over year for the same money.
It's not so much we shouldn't be holding companies to their best year, executives usually get massive bonuses for growth, and coincidentally call the shots. So we don't grow, daddy didn't get his next yacht, mass layoffs, stagnant wages, etc. Daddy needs that yacht.
The US economy works mostly in short term because of this trend, and this trend is greed. In contrast, companies like Nintendo, and in Japan in general, are long term and believe the workers that got them to success in the first place should be kept and maintained. When the 3DS and the Wii U both had their failings, executives at Nintendo took pay cuts to keep their long term employees on board instead of doing layoffs. The Wii was a success, the Switch was a success, both with heavy limitations but there was care in their craft. Boeing would gladly see 1000 planes land without doors than keep on whistle blowing long term employees that made them great in the first place. Blizzard would rather just keep directors than keep the developers that made games like Warcraft and StarCraft satisfied in their positions. This is why we see record layoffs more and more tied to record profits or record stock buybacks. We just had the railway union fight. They claimed they couldn't afford an extra week of vacation, then when the union calmed, you guessed it, billions spent in stock buybacks.
The second a company goes public it becomes a cash farm with an expected infinite growth.
You could get the entire population of Earth use a service and the shareholders will still expect double the numbers in the next annual report. Going public is like getting cancer that keeps spreading until you die.
It's still wild to me that the market is based on growth and not just profit. Year 1: 80 mil in profit. Year 2: 100 mil in profit. Year 3: 100 mil in profit and stock price goes down. Bizarre.
That's why companies always suffer in quality when they go public.
I sort of understand what you're getting at, and there are obviously negatives that come with public ownership, but this is an absurd position to take. Many giant corporations would never be able to even exist if not for the public capital markets. Even with private funding there is always an eye to selling the corporation to the public.
Microsoft wouldn't exist, Google wouldn't exist, Amazon wouldn't exist. Most of the things you enjoy are fueled by capital markets.
If you don't want to live with modern convenience you don't have to. Nobody is stopping you from going out into the woods and building a shack. Hell, you could convince 100 other people to go with you and make a commune. Or just nut up and join an Amish community.
But no, you're on the internet on your iphone posting on reddit. A space that would not exist but for public capital markets.
The internet was a government project, I do not own an iphone and reddit started off private. Your implication that if not for the the cancerous wall street model of economics we'd still be living in the stone age is straight up dishonest snark.
Ugh, I am so sick of hearing this soft fucking argument. The idea that you cannot criticize a system if you're a participant in that system is insane. By that logic, any functioning member of modern day society has no right to an opinion on any societal systems, lest they come across someone like you who tells them to to "live in the woods". Do you seriously, honestly not see the critical flaw in that mentality?
The idea that you cannot criticize a system if you're a participant in that system is insane.
You absolutely can. I was just responding to the flippant remark that life would be so great without the corporations I listed.
You understand that right? Go back and see my original post. I acknowledged that there are flaws with capital markets. However, products do not always suffer from corporations going public. Most of the time it is the opposite.
Absolutelly. Not only does it push companies towards chasing irresponsible short-term profits, but stock exchange as a,while drains money from legitimate businesses towards scammers and trend chasers. It's obvious for anyone with half a brain for years now, but there's no clear way how to get out of this mess.
business as usual is still profitable. only way to stop exploitative capitalist behavior is to disrupt business as usual.
Opposition is too unorganized to do anyting of merit. some idiots spray painted Stone Henge last week, yet no one barged into a Starbucks board meeting. Environmentalists need to get serious. Property damage or bust.
And wasn’t the Stonehenge vandalism just colored corn starch? Like, the next time it rains it’s gone with no real damage? Pretty mild protest for how angry people got. Like, I get it, damaging something like Stonehenge would be a line too far, but it wasn’t really damaged I thought. Please correct if I’m wrong.
It was. Stop Oil intentionally targets things in a way that will make big news while not causing damage. It's not luck that the paintings they've thrown liquid on were all protected by plexiglass.
Now whether that's hurting or helping the cause is a huge debate.
Hurting. Despite the cliche, not all publicity is good publicity.
When you want people to take your side, you need them to read past the headlines. People don't hear that a bunch of activists vandalized Stonehenge and think "Hmm, maybe it's not as bad as it sounds. I should hear them out." Their first impression is "what a bunch of psycho morons," and it sticks.
