2016 POTUS Election Thread

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townsend

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The law of diminishing returns is true but wages can be diminished quite a bit if a company is willing to outsource. Also since long term company health isn't always a priority, a company can cut itself to the bone for a short term surge in profits. Especially if it's being managed by venture capitalists who want it to look good before they sell it.
 

Cowboysrock55

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a company can cut itself to the bone for a short term surge in profits. Especially if it's being managed by venture capitalists who want it to look good before they sell it.
Sure and the business dies shortly after. And a new better business will fill the void.

Monopolies are bad for an economy though. Whether those are government run or private. Without competition a business will become highly inefficient which is bad for everyone.
 

L.T. Fan

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The law of diminishing returns is true but wages can be diminished quite a bit if a company is willing to outsource. Also since long term company health isn't always a priority, a company can cut itself to the bone for a short term surge in profits. Especially if it's being managed by venture capitalists who want it to look good before they sell it.
Service companies usually cannot outsource.. generally there needs to be a product involved to engage outsourcing foreign or domestic.
 

townsend

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Monopolies are bad for an economy though. Whether those are government run or private. Without competition a business will become highly inefficient which is bad for everyone.
I think that's the issue. We are seeing a rise in certain corporate profits thanks to virtual monopolies, that money can't and won't shake down to anyone else. Because the supply and demand curve is shot in a non-competitive market.
 

L.T. Fan

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I think that's the issue. We are seeing a rise in certain corporate profits thanks to virtual monopolies, that money can't and won't shake down to anyone else. Because the supply and demand curve is shot in a non-competitive market.
There are exceptions to this such as utility companies. They are still monopolies in certain areas that have no competition but they are publically owned so the profits are distributed to the stockholders. That's just one example but the majority of the mega corporations are publically held and if the board of directors do not make up the majority of ownership then they will distribute profits in the form of dividends rather than declaring them retained earnings.
 

townsend

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There are exceptions to this such as utility companies. They are still monopolies in certain areas that have no competition but they are publically owned so the profits are distributed to the stockholders. That's just one example but the majority of the mega corporations are publically held and if the board of directors do not make up the majority of ownership then they will distribute profits in the form of dividends rather than declaring them retained earnings.
I think this is where the waters get real damn muddy. Public utilities are regulated by government.
I think in a lot of industries we can say they are publicly traded, but not publicly owned. There's a relatively small number of people in control of the vast majority of stocks. I would wager that most of them aren't really in competition with each other either. In the same way 19th century trusts weren't.
 

L.T. Fan

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I think this is where the waters get real damn muddy. Public utilities are regulated by government.
I think in a lot of industries we can say they are publicly traded, but not publicly owned. There's a relatively small number of people in control of the vast majority of stocks. I would wager that most of them aren't really in competition with each other either. In the same way 19th century trusts weren't.
Utilities are regulated but most are owned by stockholders at large.

Many of the large companies are controlled by a group But they do not necessarily own the majority. They may in fact be in the minority ownership wise. The controls are often due to reciprocal agreements among directors that are other boards but again the control isn't via ownership necessarily. It often times is common directors on several boards.
 

townsend

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Utilities are regulated but most are owned by stockholders at large.

Many of the large companies are controlled by a group But they do not necessarily own the majority. They may in fact be in the minority ownership wise. The controls are often due to reciprocal agreements among directors that are other boards but again the control isn't via ownership necessarily. It often times is common directors on several boards.
that's enlightening, thank you for that insight.
 

Clay_Allison

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Utilities are regulated but most are owned by stockholders at large.

Many of the large companies are controlled by a group But they do not necessarily own the majority. They may in fact be in the minority ownership wise. The controls are often due to reciprocal agreements among directors that are other boards but again the control isn't via ownership necessarily. It often times is common directors on several boards.
sounds like a handy way to encourage collusion so that several big companies can operate as a monopoly.
 

L.T. Fan

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sounds like a handy way to encourage collusion so that several big companies can operate as a monopoly.
I suppose it could sound that way but the idea behind it is to have a group who can contribute business interests to your company. Think of it as a Tippers club where a lot of people in various business's meet at a local café for breakfast once a week and refer business leads to their club friends. This is done all over the country with small business owners. It's a common business practice throughout. If you own a business or you are the Chairman of a Mega Corporation you want people on you board that will be helpful to your company while at the same time you reciprocate with others on the board in their business interests. It's really not collusion because the idea isn't to circumvent anything it is to obtain help through common interests.
 

Clay_Allison

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I suppose it could sound that way but the idea behind it is to have a group who can contribute business interests to your company. Think of it as a Tippers club where a lot of people in various business's meet at a local café for breakfast once a week and refer business leads to their club friends. This is done all over the country with small business owners. It's a common business practice throughout. If you own a business or you are the Chairman of a Mega Corporation you want people on you board that will be helpful to your company while at the same time you reciprocate with others on the board in their business interests. It's really not collusion because the idea isn't to circumvent anything it is to obtain help through common interests.
Sometimes that help is things like agreeing not to compete over valuable tech workers and fixing wages like Google, Apple, Intel and Adobe did.
 

Jiggyfly

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God I hope so. I'm still in disbelief that he doesn't understand profits are a combination of revenue and costs. But it's not surprising since the law of diminishing returns is something that he wasn't able to understand either.
CRock what the hell are you talking about.

