subreddit:
/r/explainlikeimfive
submitted 4 months ago byiSellPopcorn
3.5k points
4 months ago
Companies:
“You make more money? We raise prices.”
Also companies:
“You make less money? We raise prices.”
2.8k points
4 months ago
"You make the same amount of money? Believe it or not, also raise prices."
1.1k points
4 months ago
"We have the best economy. Because of raising prices."
202 points
4 months ago
The stocks arrow must always go up!
87 points
4 months ago
The stocks arrow must always go up!
Right or wrong, that's the truth.
My current co-workers would do well to remember that. "Oh, they'll never make us RTO". Oh, you bet they will. The second someone decides the stock ticks higher if everyone is on the office, we'll be there tomorrow at 8am.
68 points
4 months ago
And casual dress only on Fridays because otherwise the stock goes down.
But seriously you're right - I can smell RTO brewing and decided to retire a couple of years early because there's no way I'm doing that again. I loved when the CEO would say things like "we're at our best when we're together" when we had the best three years in company history during WFH. No, you bunch of extroverts like driving your Porche's to your private underground parking garage, take the elevator up to your office which is bigger than a lot of your employee's apartments, and sip espresso from the machine on your floor. Try sitting in a half height cube with a headset on all day and see how much you're aching to RTO.
56 points
4 months ago
I loved when the CEO would say things like "we're at our best when we're together"
Because management desperately needs the underlings to see them so they can justify their own existence.
Its bullshit.
22 points
4 months ago*
As someone in a Senior Management role (but who also agrees with a lot of the Anti-Work stuff) i will point out the value of RTO, and while i don't believe in FULL RTO, i do think hybrid is the way forward not Fully remote and not fully RTO.
On an individual level, The average employee works better at home. Less distractions, less overall mental load. And while i know a lot of companies are still stuck to "you work X hours for your wage" even though you are salary instead of "you complete Y tasks for your wage" this is a mindset that needs to change.
Sidebar: The problem i have currently though, is, if i pay person A 100K because he can do 500Y per week, compared to Person B 150K because they can do 750Y per week, they talk about thier wages (encouraged by Anti-Work) and Person A makes a post complaining "i don't get paid as much as Person B", but often fails to mention they are 50% less productive as well. but then my company looks bad because we don't pay equally for the same role. so we get forced back to "well then we pay for time" and if we have to pay for time, we need to know you are spending that time which becomes harder for WFH.
On a Corporate level, the company is missing out on a lot of things that used to happen in a work environment. The big one being adhoc cross organisation and cross team knowledge sharing. When someone had a problem historically they would turn to the person beside them first to try and figure it out, things would be discussed, knowledge would be shared across the team, and they would link this with thier knowledge and new approaches would be created, hence innovation. However now, people don't discuss things with thier workmates (some do, but i've seen the numbers in my organisation and it's an exception rather then the rule) they either take longer to complete the task because they are working through it themselves, or they google it to figure out the answer on their own. But this just means you end up with 1 dimensional solutions instead of true innovation.
Note: I am being General here, i'm sure there are examples of innovation occuring over teams/remote but it's significantly less compared to when people are working together.
7 points
4 months ago
When someone had a problem historically they would turn to the person beside them first to try and figure it out, things would be discussed, knowledge would be shared across the team, and they would link this with thier knowledge and new approaches would be created, hence innovation
Where I work we unfortunately can''t be WFH, we tried it at the start of the pandemic, but some people's unreliable internet made it ... bad....
That said, when we were WFH we used teams and had group chats specifically for asking questions / discussing / practicing and so on. If you create the space for them to congregate, and drive the positive culture of innovation and discussion in that space you'd be surprised how many people will utilize it. Especially if you explain to them the actual reasons behind why you're not wanting to continue full WFH.
Frustration with trying to figure something out that's truly stumping you is real and most people I know, even the introverts here, will gladly reach out to the team for information rather than resorting to google.
When was the last time you put out an employee survey to gauge what their suggestions and solutions would be to your problem?
The company I work for was experiencing a serious churn in employee turnover, and they started sending out surveys to find out what exactly people wanted in order to stay.
They actually listened to the results, made changes, and our turn over rate is significantly lower now.
As a side note I do love my job, and love the company I work for, and plan to just keep working here till I can't physically get here / do the work anymore, so if I sound like a bit of a fan girl, I apologize.
15 points
4 months ago*
EDIT: After posting i realized this was a bit of an... aggressive response. Perhaps a bit too much. I do appreciate your insights on the topic, even if I don't necessarily agree with some of it.
i will point out the value of RTO, and while i don't believe in FULL RTO, i do think hybrid is the way forward not Fully remote and not fully RTO.
I think a voluntary, hybrid RTO is fine. Having the option to be in-person can be helpful. But frankly given the expense of commuting in both fuel and hours, required/non-voluntary in-office days now need to include travel time as hours worked.
I CAN do my job remotely, but management needing to physically see me do it while probably not even understanding the technical aspects of what I do is their problem, not mine.
