companies really have got to be okay with stagnant profits. what is wrong with earning the same amount every year? why does it always have to be more? it’s not sustainable. there are only so many people on the planet you can profit from 😭
The thing is, the people who run companies love stability. It means they get to keep doing the jobs they’ve been doing for years, maybe a few updates to adjust to shifts in culture or technology, but everybody keeps making product/performing service and everybody keeps getting paid.
But investors, they want to know that when they put money into something, they will get 7% more money out of it next year. They don’t care what the company does, they don’t have any idea how the industry it’s in works, all they know is they want number to go up and if number does not go up then they will burn the whole thing to the ground.
That’s why the stock market is the worst possible thing for the economy.
It’s not even that.
It’s illegal for them not to. (by legal precedent, not by legislation.)
If shareholders - investors who own stock in a company - believe that the company is not doing everything possible to increase the value of their shares, they can sue. For-profit corporations are required to make “line go up” - as in, not just profits increase, but returns to the people who own the company increase, their number one priority, and if they don’t, they can be held liable for not doing that duty.
The biggest problem is actually that they literally cannot increase forever, because we live on a finite biosphere with finite resources and finite numbers of people engaging in any company. So once they’ve done the most they can by normal routes like “sell more good/service” and “raise prices of good/service” and even shitty things like “buy competitors of good/service so we can raise prices” and “pay workers less,” they … still have to keep making more than they did last year. So they start shrinking their staff, laying off as many people as possible, even if it means the company isn’t functional anymore, producing their good/service as cheaply as possible, even if it means it actually becomes unusable or dangerous, and eventually, when the investors have sucked every drop of potential profit out of the company, they sell it, walk away, and buy shares in some other company.
Corporations Are Required By Law To Maximize Profits | eBay v. Newmark | Senator Al Franken
I am absolutely convinced that the single law that would do the most good in this country would be making it law that instead of considering shareholder return increase their first priority, for-profit corporations must consider their top four priorities in equal measure: (1) the quality of the good or service they offer, (2) the working conditions and retention of their labor, (3) the environmental impact of their business, and (4) stability/non-decreasing returns to their investors.
So if the workers could show that they had sacrificed retention/labor conditions in order to increase profits by laying off so many employees that they were understaffed, they’d have a case against the executives; if the community or EPA could show that the company had sacrificed environmental impact to raise the quality of their service by using materials that poisoned the air/water around the factory, they’d have a case; and even if the shareholders could show that the company had sacrificed returns on their profits to the point of decrease or something, they would have a case. (Because if you cut out shareholder profits at all, it wouldn’t stand a chance of even making it out of the first committee in Congress, and because “Every year the company makes less money than last year even though our customers are reliable and we haven’t made huge improvements to our facilities because our CEO has sixteen executive assistants and keeps hiring his friends” is actually a fair complaint, if it ever happened.)
(I mean honestly none of this would ever pass because rich people would scream and poor people who believe they will be rich someday by the skin of their bootstraps would also scream. but i like to dream of legislation that might exist in a better world because i am too embittered about/by The Glorious Revolution rhetoric.)
Just imagine how much of any nation’s GDP is just products that needed to be produced due to planned obsolescence.
The bottle that was used once instead of ten dozen times.
The clothes that were worn for a season instead of a decade.
The washing machine that was replaced after four years instead of a lifetime.
Just imagine how much of any nation’s GDP is just products that would stop existing if they couldn’t dump money into advertising.
Everything from Coca Cola to those scam “bug deflectors” that are just a white plastic box with a green LED.
The amount of “growth” achieved by manufacturing things and creating products that literally don’t need to exist is staggering. Just imagine what humanity could achieve if we stopped wasting labour on such things and instead spent it on something actually useful.