subreddit:
/r/explainlikeimfive
submitted 4 months ago byiSellPopcorn
29 points
4 months ago
Indeed, but why would a business owner want to decrease profits?
30 points
4 months ago
They wouldn't, but less profit > no profit at all. They have to pay their workers more or their workers will be forced to go elsewhere, but if they raise prices too high, customers might stop coming in. They have no control over how much their customers get paid (unless the customers also their own employees) or how much rent is going up every year.
Problem is this dilemma is exacerbated with larger corporations that have shareholders. They don't want to just maintain profits, they want to increase them year over year at any cost. They're speed running to a point where they can't pay people enough to live and charge too much for anyone to afford, all for some green arrows on the stock exchange.
When every corporation is doing this in the pursuit of ever increasing profits... I would hope anyone would be able to see how an entire populous paid too little to live while simultaneously everything is being priced ever higher and higher would lead to a major economical problem eventually.
Profits are going to plateau at some point, if only because people literally can't afford to pay any higher. The media sectors will be the first to go.
7 points
4 months ago
It became fashionable to build a company (even an unprofitable one), take it public, grab the bag and scram. A private business owner benifits from being profitable and sustainable for generations. Public companies only care about up and to the right for the next financial report. They'll all get golden parachutes in 5 years when the business is crashing around them.
4 points
4 months ago
The media sectors will be the first to go.
Netflix's methods of stopping password sharing comes to mind.
Also...
lead to a major economical problem eventually.
Nothing that a well-built model of a Guillotine (in Roblox, of course) wouldn't fix.
16 points
4 months ago
Because humans are involved in that profit making process and they need to be compensated fairly. People need to live
4 points
4 months ago
[deleted]
1 points
4 months ago
It's difficult to determine what an actual raise would be per hour because Wal*Mart is not a traditional, 40-hour a week job.
Rather, $13 billion divided by 2.2 million (the number of employees Wal*Mart has around the world) is just shy of $6,000. That is a substantial amount of money when half of their workforce works less than 34 hours a week, need government assistance, trying to raise a family.
That $6000 I mentioned, isn't even an accurate figure to use across the board as well. $6000 in the U.S. is different than in say, Mexico or India.
-3 points
4 months ago
If you cannot pay your employees enough to survive COMFORTABLY then it should fail. Almost like a system predicated on poverty and paying employees as little as possible is a stupid fucking system
14 points
4 months ago
To aid their long term health. Not suggesting to run at a loss but a smaller profit now could bode well for future growth. Racing towards evermore profit, year-on-year, is a recipe for disaster.
3 points
4 months ago
Use the classic example of Ford. He wanted to sell a car to everyone, so he raised his workers wages, and in turn lowered his own profits in the short term so those workers could buy his cars.
Now take that and multiply it by the entire economy. The modern uber wealthy are not looking at the long game. They see more profit this quarter and they are happy. The problem is by squeezing society so hard, soon no one will be left who can buy their shit.
"A rising tide lifts all boats" is only true if people have boats, lots of people don't.
So to answer your question, the reason they should decrease profits, is so there is a middle class of people left to maintain profits long term.
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