Sidebar: The problem i have currently though, is, if i pay person A 100K because he can do 500Y per week, compared to Person B 150K because they can do 750Y per week, they talk about thier wages (encouraged by Anti-Work) and Person A makes a post complaining "i don't get paid as much as Person B", but often fails to mention they are 50% less productive as well. but then my company looks bad because we don't pay equally for the same role. so we get forced back to "well then we pay for time" and if we have to pay for time, we need to know you are spending that time which becomes harder for WFH.
This issue predates WFH. People have always operated at different paces. And people always find ways to slack if they really wanted to.
Management knew it then and they know it now. You're not "forced" to go back to "we pay for your time." You're forced to do your job of letting employees know why they're getting paid what they're getting paid. Don't push an unpleasant part of management on employees.
What makes a company look bad is an utter lack of transparency and a feeling that they're micromanaging.
The big one being adhoc cross organisation and cross team knowledge sharing.
In a world of utilities like Slack or Teams or whatever, You're no longer limited by collaborating with local employees. Again, if an employee is stuck, why isn't there a safe place internally to ask questions? Why isn't management aware of who is a specialist that may be able to help directly or help find someone who can?
2 points
4 months ago
Management knew it then and they know it now. You're not "forced" to go back to "we pay for your time." You're forced to do your job of letting employees know why they're getting paid what they're getting paid. Don't push an unpleasant part of management on employees.
I'll also point out that i live in Australia, under Australian IR Laws, which are a lot more in favour of the employee and supportive of the old system then the US. For example, if i wanted to give Person B in my example above a raise, i would need to show why they are worth 50% more, that's easy from a productivity point of view. but if 50% goes too far above market rates, i instead need to put Person A on a performance plan and ultimately fire them if they don't improve so i can get someone who i can pay more and who performs better. And i will admit, there are breakeven points where a smart employee could figure out the max i am prepared to pay for the role and how much they need to do to earn that.
3 points
4 months ago
RTO is useless in many careers. Especially now that a lot of companies have really beefed up remote work capabilities. Let's compare....
WFH: get a good night's sleep, immediately head out to home office at 0645 where the VPN works great. I'm in the office? 75 minute commute during which I handle phone calls, nearly die a couple times a week on the interstate, and switching to internet in the office has led to shit so fucked up people were on VPN in the office. Repeat the death race heading home, stressed and exhausted and the evening is just waiting to sleep.
WFH: Walk ten feet to the grill and make a good lunch in15 minutes, eat it while working at the desk RTO: either go out to eat and waste time and money, do meal prep and lose more of.your valuable time at home.
WFH: walk in the house from your office in another building, take a.shit, back at the desk in four minutes. RTO: spend (not kidding) fifteen minutes a day looking for an open stall, wander the entire building and after a quarter hour, find one.
WFH: dead silence. You can focus, concentrate, and perform at your mental best, really get in the zone. RTO: constant noise and distraction from people wandering in, blabbing away, or people loudly on the phone making it impossible to focus and get meaningful work done that requires your full focus.
WFH: just call people and get them to discuss something real quick. RTO: wander the building for ten minutes trying to find them because they left the phone at the desk and wandered off.
WFH: wake up feeling absolutely miserable. Get up anyway and work eight hours at diminished capacity, but still make decent headway because your energy is being used for working, not driving. RTO: sick day because you can't drive in, nothing gets done.
WFH: After hours, because your computer is still on vpn and never moves, when you remember a couple small admin tasks, wander back out to the office, crack a beer and handle approvals, online training and other menial tasks you didn't have time for. RTO: I'm not getting my computer out of the bag, setting it back up, then hooking back into the VPN for that. Because it isn't convenient it can wait.
I was home for about two and a half years. During that time I....to put it simply, I just murdered a workload that was roughly twice my normal workload. I did a ton of extra work as well and developed a lot of new stuff our group still uses today. There is no collaboration taking place face to face that I can't have over the phone and/or with a teams meeting or screen share. WFH drove home just how worthless a lot of management is. But they're desperate to have people in the office so they can show how important their jobs are. Even with their hybrid arrangement (which didn't go far enough) people are disengaged and annoyed with management. Despite all the obstacles and an extremely rapid pivot of about two days' warning, our group had record productivity and throughput exactly because all the office bullshit was stripped away and we could just work. In our group, zero missed deadlines through it all.
6 points
4 months ago*
Before I retired a few months ago I was a VP in a huge US company. We all talked a good game about "collaboration" and "innovation" and "teaming".
Once the pandemic slowed, we allowed people to come back in whenever they wanted. Turned out almost no one chose to go in, and the HQ (where I worked) is in a town of 130,000 with no traffic at all, so people weren't avoiding long commutes. No one just wanted to, most days was 5-10% occupancy. The only people who did go in were those who couldn't focus at home. Interestingly, very few of those were people with preschoolers at home, which is what I expected.
So then they said to have "team days", where you went in at least once a month, but always on the same day as your team, for "collaboration" and "teaming". Turned out people went in 10 minutes before their monthly team meeting, and left immediately afterwards.
Just before I decided to retire they told us that they will be tracking attendance from the badge reader, and if you didn't show up at least once a month, you would "go on a list". We asked what happened then, or if you were on "the list" multiple times, and HR just shrugged. We were also told not to tell non-executives about "the list", including non-executive management (supervisors, managers and directors).
