[LeoTinnitus]

It's certainly more nuanced than that. However, it does point out the fact that corporations focus too much on shareholder value as opposed to just making a good business system...except for the major players that is.

These the so called "too big to fail" types of companies which borderline monopolize market sectors like Amazon and Walmart. But they don't care during recessions because they're fine. They essentially are the government as they have a larger impact on your daily life than the actual government!

It's not so much that the stock buybacks are the straw that broke the camel's back, it's just another inevitable economic event that the invisible hand dealt. There is no stopping it. Otherwise we're just back in a labor economy again where money can't flow where irrational people deem they need to place it.

[BlackCherry]

It’s not the “corporations” as this abstract entity that are focusing on shareholder value as a top priority.

It’s the C Suite members, and it’s the board members... it’s a small group of people at the top who are trying to enrich themselves at the expense of the company and at the expense of the people who actually run the company.

[LeoTinnitus]

Yes that is most definitely true. The intent isn't for your company to go spiraling down into bankruptcy. The problem is these bourgeoisie types at the top don't change even after getting bailout money. Why the hell are we rewarding the people who maintain a company culture of "Well if we go bankrupt, we'll just ask the government for money cause they can't afford for us to go out of business!"

It's a load of crap that this is even a concept if the government cannot get involved at that point.

[softwarejosh]

under the guise of enriching the company through stock growth

[jimmaswell]

> They essentially are the government as they have a larger impact on your daily life than the actual government!

Amazon and Wal Mart could disappear overnight and I would just shop elsewhere. Amazon isn't in charge of my water quality or road maintenance.

[supercanuck]

Are you sure about that? All the people in your town would also have to shop at those alternatives as well.

Do you think that there is enough inventory and stock to go around? Would those alternatives replenish their inventory in a timely fashion? Would you seek alternatives to your normal shopping?

I think people vastly overestimate the capabilities of their local options.

[eanzenberg]

People also vastly underestimate how hard it is to produce commodities. Like, if Amazon disappeared overnight then we'd just all switch to something else and no issues would arise. What nuttiness!

[adwn]

> People also vastly underestimate how hard it is to produce commodities.

Neither Amazon nor Walmart produce those commodities, they distribute them. Sure, there would be some initial issues, but both the remaining distributors as well as the producers would have strong incentives to quickly resolve those issues.

[jimmaswell]

Obviously there would be temporary shortages in some areas heavily dependent on Wal Mart, but elsewhere where Wal Mart is one of 20 similar stores, the surrounding businesses would be able to handle increased business. That one Wal Mart suddenly closed to prevent union forming and the town survived. Brick and mortar in general would have growing pains but also adapt.

[derision]

So people didn't buy things before Amazon?

[danaris]

Of course they did—the same way they bought things at the local mom & pop stores before Walmart came in, undercut them, and drove them all out of business.

Companies like Amazon and Walmart massively distort the market, and do so quite deliberately. It's hopelessly naïve to think that if they vanished tomorrow, everyone would be able to just shrug and switch their purchasing to a drop-in replacement.

That's only possible in, as someone else described it, the "spherical cow in a vacuum" type of hypothetical free market. We live in the real world, where an arbitrary number of fully equivalent businesses can't actually continue to compete perfectly for everyone's money.

[derision]

Depends where you live. In Cleveland, there's still plenty of small shops I go to all the time. I also order from Amazon and shop at Walmart.

[enraged_camel]

Keep in mind that over the past couple of decades, Walmart has replaced small mom-and-shops in most towns and small cities.

An enormous amount of people in America would be utterly screwed if it went away.

[Retric]

For a few weeks possibly, but most of their items can be ordered online and their failure would open many doors for new stores.

Also, the overwhelming majority of people are driving to Walmart so even if significantly less convenient they can also drive somewhere else.

[LeoTinnitus]

It would open many doors over the course of a few decades of market correction. Just cause walmart closes shop doesn't mean local poor people suddenly have the capital to start a business and compete. It's why ghost towns are still a thing. When the oil derrick town dries up, the driller who now lost his job isn't gonna just start drilling for oil now.

[jimbob45]

Sounds like a decent reason to nationalize Walmart (other than that their margins are very thin and it’s unlikely anyone could do better)

[LeoTinnitus]

Why nationalize them? What would be the point? The purpose for nationalization is to give preferential treatment to the state. Walmart already does that and (in my personal opinion) does for the people as well.

Although the only thing I wish they cut back on was their employee culture cult stuff. It reminds me of McDonalds where you have to say thank you to a supervisor after everything, even if they're yelling at you to be a dick. It's like the f'ing military. That kinda brainwashing garbage needs to go.

[darawk]

> These the so called "too big to fail" types of companies > which borderline monopolize market sectors like Amazon and Walmart.

It's somewhat interesting that when coming up with a list of two 'monopolist' companies, you came up with two companies that compete directly.

[LeoTinnitus]

They monopolize supply chains. Not a specific market. Walmart has a reputation for exploiting companies to solely work for them because the money is too good. Then they force them to make it at insignificant margins until they can't anymore. Amazon as well.