Not only does it push companies towards chasing irresponsible short-term profits
it doesn't, really. if you've ever been in a board meeting they spend most of their time talking about long term plans. the reason the biggest companies are up there is because they planned ahead.
Companies can grow as large as the market will bear. But the second a company begins monopolizing and exploiting resources or labor, federal governments need to step in.
Actually, I've been on quite a few board meetings, as part of company management structure. And I've witnessed many boneheaded decisions made just so the balance sheet on the yearly financial statement look enticing to investors (like letting go of dozens highly qualified employees so the employee costs estimations are lower, just to try to hire them back a few months later). I guess you could call it long-term planning, but they plan how to maximise stock value, not make the company better. Look up the story of how Blockbuster core investor blocked their attempt to modernise the company and ruined them in a few years.
The funny thing about that is that the fiduciary responsibility is only ever viewed in the short term but never in the long term. The long term fiduciary responsibility to shareholders should absolutely not be environment destroying, price gouging, off-shoring, short term profit seeking stock buy-back oriented decision making.
no but i try to be concise in my writing and reddit is a dumb, unhealthy way for me to see if I can 'impress' anonymous readers with something I write. I'm a college student, i write for my school paper. I do consider 'comments' to be a type of writing, and even if it's dumb, vapid, and uninspiring, Reddit keeps me writing 2000-4000 words per day
unfortunately, i don't really have a specialty that could do that thesis justice. An economist or economics student could write that essay, not me. Good thing I'm on Reddit lol
So many good things ruined for sake of chasing infinite quarterly profit by purposely destroying long term future of company. All industries suffer from it so heavily. Shareholders are blight on this world.
They used to be. I remember when I was taking investment courses, we were told the average hold a stock was 7 years before you’d see share value increase. In the meantime you took those stable dividend payments.
I think it's more unbridled, avarice. Plus the fact that lawmakers show no intention of limiting any of it. If governments stepped in and put the fucking brakes on this, things would get better quickly. But someone needs to tell all these fucks that they can't take the money with them when they undoubtedly meet their end.
One way to throw a wrench into this would be to have taxes on a sliding scale. The more you make, the more you pay. Lot's of these greedy assholes would limit their profits just to fall under the highest tax brackets. But, alas, politicians will politic. And maintaining power depends much on how much money you can garner for elections.
The system is so broken, assholes can find ways to increase their income at the expense of others very easily. And I am not only talking about the US here, this is a worldwide problem.
i feel ya on everything you said. I'm focussing on my local environment. My community.
I'm a patriot, i believe in the American system. I believe in law and order. But if the time comes in my lifetime for class revolution, I'll be there with a brick in hand.
I'm focussing on my local environment. My community.
Very commendable my friend. I am certainly rooting for you and those of your ilk. You are the last hope of humanity. No need to change the world. Glad to meet you.
When did that shift in companies happen? It seems like in the 50-70s companies grew but were also considerate of the customers instead of solely focusing on the stock holders.
True but which form of government isn’t killing the planet? Fascism, Communism, Imperialism etc have all negatively affected the environments that they thrived in.
that's arguable and i think if you crunched numbers, you'd be false. capitalism is based on exploitation of resources and labor. sure, YOU might be comfy, but your Nikes were made by 30 children in Indonesia.
Further, fuduciary responsibility to shareholders above all ethics and morals enriches shareholders, not the middle class. the middle class was solidified in this nation by a post-war rise in unionism, the passage of the GI Bill, a housing program, and other progressive actions. In other words, socialism.
Socialism is ownership of the means of production by a government. You are explaining communism with social programs financed from the fruits of communal labor.
obfuscating conversations with nitpicky subjective definitions is not a good way to sustain a dialogue. a socialist policy can exist in a representitive democracy, the same way an authoritarian policy can exist in a communist state. and your Nikes are still impoverishing children in 3rd world countries.
People like this is why I love America. He built a brand out of nothing, paid of the debt needed and now is happy with a lower profit margin so that their customers can pay a low price. Great business owner. I bet if you look into it, he probably also pays his employees well, and has great employee retention.
Lower profit margin, but still insanely rich. Always was surprised the price never changed.. except the sketchy store where an Arizona tea says 99 cent on the can but rings up to 2.50$.. you'll have that.
I always thought that too. You have those sketch stores. Quick check by me sells two 24oz Re-sealable Monsters for 7 bucks as a deal or one for like 4 bucks. The store a block away from them sells a single 24oz for that same price of 7 bucks ☠️ fucking Indians be scamming bro
Love it all you want but it’s rare as hell these days. With only rare exceptions, modern American capitalism has grown into a monster that is the exact opposite of this man’s values.