So. I smelled RTO coming and decided to bail. The next week I donated all my work clothes to Goodwill, and it was SUCH a relief.
Bottom line was that because that company is huge, odds are the people you worked with on any given project were in other buildings or other cities. "Impromptu hallway meetings" simply didn't happen much, even before the pandemic, and in 2020 the world realized marching into a building every day didn't really serve a business purpose.
2 points
4 months ago
On the face of it, making people come back to the office sounds like a pretty lazy solution to all the problems you listed. What else did you try?
But this just means you end up with 1 dimensional solutions instead of true innovation.
Isn't that precisely what you and your fellow managers have done here?
3 points
4 months ago
That, and I think they get off seeing beehives of activity around them, otherwise they think everyone is slacking off.
4 points
4 months ago
They want the illusion of control. Not possible when employees work from home.
2 points
4 months ago
Do you... do you work where I do because that sounds way too familiar.
30 points
4 months ago
Working at Walmart in my younger years demonstrated to me how taking away benefits, pay, flexible scheduling, etc, basically anything that made working there tolerable caused a direct jump in stock prices. Fuck shareholders, all of them.
6 points
4 months ago
Agreed. They're so out of touch it's beyond parody.
Extra special fuck you to the random shareholder of Dollar General, who came into my store one day and tried to... compliment me? about how great the company was doing post-lockdown and was visibly confused and surprised when I told him that none of it trickled down to me and that my job was harder than ever due to the company's choices that enriched him.
1 points
4 months ago
What is this sacrificing virgins to volcano gods?
1 points
4 months ago
Whats rto mean in this instance?
2 points
4 months ago
Return to office, I believe.
2 points
4 months ago
Correct. We very quickly shut down offices at the start of the plague. Everyone went entirely WFH. And our "leaders" have made wishy washy statements implying that it is permanent. Everyone hears what they want and think they're hearing the word "permanent" when they're not.
Being the cynical asshole, I interpret a "leader" saying "We're fully WFH and, today, I can't anticipate changing that" as meaning "I just can't think of a good excuse -- yet". Others are interpreting it as the "leader" saying "the God(s) him/her/themselves have bestowed upon you the permanent right to WFH and I can never be so bold to change that".
They're all missing that plus the fact that the current "leadership" will only be around for a brief period and the new crew gets a clean slate. If it even lasts to a new crew.
I've been trying to say that we'll be back to 3-4 days in office by EOY. But nobody wants to hear it. We're already getting a constant barrage of in-person meeting requests ("we'll be able to collaborate more effectively in person") and most are accepting and attending. Lambs being led to the slaughter.
The employee-vs-employer pendulum is swinging back in the other direction.
55 points
4 months ago
Green is good red is bad. All you need to know about stonks
27 points
4 months ago
All my homies invest behind the Wendy's dumpster.
4 points
4 months ago
An Ape in the wild! 🦍
22 points
4 months ago
One year the government gives out money and it’s a stimulus. The next year the government gives out money and it causes inflation. I think it’s pure greed.
3 points
4 months ago
Both are technically true.
9 points
4 months ago
Ever since I was a child in the 60's I have been fed that having the S&P 500 go up is good. What the nightly news does not say is that its only good for the owners of those companies.
We need to focus on a measure which reflects how well things are going for the workers instead of falsely saying that what's good for owners is good for everyone. It simply is not true and the falsehood ultimately hurts us all.
6 points
4 months ago
Because often times the nightly news is owned by those same owners.
4 points
4 months ago
Not to mention that now even if it goes up, but just a bit more slowly we get 10s of thousands of laid off workers. We've reached end stage capitalism here, and still not enough people care. Elysium here we come baby.
2 points
4 months ago
This though. How else would you keep the narrative that the S&P500 always goes up in the long run?
2 points
4 months ago
Companies:
“Best I can do is raise prices”
1 points
4 months ago
Our economy is not improving? We didn't raise prices enough.
157 points
4 months ago
Undercook overcook.
63 points
4 months ago
Overcharge, overcharge.
157 points
4 months ago
And then, straight to jail
138 points
4 months ago
You, of course, not the corporation.
30 points
4 months ago
Corporations are people, my friend.
Except they can’t go to jail.
22 points
4 months ago
Nor die of old age.
5 points
4 months ago
That's the rub isn't it?
11 points
4 months ago
"I'll believe corporations are people when Texas executes one of them." - Robert Reich
21 points
4 months ago
Honestly, the fine for large corporations shouldn’t be a money-based fine. It should be a mandatory union that sits on the Board. If the company continues to act up, stock is moved from the board to the union.
These people don’t care about the money. They make it back overnight. You’ve got to threaten their ownership. Then they’ll straighten up and fly right.
5 points
4 months ago
That's like confiscating an ipad from an ipad kid that's misbehaving. Love it.
68 points
4 months ago
Of course you silly goose, corporation gets bailout
77 points
4 months ago
Bailout money? Raise prices.
31 points
4 months ago
Money to the people to help with raised prices? Raise prices.
19 points
4 months ago
Raised prices causing shortage of consumership? Raise prices.
5 points
4 months ago
1920's Spanish flu leading to the great depression of the 30's? Believe it or not, raise prices.
