Is it just me? Corporations

[StevieC]

Is it just me or does it seem that corporations today fail to realize that by being stingy with wages and rolling back wages / cutting work force that they along with others are only shooting themselves in the foot over the long term because consumer spending is then cut back out of necessity. It's like they can't see that one hand feeds the other and that if they give a little they will get a lot in return with benefit of a stable society where inflation grows and so do their profits and everyone is happy. Seems to me the cycle is broken and they just keep breaking it further ?!?

 

[aquariuscsm]

You're right on Stevie. Back in my retail days I saw how that slippery slope worked. The cut pay/benefits/hours/. Th crew is unhappy which flows down into the clientele. We'd work on a skeleton crew,and there would be no one to wait on the customers. So of course they'd walk out and spend their money elsewhere. Corporations' greed definitely shoots them in their own feet. I see it too as a customer when I go into an establishment.

 

[StevieC]

To elaborate I'm not saying that corporations should pay all the taxes and not earn profits, but that if they paid properly this would be spent back into the economy and ultimately back into their pockets with the benefit of the whole sales cycle going around and around instead of boom/bust/crashing/uncertainty of today. I mean we can all point fingers of what started this but at what point do they recognize and start moving toward change? I just don't get it.

 

[Leo99]

Why do you think inflation is a good thing?

 

[dmack2]

That’s what happens when the companies are run by bean counters & layers.

 

[StevieC]

Originally Posted By: Leo99

Why do you think inflation is a good thing?

Leo a certain amount is a good thing.

 

[StevieC]

Originally Posted By: dmack2

That’s what happens when the companies are run by bean counters & layers.

So glad someone else "gets" it. They are watching $100 bills float by as they pick-up the pennies in front of them.

 

[wimpy01]

Started in the late 70s-early 80s when accountants started taking over C-level positions. Chrysler's debacle when Iacocca saved them was due to R&D $ being killed cause it didn't contribute to the bottom line. Investors started looking at quarterly numbers instead of yearly numbers & M&As became REALLY popular. Buy a corporation, sell a portion of it or ship production overseas...etc., etc.

 

[StevieC]

Then it seems they throw super optimistic economist into the mix that keep telling everyone that everything is fine until it's not and then they are befuddled and have all the answers as to why something went wrong and then they go back to being super optimists again. It's like a cancer on the world but one that is totally preventable without killing the patient!

 

[WobblyElvis]

This video is sort of on topic although a little political. [uh oh] When the middle class does not have the money to purchase goods because their wages are scaled back, who is going to buy the goods to keep the companies going? https://www.youtube.com/watch?v=CKCvf8E7V1g

 

[StevieC]

I love TED. It's awesome. Thanks I hadn't watched this one.

 

[DdDd]

There are currently more people middle class in China than there ever were in the US. They don't need you to do good anymore for profitability. In fact it's more profitable to operate in countries where everyone is buying their first whatever with insatiable appetites than to try and replace whatever you have. And that boys and girls is the world in a nutshell circa 2017

 

[Mr Nice]

Originally Posted By: StevieC

Is it just me or does it seem that corporations today fail to realize that by being stingy with wages and rolling back wages / cutting work force that they along with others are only shooting themselves in the foot over the long term because consumer spending is then cut back out of necessity. It's like they can't see that one hand feeds the other and that if they give a little they will get a lot in return with benefit of a stable society where inflation grows and so do their profits and everyone is happy. Seems to me the cycle is broken and they just keep breaking it further ?!?

That's how companies maximize their profits. It's all about meeting the financial metrics the CEO wants....

 

[StevieC]

Yeah but what about sustainability or does it just matter what's right in front of them?

 

[StevieC]

Originally Posted By: DdDd

There are currently more people middle class in China than there ever were in the US. They don't need you to do good anymore for profitability. In fact it's more profitable to operate in countries where everyone is buying their first whatever with insatiable appetites than to try and replace whatever you have. And that boys and girls is the world in a nutshell circa 2017

So then how do we continue to grow and stay relevant with a thriving economy on this shore?

 

[Kage860]

Your logic is flawed. Let’s say store x pays its employees more, that doesn’t mean that its CUSTOMERS will spend more money, all else being equal it only means that its employees have more money to spend at OTHER stores, so store x makes less money, not more. QUALITY of emplyees hired at different wages is another argument that is valid but not the one you are making here. On average employees are basically worth what they get paid, if they are worth less an efficient employer will fire them, if they are worth more in the marketplace then they should quit and work where they will be paid more. This is called quit rate, and it would force the market to correct and wages to go up. Based on your logic minimum wage should be $100 an hour and everyone would be rich.

 

[StevieC]

Originally Posted By: Kage860

Your logic is flawed. Let’s say store x pays its employees more, that doesn’t mean that its CUSTOMERS will spend more money, all else being equal it only means that its employees have more money to spend at OTHER stores, so store x makes less money, not more. QUALITY of emplyees hired at different wages is another argument that is valid but not the one you are making here. On average employees are basically worth what they get paid, if they are worth less an efficient employer will fire them, if they are worth more in the marketplace then they should quit and work where they will be paid more. This is called quit rate, and it would force the market to correct and wages to go up. Based on your logic minimum wage should be $100 an hour and everyone would be rich.

I see it a different way. 1) All employers are paying the same because they are all learning from each other which is why wages are stagnant. 2) People can't quit and work elsewhere for higher wages because there is a lack of these higher wages and a lack of jobs in general for them to run to versus yester year where jobs were abundant and employers were forced to pay more to attract candidates. (It's an employers market at the moment) 3) People will always spend the majority of what they have. Yes some of it gets parked in savings but this is just spending that happens at a future date which benefits the economy more long term. No money is ever parked forever. Well that is unless you are in the top 1% and have so much you can park it forever. You can't have a functional economy unless it's cyclical and money is changing hands. Right now it's like the corporations put a siphon onto this cycle and have diverted money into a holding pot while still expecting the cycle to continue to go around and keep growing. It's not gonna happen because they have drained off too much momentum.

 

[ET16]

This is why unions can bee good. Look at Germany.

 

[Rand]

What can happen: Upper management have golden parachutes. They grind good company into dust for short term profit usually 5-10years after a few years they retire, move on with giant bonuses, etc. Next company hires them thinking look what they did over there.. Meanwhile all the bad decisions catch up making the first company falter... They blame the new executives that just continued what the previous set did. So basically the executive racks up 10's of millions in pay and bonus.. and moves on. Meanwhile thousands of people lose their good jobs.. yes its very broken.

 

[4WD]

At one time companies relied on loyalty of where they were from … and customers who bought the home brand. North America no longer does that … Korea still does and that quickly contributed to doubling of an existing trade deficit when that side of “free trade” is not understood upfront … The corporate executives have no loyalty either … keep raising taxes and they move headquarters abroad … many have.