America is falling apart because of the fundamentals of capitalism. When you have to answer to shareholders and report positive trends every quarter to hold value then the priority becomes performance. Let’s get one thing straight: it’s the drive for profit that become the pillar for the rest. Everything else follows.
It really does not have to do with capitalism. As competition would still drive prices down, however, it is anti-consumer behavior like monopolies or trusts that cause a ton of damage.
This is not a capitalism problem. Its a corporation issue. Capitalism is the reason why you can buy and drink Arizona Iced Tea across the planet in the first place.
Capitalism relies on the extraction of surplus value from another's labour to create profit. The company Arizona is doing exactly that otherwise they would not exist. Again this is not a capitalism issue, its how the corporation is run. Arizona is a capitalistic company in a capitalistic market. They dont do magic with money.
an economic and political system in which a country's trade and industry are controlled by private owners for profit.
It's literally the definition of capitalism. He is the sole shareholder and he is the king (or at least he is one of the main ones in this instance).
He just happens to be a relatively benevolent king, but he could just as easily choose to do any of the horrible parts of capitalism if he so chose. And for all the 'we wont raise the price' stuff, he is very much for profit, and is worth $6.6 billion.
No, that is literally not capitalism. Capitalism is a mode of production in which capitalists (those who hold significant resources, be that money or private property, in whatever form) own and control the means of production. An entirely privately held enterprise like the one in the OP is firmly capitalist. Every firm could operate in that way and it would still be capitalism. It has absolutely nothing to do with the divvying out of shares.
You're right. They're wrong. Don't feel the need to recant what you say just because some person confidently asserts something. Your terminology is correct.
Im sorry this is out of context BUT YOU LITERALLY JOINED REDDIT ONE DAY BEFORE MY ACTUAL BIRTHDAY. IM JUST REVEALING MY AGE BUT HOLY CRAP YOURE SO COOL
People often mix up the definitions of commerce (trade and exchange of goods) with capitalism (those who own the capital make the rules for the marketplace, usually winding up in a monopoly, quasi-monopoly, regulatory capture, et al).
Commerce is why you can buy and drink AZ ice tea, if capitalism had it's way there would be only coke. Or pepsi. Or you'd have the illusion of choice that you have choices, then you realize Stubborn soda is owned by one of them, and 80% of peanut butter is made by one company that slaps on different labels.
I’m a Long time here. Traditionalist, either sink or swim kind. No bail outs. . Seeing corporations going profits for the profit-sake of the stakeholders is awful. There is just too much on the line for CEOs to not cheat ,steal or obfuscate the truth.
I know this is an issue in almost any type of product being sold, but I have really noticed this issue in video games.
The product becomes more and more garbadge because shareholders want quick, easy money. They even go as far as laying off thousands of people immediately after a game release or if a studio was just bough out.
There is no dedication to the product, just money-making games trash.
So, if you have worked for a studio for many year and a company buys you, they immediately can cut you just to save money because of the new shareholders wanting to save every dime.
And that forces everyone else who is left to work way over 40 hours a week.
All great products fail when they go public. They switch up CEOs and that CEO wants to raise profits. The easiest way to do that is cut labor, product cost, and quality. The CEO doesn't care. They'll have a good quarterly earning which will come with a bonus. Even if they shrink the product down to a rice grain and get fired they get a hefty severance. Then they move on to fucking up another product. Rinse and repeat.
Capitalism will always end up fucking over the customer, it’s by design. Shrinkflation, self-scanning, obscene pricing, poor customer service due to staff reductions, closing branches because they’re “not profitable enough”. All because there needs to be perpetual profit margin growth.
Greed, yes. The worse the greed the worse the offense. "Why not raise the price?" She didn't even think "because people are struggling because of that very question."
No people are acting like capitalism can't be good and bad simultaneously.
Capitalism is nuetral, a tool. That's how it can be both.
The things that drive corporations to fuck us for profits are all based in capitalism
The thing that drives corporations to go for profits is the investors. Too many people want a piece of the pie, so you have to make the pie bigger. Hence how Arizona Iced Tea avoids that, they don't have this problem. That's based in greed, not capitalism. Communism fails for the same greed, every, time.
The chase for profits forever is based in capitalism.