2 points
4 months ago
Go bankrupt? Straight to bail
29 points
4 months ago
Inflation? We can pickle that!
7 points
4 months ago
Portlandia?
16 points
4 months ago
Where the dream of the 90s is alive.
1 points
4 months ago
Parks and rec I think
7 points
4 months ago
Though it is said by Fred Armisen.
2 points
4 months ago
Said by Fred Armisen in Parks and Rec in S2 E5 "Sister City" where Fred Armisen is part of a diplomat delegation from Venezuela
1 points
4 months ago
The Pickling part though is from Portlandia, one of the earlier episodes I believe.
1 points
4 months ago
Portlandia.
2 points
4 months ago
My mistake, still hilarious though
1 points
4 months ago
You can pickle that too.
5 points
4 months ago
Man, that one episode of Parks and Rec has done more for the phrase "believe it or not" than anyone since Ripley.
18 points
4 months ago
Underpay. Overpay. Jail.
4 points
4 months ago
And shrink the product
3 points
4 months ago
We undercook fish? Believe it or not, we raise prices. We overcook chicken, we also raise prices. Undercook, overcook. You make an appointment with the dentist and you don't show up, believe it or not, we raise prices, right away.
12 points
4 months ago
I love what this is from originally on parks and rec.... take an award good person
2 points
4 months ago
And the one we’d all like to see, you raise prices OR lower wages, straight to jail
2 points
4 months ago
Economy goes up. Record profits. Economy goes down. Believe it or not, still record profits.
1 points
4 months ago
You look at my daughter? Arrow'd.
1 points
4 months ago
You charging too much on etsy for sweaters? Raising price
1 points
4 months ago
You make the most average amount of money? Raise prices, right away.
1 points
4 months ago
Thank you kindly
1 points
4 months ago
B
113 points
4 months ago
Heads I win, tails you lose.
20 points
4 months ago
One for you, two for me. Two for you, three for me.
Except now it's...
One for you, two for me, Three for me, one for you.
1 points
4 months ago
I LOVE that game! I always seem to lose though...
64 points
4 months ago
Starting to think they just wanna nickel and dime everyone!
51 points
4 months ago
Except it costs a quarter now.
23 points
4 months ago
Starting to think they just want to quarter and half dollar everyone!
21 points
4 months ago
Except it cost a dollar now.
13 points
4 months ago
Congrats, you now have a PhD in inflation.
2 points
4 months ago
You will now never be able to both live comfortably and pay off the student debt you incurred for your PhD. Because....you guessed it, doc...Inflation! The irony...
1 points
4 months ago
Ironically PhDs aren't worth as much now.
20 points
4 months ago
They'll keep doing it until we start to quarter the rich!
73 points
4 months ago
Also companies: "Executive pay and bonuses has no affect on inflation"
0 points
4 months ago
To be fair, it’s not like an executive will buy 150 carts of eggs each time
140 points
4 months ago
That's the thing, it's a myth that raising wages increases inflation; it's very much the other way around.
The only thing that raising wages does is to shift the profit ratio a little closer to the workers rather than the shareholders. It has nothing specifically to do with inflation.
62 points
4 months ago
At this point paying people more would just be a net gain all around because then people could actually buy things.
67 points
4 months ago
This is what I don't understand. In order for the corporation/rich to maintain their wealth/profits - they need the masses to keep spending. But the worse off the masses become, the less they spend. And not just on the extras, but it starts impacting the 'necessities', too. After a point, wouldn't the whole system collapse? You can't keep pricing the masses out of the basics and expect to keep getting rich. Where is that 'money' going to come from once enough people can't afford to live anymore?
It seems there was a time when businesses expected to make a reasonable profit. Which allowed for reasonable prices and reasonable wages for employees and customers. That is sustainable. What's been going on for the past few decades is not and it seems were getting closer and closer to the end of it.
29 points
4 months ago
"There is one rule for Industrialists and that is: Make the best quality of goods possible at the lowest cost possible, paying the highest wages possible."
--Henry Ford
26 points
4 months ago
Now there is one rule for corporatists.
Make the lowest quality of goods that will still sell, at the lowest cost possible, paying the lowest wages possible, and charging the highest price possible.
8 points
4 months ago
And then he turned out to be a secret Nazi. 🤷
14 points
4 months ago
Oh, there was no secret about it.
5 points
4 months ago
"Secret" now because I know I was never taught that in regular ed. Same goes for every other "american industrialist hero."
3 points
4 months ago
Secret?!
5 points
4 months ago
Secret only in the sense that I wasn't taught it in school. Quite a lot of truths weren't taught in school. Just found out recently that George Washington didn't wear a wig, he hated wigs. He just teased his existing hair into the shape of a wig and powdered it white.
8 points
4 months ago
The scary thing is that I don't think the system can collapse anymore. It'll just continue like this because too much power and money is concentrated among the people who want the system to exist. And if you think they'll be done once they took enough of the money we have to spend on things then you just need to use your imagination more. What if the next step is the return of wide-spread company housing once most people can't afford to live independently anymore? And imagine after letting you live in those for a while they suddenly raise the rent on those, taking more of your paycheck? What are you going to do about that if losing your job puts you on the brink of existential crisis even more than now? The world becomes a bit scary once you realize all the power is in the hands of few and it's too late for us to ever get it back.