Everything I have said is showing an example of maximizing revenue and cutting cost.

Diminishing returns has nothing to do with this, once companies start seeing a growth in demand of course they will start hiring but until then they will stay as lean as possible, thereby maximizing profits.

Really how are you not getting this.
 

Cowboysrock55

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Yeah but a law that isn't enforced is no law at all. Sherman anti-trust laws were on the books before Rockefeller owned his first business.
We have a real problem enforcing laws and doing so selectively. It's sort of like when people bitch about immigration. The laws that we have on that stuff are so poorly enforced. But that's true with basically everything government tries to do.
 

Jiggyfly

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You want graphs, I'll give you a graph.

And this shows the actual numbers of what is going on.

Click on link to see bigger graph
http://angrybearblog.com/wp-content/uploads/2015/01/Profit-per-employee.jpg



Five years into recovery, Dow companies squeeze workers as investors thrive
Yahoo Finance By Michael Santoli
January 29, 2015 11:16 AM

American Express 2Q profit rises 9 percent
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A recent flurry of four-figure staff reductions by American Express Co. (AXP), eBay Inc. (EBAY), Coca-Cola Co. (KO) and other Big Business stalwarts might seem at odds with the broader picture of a cash-rich Corporate America enjoying record profits and buoyant stock prices.

Yet there’s nothing novel about corporate prosperity coexisting with lean times for workers. In fact, most of the five-year economic expansion and corporate profit bonanza since late 2009 have come with only scant increases in headcount at the largest companies.

As the chart shows, the 30 huge companies that comprise the Dow Jones Industrial Average have barely nudged their employee ranks higher, by 6.4% since the end of the recession in late 2009, according to data provided by Howard Silverblatt, chief index analyst for S&P Dow Jones Indexes.



Indeed, the number of people who work at these blue-chip firms, in aggregate, has been about static since the end of 2012, even as the U.S. economy has added more than three million net jobs. (Silverblatt notes that a geographic breakdown of these employees is hard to come by, so it could be that most or all of the slim growth in payrolls for the Dow 30 has gone overseas.)

Over the past five years, total profits of the current Dow 30 members surged by more than 42% through the end of 2014, to nearly $320 billion. This has driven the average annual profit per employee up by more than 34% since 2009, to $48,887. It hardly bears repeating that wages across the U.S. economy have barely grown at all in recent years beyond the general rate of inflation.

Most of the financial bounty from this corporate renaissance has gone to investors (and the top corporate executives who reap rewards from higher share prices).


Not only have stock indexes soared some 200% since March 2009, but the big companies have placed shareholders first as they contemplate uses for their copious cash flows. Dividends paid by the Dow 30 are up better than 30% the past five years, according to FactSet.

Doing more with less

There are a variety of forces pushing this trend, many of them underway for decades.

Two generations of corporate executives have been steeped in the productivity ethic, a constant imperative to do more with less, to substitute automation technology for human workers and to defend profit margins zealously even in flush times. Globalization brought new competitors and low-cost labor in other world regions.

One could defend these companies by noting that if they’ve managed record profits while keeping payrolls lean, it says they didn’t need to hire any more people after a
ll.

Meantime, the rapid ascendance of many young technology-centric companies has made paranoia a pervasive trait proudly adopted by CEOs and CFOs. Facebook Inc. (FB) is scarcely a decade old and is worth more than all but a dozen U.S. companies. The entrenched, mature companies that make up the Dow have come to expect to be “disrupted,” and so are loath to bulk up payrolls and are forever receptive to ideas about how to trim down.

Returning value to shareholders

Much has been said and written about the widespread worship of “shareholder value maximization,” a creed that has spread from academia through the corporate ranks, distilling executives’ jobs to enriching equity owners. There is a spirited debate about whether this ethic is constructive, or perhaps gone too far for everyone’s good.

The particular nature of this recovery following the Great Recession also has plenty to do with the skimpy rewards reserved for workers. Economic growth has been slow, staccato and fragile as an over-indebted world struggles to lift demand for goods as developed nations age.

Ultra-cheap debt-financing rates have boosted financial markets and fattened corporate profit margins, yet absolute revenue growth has been tepid, sapping executive confidence in the growth outlook and leaving them hesitant to expand.

If there’s a bright side for the working American, it’s that this trend is showing some tentative signs of having peaked.

The job market has tightened enough that glimmers of wage growth have been intermittently visible. Cheaper gasoline helps households far more than it does companies, and some big businesses linked to the energy game will be hurting. There’s been a recent – and arguably belated – surge in consumer confidence even as global financial turmoil puts investors on edge.

Put together, these are hints that we might be in for a phase when Main Street has it a bit better than Wall Street, after several years of the reverse being true.
 

townsend

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We have a real problem enforcing laws and doing so selectively. It's sort of like when people bitch about immigration. The laws that we have on that stuff are so poorly enforced. But that's true with basically everything government tries to do.
I would argue on both points that it isn't trying at all. I would say the the government is active in pursuit of the best way to not try and enforce those laws in fact.
 

L.T. Fan

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Wow if corporate America can manage to increase profits while reducing the size of staff maybe Trump should be President after all. :lol
 
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