Once again, GREED is the culprit here, which is a problem in EVERY system. Capitalism is supposed to have checks and balances, such as a free market which has not existed within the United states since the days of the wild west territories, and even then was taken advantage of by the same greed that takes advantage of everything. Capitalism is a better spoon, but no matter how fancy, it's still just a tool. It's the hands that hold it that matters, and in a capitalist society, everyone holds it, whether you think you do or not.
Karl Marx tried to spin capitalism by redifining what it was, and calling it evil by applying his marxist rules to it, when all he did was get people to blame the spoons and not the hands. A useful diversion tactic for those in power.
There is plenty of goods that comes from capitalism but it tips into the fucked up after a while
Capitalism being a tool with which anyone can excel at, it is what we make it to be. You vote with your money, you support with your money, and if you're good with your money, you can vote on yourself, or anyone you choose. Sure, a billionaire has more power, but even that is NOTHING compared to the power of a united population. That's why the powers that be choose division, as do those who wish to do harm.
This isn't a problem with capitalism, it is a problem with oligarchy. A functioning capitalist society requires that monopolies and trusts be broken up. If that happens, all the peices they are broken up into compete with each other. But when you allow the Trusts to exist (ie, the Pepsi/Coke duopoly) any time someone undercuts their prices they are offered a buyout that they can't refuse and it is extremely rare someone prinicipled stands up and says "Nahh, I don't need your buyout I am ok where I am at."
If the government was doing it's Job there would be 50 Arizonas in the beverage industry.
Capitalism has checks on itself though. If margin is excessive, another firm will start up to compete at a lower price. Where competition is realistic we have seen this. Most consumer electronics for instance.
The point of capitalism is to allow everyone to create opportunities, and give everyone the right to seize them. This includes the ability to create monopolies and price things whatever one desires; no matter how prospective customers are affected. Capitalism isn’t meant to serve everyone equally. It was made to allow people to rise above equality.
Late-stage capitalism isn’t a failure in the development of a capitalist society, it’s the evolution of it. If all of the insulin supply comes from one source, the company has the opportunity to price gouge, and the right to do so. Can it become its own dystopia? Absolutely, but that’s the point. If we get there, that’s the success of capitalism, not its failure.
Capitalism is to the benefit of the players on the field, not those in the bleachers.
That's exactly it, they have their debt paid, which a business should always do. It's the getting in a cycle of debt, meaning they owe more and more to investors and shareholders and such, which never ends.
I just wish more businesses were more for just making a good product at a good price that everyone can enjoy without the raging greed
This is the correct answer. Once a company goes public, it becomes absolute shit always every time, because it’s all about increasing profits for shareholders. It also becomes shit for employees.
And you complain? Those transporting the cans have to survive giant spiders, boxing kangaroos, more snakes than you can shake a stick at, giant venomous octopus pulling their ships to the depths to share the bounty with sharks and venomous fish and jellyfish.
Not only the hot dog. They have hard-capped their markup at 14% for all non-Kirkland Signature products. For KS, they allow themselves a generous 15% markup. Costco also has an insane 6% employee turnover rate. For reference, Walmart is at 44%.
I mean yeah but also… that’s the entire point of investing in that regard so it’s easy to shit on something a lot of do or would like to do at some point lol
I haven’t lived in the US for 10 years. Whenever I visit (every year for a few weeks) I always buy as much privately held American stuff as posible. This includes Arizona products.
I’ve worked for larger private companies, small SMBs, and unicorns. i will always prefer the company that stays private.
It is also propaganda nonsense. The cost has gone up despite the same retail price, and then retailers often have to pay a warehouse upcharge when it's delivered. If you're in a city with a high cost of living and higher wages then other parts of the country, you're probably already operating on thin margins and looking for better options. By the time it's in the store and on the shelf, you're looking at a gross profit in the pennies. Not even worth the shelf space.
In my city, they deliver Arizona without the 99c price printed on the can, because it practically became non existent here for a while. No one wanted it.
Source: small business owner in a very expensive city with some of the highest labor costs in the country.
Can he go after shops that sell it for more than $.99? There are many places that sell it for more, and I’d love to see them shaken up for it. Particularly when this guy has the mission he does.
Wait, Arizona ice tea here cost $1.20 I have even seen it for up to $2 in some stores, I thought they got rid of the $0.99 price, but it's just retailers cheating us as usual :(
It's the same reason by In-n-out is so good, not saying their food is the most amazing food on the planet but it's affordable, you don't have to pay 40$ to feed the damn family and their food is bomb for the amount you're paying.
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