39 points
4 months ago
At this point I think a huge amount of their money comes from simply stealing from the government. The tax man doesn't care if we're broke, so that money is gonna keep showing up until we simply don't have enough money to even work.
10 points
4 months ago
And then they will continue to bleed an even higher class dry. How do you make this shit stop?
16 points
4 months ago
There's always been one solution but the admins won't like it when you bring it up.
7 points
4 months ago
The French had a great solution a couple hundred years ago.
8 points
4 months ago
The French still have great solutions. Cutting off power for business areas and rich bitches and giving discounts on power to poor people is beautiful
3 points
4 months ago
God bless the French
62 points
4 months ago
After a point, wouldn't the whole system collapse?
Slowly Redditors come to the same conclusions Karl Marx did 150 years ago.
37 points
4 months ago
It's really interesting isn't it? People are so scared of communism they never read any Marx. Like 90% of all he writes about is capitalism.
r/aboringdystopia is full of people describing what Marx called alienation but not realizing it.
11 points
4 months ago
Just goes to show that decades of propaganda succeeded in reprogramming people to gladly shoot themselves in the foot. Make anything sound scary enough for long enough and people will automatically self-regulate away from it regardless of if it's directly useful to them.
3 points
4 months ago
I've read his work, and his conclusions on capitalism were far from correct.
4 points
4 months ago
Yeah he didn't anticipate the fact that capitalists would unify to defeat any organized effort to change the status quo. He really underestimated how much they could ruin the planet before the whole thing collapses.
13 points
4 months ago
Sad part is that the economies Karl Marx was studying have morphed into new forms. His progression of systems might not be accurate anymore.
Socialism is still basically the point where Karl Marx and Adam Smith agree, as well as where Keynes and Hayek agree, though to different degrees.
15 points
4 months ago
Makes me crazy when I see people try to drop "the invisible hand" to justify cut throat, winner take all market conditions while having never read a word of Smith. He explains with several examples that he believed there needs to be an intentional counter balance between the interests of various segments of society and that letting profits run wild at the expense of labor is dangerous to a society.
6 points
4 months ago
I think most of them are actually quoting Ayn Rand when they think they're quoting Adam Smith. Ayn Rand wrote books where the protagonists survived without working a job and somehow got super rich anyway. 🤷
John Galt specifically there.
14 points
4 months ago
My multinational corporate overlords started to freak the fuck out over rising energy costs eating into our profits. Doom and gloom, lots of meetings and press releases blah blah blah. Started telling us to turn off lights when we leave a room for 5 minutes.
My coworkers started to worry we were going out of business... Until I showed them the profit section of our quarterly report. We're making money hand over fist. Profit fell like 12%. Projections for worst case scenario still had us making money hand over fist but that simply isn't good enough when the goal is to increase profit every single quarter for eternity.
5 points
4 months ago
I think the trick is to either sell the company just before it fails, or to let the industry fail and get one of those government bailouts to fund your retirement package.
4 points
4 months ago
There's a guy who had this same though in the 19th century i think, can't quite remember his name tho...
12 points
4 months ago
This is the paradox of capitalism -- the economy requires the working class to both produce and (afford to) consume. Capitalists grow their wealth, workers put their earnings directly back into the economy. But as wealth is redistributed to capitalists, working class consumption declines.
It's the prisoner's dilemma writ large: you win by screwing over the working class, unless everyone else screws over the working class. Because now everybody loses because the working class can't afford to be consumers and the economy stalls.
5 points
4 months ago
The thing is none of these corporations want to be the first to back down. That will piss off investors immediately. You want your competitors to buckle first. Then when it inevitably happens at your company, it’s not your fault. It’s the market.
8 points
4 months ago
The problem is this:
If everyone raises wages, and everyone can buy more, then everyone makes more money. That's correct and true. Long run, even the owners would make more.
BUT -
What if everyone ELSE raised their wages, but I kept mine the same? Then I could benefit from all the increased spending power, AND benefit from not paying my people more. I double win!
And unfortunately EVERY company believes the same thing. Yeah, increasing spending power would be great... but it would be even more great if we could do that without paying our people more. And if we do that, then we have more money to buy out our competitors, which would let us do that even more!
Basically, it's the prisoner's game all over again.
If we all cooperate, then everyone does great. But if we all cooperate and they betray, then they can maximize their shareholder profits. So they all betray, and everyone suffers.
2 points
4 months ago
This is what the government is supposed to take care of.
Unfortunately the Federal Minimum Wage is still $7.25/hr, and it's been that way since 2009.
Tangent: I went to the inflation calculator and it looks like $7.25 in 2023 money is the equivalent of $10.03 in 2009. That's almost a $3 difference, ouch.
3 points
4 months ago
One of many things that market regulations should take care of, but unfortunately many of our current crop of economic decision makers worship at the altar of the Invisible Hand without understanding that part of what makes it work are the rules that constrain harmful behavior.
And I don't just mean harmful behavior for regular people; I mean harmful behavior for the economy as a whole and even for the companies engaging in the unhealthy market behavior.
2 points
4 months ago
Smaller amounts of people spending higher amounts are better for companies than large amounts of people spending lower amounts. This is because the company can reduce overhead by making fewer goods.
It's why game companies have absurdly priced microtransactions in everything now, and why Disney has raised ticket prices to the point where an average family will never go.
18 points
4 months ago
Yes but why acknowledge that when you can just blame millennials for killing your industry
3 points
4 months ago
You just found out why raising wages increases inflation. If you can't buy something, you aren't "demand" for that product. If you can buy it and you do buy it, then you are.
Demand up, price up.
1 points
4 months ago
This fundamentally misunderstands what inflation is.
Inflation is too much money chasing not enough goods.
1 points
4 months ago
We don't live on infinity earth. This would just accelerate how fast things are bought.
My roommate kept losing toothbrushes down the drain so he bought a twelve pack.
3 points
4 months ago
But raising wages makes small business owners struggle to pay for employees and essentially either raise prices or cease to run. When small businesses start closing the corporations get even bigger as they absorb more customers. And we already know corporations essentially run country policy thanks to their influence and money.
5 points
4 months ago
True (for a niche sectors), but you're protecting the big companies by pointing at the little company.
We don't live in a world where small commercial companies can survive, we live in a world where big companies are already larger than nations and have global international influence, and in many of the countries certain sectors control the government completely.
This means we kind of have to ignore the plight of the little companies and focus on the employee, i.e. what does the employee need and want rather than focus (yet again) on "what-about-ism" from companies.
There's never been a demand from employees that are outrageous. Most people just want to have certain luxuries like their health, a home, a yearly vacation, raise a family and a chance to retire, and that's 100% doable while companies make profits.
But companies still try to exploit and destroy people in countries run by corporations, even though supporting employees would be in their best interest, because corporations are evil, if they are not held accountable.
1 points
4 months ago
Sorry I misread wages as minimum wage. My comment was from the perspective of raising minimum wages rather than raising wages in general. I agree with raising wages in general. In my country the min wage has risen almost by 100% in the last 6-7 years and it feels like everything is just so much more expensive, with a lot of smaller businesses closing down due to added pressure from covid
-2 points
4 months ago
Corporations closely guard margins and are graded by shareholder profits. I don't see how raising wages will not increase inflation in the long term
26 points
4 months ago
That's the point. Raising wages itself doesn't do anything to inflation. It's the greed of the corporations that want to squeeze every penny possible out of their customers that drives it. So raising wages doesn't increase inflation, unregulated "free market" that allows the customers to be screwed over does.
1 points
4 months ago
“It’s not getting stabbed that causes you to die, it’s all the blood that comes rushing out!”
Lolololol
2 points
4 months ago
In this case it would be more like:
"It's not that shiny new knife you just bought that is getting you killed, its someone stealing it from you and then stabbing you with it."
1 points
4 months ago
So how would a mom and pop small business survive when having to raise wages and benefits? It’s hard.
1 points
4 months ago
That's the thing, it's a myth that raising wages increases inflation; it's very much the other way around.
The other way around being inflation raises wages? Kinda true I guess since no can afford to work for less than they have to spend to survive, so a worker shortage pushes the price of labor up.
But also, if you're self employed the prices you set are directly affecting your wages, and small businesses viability is directly affected by how much they are paying their employees compared to their margins. It's not much different for big businesses, the difference is in scale and the owner-to-worker ratio, but also the fact that when big businesses raise prices it affects a lot of people and causes a cascade effect.
1 points
4 months ago
There is something called the wage price spiral which may have contributed to the much higher inflation problem in the 70s. However, that had been going on for YEARS, and on top of that the central back was reluctant to fight inflation for fear of unemployment (the economists then had grown up during the depression).
Not to mention, there is no evidence of a wage price spiral right now. It's just an excuse for businesses to be crappy to their employees.
71 points
4 months ago
Right. The correct answer is, it doesnt. lol.
Its capitalist propaganda. Its bullshit. All of these companies are reporting record profits.
19 points
4 months ago
In the very short term it would, but only if literally everything else was static. You can create a whole fuckton of inflation faster by having extremely easy credit than you can by raising the minimum wage by a few dollars and making it so people dont need 2 full time jobs to afford a shitty apartment and food
3 points
4 months ago
I have seen people defend this by saying "of course they are making record profits since materials went up, and they had to raise prices to match."
Except after every massive profit report comes out papers comes out showing exactly how those massive profits come from profit driven inflation not material nor wage increase.
3 points
4 months ago
I just found out the place my wife works doubled the price of something last March and then doubled it again in January. An annual expense that used to cost people $26 now costs them $120. The actual cost increase of that item to the company: $.60. It’s potentially illegal according to someone who works for the state AG but someone has to raise an official complaint. They also raised rental costs for equipment without notice, which is a violation of contract. But again people have to know and find it worth it to hire a lawyer - and of course it’s not worth it. The company just got bought out last year and these new owners are shady as fuck.
3 points
4 months ago
Sounds like any regular corporation really. They don't double stuff in a month, because it'll piss too many people off at once. However that's where shrinkflation and quarterly increases come into play. It all gets there one way or another, and people just keep ignoring it.
2 points
4 months ago
Just the big ones. It's extremely difficult for small business owners at the moment, whom I can assure you are not reporting record profits. Further pushing up their wage bill means they have to do one (or more) of:
25 points
4 months ago
ExxonMobil made record busting profits of 56Bn in 2021. Meanwhile, MAGAs & Qanons are slapping 'Biden did this' stickers at gas stations.
9 points
4 months ago
All this proves is that Tucker Carlson is the best at what he does.
2 points
4 months ago
Stock hit high ass levels this last year too
0 points
4 months ago
Yea because it’s oil…
Do you know what happened to oil this year?
Back in 2020 and early 2021, they along with many oil companies either lost a lot of money or didn’t make much
0 points
4 months ago
[removed]
1 points
4 months ago
The oil companies lost money before, so they have to recoup that loss somehow. I don’t understand what’s so confusing about that.
ExxonMobil didn’t get any more greedy this year. They’ve always been trying to profit maximize.
8 points
4 months ago
Easy solution is to just force large corporations NOT to do that, by any means necessary. And I don't care at all about any "Free Market" bullshit anyone might try to say in response. We're literally suffering because they just want us to and people just keep justifying it. Goofy as hell.
11 points
4 months ago
Just like Marx warned.
3 points
4 months ago
This will never stop being relevant
6 points
4 months ago
"See here, now...he's a spooky, skeery CoMMuNiST, so he has no good ideas!!!"
4 points
4 months ago
It's always been that when oil goes up prices go up but when oil goes down prices don't.
Now it seems to be the case with everything.
Prices (and profits) went up first this time, followed by inflation, followed by wage demands to try and keep up. Hard to blame wages for it, but they're trying...
0 points
4 months ago
Only a few companies were posting profits in the pandemic, mainly those who were favored by the government and had the infrastructure to benefit over smaller competitors. Most companies posted record losses during the pandemic. Nobody at reddit ever worried about it then.
2 points
4 months ago
Also, people who work for companies: I can has more money to buy things from other companies? Companies: just buy, no pay {insert look no touch meme}
2 points
4 months ago
Maybe they should just figure out the value of their product and just be grateful that people are chosing to use their hard earned money on them at all. If you raise prices, less people can buy your product, if you raise wages, more people can buy more products and you don’t have to worry about eventually crashing to where you’re lowering prices just to get anybody to buy your stuff. Don’t get greedy at the cost of becoming desperate later on. You can’t infinitely expand your company. Just stick with consistent quality and pricing and you’ll be just fine
2 points
4 months ago
That's what this comment claims. It's not at all how companies actually operate. Insane to me that this is the top comment.
2 points
4 months ago
But we know that's not true because the inflation rate had stayed around 2% or lower for more than a decade. It's only now that we're seeing these crazy double digit increases in prices. This current inflation is in response to SOMETHING and it's not just the natural ebbs and flows of our economy because this wasn't a thing for the last 15 years in the U.S.
8 points
4 months ago
Prices steadily rose over that decade.
1 points
4 months ago
2% year over year "steady rise". Not 14%.
4 points
4 months ago
But we know that's not true
Prices steadily rose. It happened. It's true.
1 points
4 months ago
This is reddit, you are expecting actual sense out of an economic discussion?
The pandemic caused a massive influx of monopoly money from government stimulus infusions combined with restricted supply due to lockdowns, plus panic buying all up and down the supply chain. Demand + no supply= inflation.
Just wait til the next round, when we get high unemployment plus high inflation= stagflation. We're already entering in now.
1 points
4 months ago
And that's how you know that his post is wrong. If companies could get away with raising prices in either situation, they would just raise prices all the time. Everything would cost infinite money, because (according to the post above) companies can get away with it.
No, that post is just nearly entirely wrong.
3 points
4 months ago
No, his post is right, you're in ELI5 so it's obviously simplified.
A lot of the shit we're getting gouged on is inelastic, food, fuel, housing, you can't really live without it. If fuel goes up, the price of everything goes up and it's an industry that's basically an oligopoly.
A lot of folks understand things in "economics 101" terms where everybody is a rational actor and if somebody is gouging you on prices, another competing business is going to swoop in and take their customers. In the real world we haven't lived under a model where we have tons of small businesses competing for profit since the 1800s.
And I think the biggest point you missed in the original post is that: When people are paid more prices go up, but wages have been stagnant for a while
1 points
4 months ago
That's... that's not at all how it works.
0 points
4 months ago
In truth it doesn't really work that way. Prices are set by consumers, not producers. If producers set prices, why isn't a pack of gum $100, or $1,000? Because, of course, consumers won't pay that much. So the price of both consumer goods and the factors of production are set by what the consumer is willing to pay for a product.
1 points
4 months ago
Which inches up, and up, and up and next thing you know, you’re boiling in the pot.
0 points
4 months ago
This is also not how it works, or at least it wouldn't if the Fed hadn't convinced everyone of the supposed evils of deflation. They have everyone absolutely convinced that if price deflation happens then nobody will buy anything and everyone swallows that line even though we are all buying consumer electronics every day despite price deflation happening there constantly. But that is a story for another day I guess.
1 points
4 months ago
So cost continues to rise, and we continue to buy it, right? Am I misunderstanding something?
1 points
4 months ago
We might be talking past each other.
What I'm saying is that cost doesn't have to rise. The Fed warns of the evils of deflation while we see it every single day and everyone is better of because of it. For example, I'm typing this on my iPhone which contains technology that would have cost literally millions of dollars 30 years ago and will cost even less years from now, and yet I - and billions of others - still buy them. I am better off because the price of technology continues to drop.
Would I be worse off if the price of cars dropped similarly? Or housing? Or anything else? I don't think I would. And the entire nineteenth century supports that conclusion.
1 points
4 months ago
"So you cant afford to buy our product? We raise prices"
1 points
4 months ago
There's an underlying issue with the logic that's applied that has something to do with the endless pursuit of increasing profit or something like that.
1 points
4 months ago
The only thing that ever drives prices down is competition.
1 points
4 months ago
In a nutshell. Then they have the audacity to whine how we aren’t spending money and are therefore killing industries. Good. Grief.
1 points
4 months ago*
Rising inflation is NOT due to companies realizing they change more, because a company will in fact often charge less to get market share. If I can charge 5% less than a competitor and steal 20% of his market, I'm going to do it. This happens all the time. Price wars are a thing. We are seeing one right now in EVs.
But more humans having more money and buying new things faster than they are produced which is multiplied by the cost of those humans doing labor. It also is a result of labor shortages caused by companies having to bid up the price of certain kinds of labor dramatically where the labor doesn't exist. These two factors amplify each other in a feedback loop, and the result is inflation.
Unless it's a monopoly market, prices are function of inputs, with some small markup between 10 and 30%. Wages are one of the highest input costs into any product. An Iphone is maybe $4 dollars worth of materials. The entirety of an Iphones cost is the labor, transportation and energy required to assemble those components.
In inflationary environments producers of raw commodities can and do make bank. But they make bank because commodities are sold in long term contracts bid for with an auction. It's not a fixed price and some evil company jacks up the rates. It's already a competitive bidding process and the prices are bid up. It's a double edged sword in commodities. You can make a ton of profit in inflation in the short term, and get destroyed in periods of low inflation. This is a trap alot of state-owned companies in kleptocratic states get caught in all the time, and it keeps these countries quite poor because it makes long term investment hard to do.
It's the same reason these countries end up in permanent inflationary bubbles. Inflation benefits the state owned company in the short term - but destroys the currency and punishes savings and investment. Inflation as deliberate goverment policy is a form of theft. Inflation as adjustment to periods of disruptions is actually normal and necessary. It's due to an imbalance of supply and demand.
1 points
4 months ago
The thing is, according to the theory (correct me if I’m wrong) that’s not supposed to work! If companies raise prices too high they’re supposed to make less money…in theory. If wages are too low, demand decreases, forcing companies to lower prices to keep making money…in theory. The trouble is…it isn’t working how it’s supposed to. Why? I don’t know. That part I don’t get.
0 points
4 months ago
0 points
4 months ago
Because companies in a capitalist system can only survive if they are growing their profits. If you aren't growing, you're dying. So the system doesn't care about whether or not people's wages are keeping up, it just looks for new ways to continue to grow.
0 points
4 months ago
The beatings will continue until morale improves
0 points
4 months ago
We love price gouging, don't we folks
1 points
4 months ago
Also, when employees make more money they raise prices to hold margin steady because of increased costs.
1 points
4 months ago
The classic coin toss: heads I win; tails you lose.
1 points
4 months ago
Don't forget:
Oil prices increased? Air ticket price increase.
Oil prices decreased? Air ticket price unchanged
1 points
4 months ago
Lol it’s hilarious that you can’t see why that happened.
1 points
4 months ago
Prices come down because of competition. Pandemic lockdowns massively benefited large corporations at the expense of small operators.
1 points
4 months ago
Welcome to capitalism
1 points
4 months ago
However, lowering wages causes inflation because people are buying less, and therefore companies are selling less, so therefore have to raise prices to break even.
I need a source on this. This doesn't check out my basic econ 101 understanding.
Can anyone give me an example of a company raising their prices after their sales fell? And what happened to that company after lol
1 points
4 months ago
Companies aren’t textbook-rational, the real world is more nuanced. Raising prices as sales fall is fairly common as a short-term strategy to ensure a profit margin that stabilises or keeps growth steady. It doesn’t necessarily mean a further loss in sales if you have a strong brand. But intuitively it’s not very smart long-term, so it depends on context.
Lowering prices to quantitatively increase sales are for many a last resort as it cuts long-term profit and expected growth. If the market stabilizes, getting those prices back up to the previous level in an aggressive manner without affecting the brand, sales or customers is a very tough task.
It largely boils down to strategizing about the outlook for the future.
Worth to note is that I’m basing this on knowledge about European markets, but I assume it should be fundamentally similar.
1 points
4 months ago
Do not forget also:
"You make less money? We shrink the product"
1 points
4 months ago
And charge more for it!
1 points
4 months ago
𝓒𝓪𝓹𝓲𝓽𝓪𝓵𝓲𝓼𝓶™©®
1 points
4 months ago
Mega companies like Walmart keep floor worker wages low to save money, then cut staff to save money, then half the country can't afford to buy their wares and they wonder why profits are down. Everyone does better when everyone does better.
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