[salawat]

>Otherwise we're just back in a labor economy again where money can't flow where irrational people deem they need to place it.

I find it interesting how in economics, analysis is based on rational actors, but whenever something goes wrong or doesn't agree, it's irrationality's fault.

Maybe there is a rationality to perceived irrationality that simply doesn't agree with the sensibilities of the claimer of other's initial irrationality?

[skrebbel]

> They essentially are the government as they have a larger impact on your daily life than the actual government!

Even if that were true, "the organization that has the biggest impact on your daily lives" is a weird definition of "government".

[dsfyu404ed]

Just to further highlight the lunacy of that definition, most people's "government" is their employer if you define government in that manner.

[LeoTinnitus]

Your employer most certainly "governs" your life in ways you may not even be conscious of. Just because they don't have a label on it in that way doesn't mean the concept doesn't exist. Industrial feudalism is the same as the old ways, it just confuses people more because there are innumerable things to do, buy, and see. You're "employer" is no different than a fief. The "entity" is the manor. The "inheritance" is described in the companies by-laws. And yes, it is 100% legal to have direct inheritance to your kin, and you can even write it in the by-laws that cannot be usurped by the board. You can write whatever the hell you want so long as it doesn't go against the way the federal government wants you to play the game (IE, basically the Emperor of the HRE or Emperor of China proclaiming a mandate for all tributaries to follow).

Your behavior is shaped by so many external influences that we often forget that the government most often has very little direct influence in our lives. Businesses typically encounter more interactions with the government, but average folks interact with businesses. Corporate cultures in a weird way end up becoming our "culture" we believe in, our "religious" views (not in a theological way). While we're all essentially considered "Freemen" in this world, sometimes you are not because of things like bills or debt bondage. You cannot leave from your "Lord" or "company" because you owe a debt somewhere or simply cannot afford to leave. It's a complicated system, but the concept of fuedalism has just been expanded.

[timlangeman]

The first point I make is that profit growth has been flat since ~2014 but the stock market has gone up quite a bit.

My question is: Why had the stock market continued to go up despite flat profits?

[Enginerrrd]

My guess is that the answer to that is cheap debt from the fed keeping interest rates so low for so long. The stocks had value beyond what you'd expect from P/E ratiosand assets alone because there was added future value in the form of anticipated stock buy backs.

[JackFr]

If debt is that cheap it would be irresponsible to finance the firm with equity.

[Enginerrrd]

That really depends on your timelines and risk tolerance assessment including externalities.

To use poker as an analogy: if you aren't sufficiently bankrolled, the correct play (most positive EV) can involve an unacceptably high risk of ruin. ....and BTW are you also factoring in the probability of fraud or a government seizure in your calculations?

[adwn]

> If debt is that cheap it would be irresponsible to finance the firm with equity.

Why?

[raincom]

'flat' only if you see through the shenanigans; otherwise, EPS (earnings per share) have increased, by reducing the outstanding shares.

When interest rates are low, firms can finance to buy back. Not only that, investors shift their investments to stocks, instead of bonds. Two forces are at work to pump stocks, both forces are products of low interest rates.

[skrebbel]

When you say profit growth was flat, that means that profit grew linearly, correct?

If true then that's pretty impressive and possibly much better than what the markets ~10 years ago expected?

[timlangeman]

Sorry, to clarify, their profit hasn't been growing.

Since 2014, Profit (before taxes) has been roughly $2.2 trillion every year.

https://fred.stlouisfed.org/graph/?g=qx3r

[skrebbel]

Ah right. Good point then!

[matlin]

I agree. I think one of the more interesting approaches to solve this particular problem as well as private companies staying private too long is the Long Term Stock Exchange. I don't know a lot about it but from my understanding, it aims to eliminate short term investors which removes a lot of the speculative nature of public stocks. Not sure that this would eliminate stock buybacks but the long-term investors might be more interested in traditional dividends.

[sokoloff]

It also likely eliminates all but the quite wealthy from investing in one of the greatest wealth-creation engines of the modern era.

[LeoTinnitus]

Playing with stocks is no different than selling phsyical commodities, except that unlike selling items on amazon, ebay, craigslist, or your own storefront, you have NO idea what that share will be worth. Plus even a 20% return on 10 shares of say amazon will give you a decent amount of money, all you are doing is sitting waiting to sell. It's not even compounding of an increase. So you need an incredible amount of capital and knowledge of the market to even make it worth your time, much of which most people don't have. It's very easy to lose money in the stock market. It's completely nonsensical to believe that everybody is competent enough to play into that system. Most people understand how to directly translate their labor into a currency. If it was an easy way to get rich, why aren't most people drawing an income off of it? Because they need a job first for their principal. Which tends to often get eaten up elsewhere for a myriad of reasons.

[dsfyu404ed]

>They essentially are the government as they have a larger impact on your daily life than the actual government!

Amazon and Walmart's power comes from being cheaper/better than the alternatives (though they may engage in unfair and unethical behavior as a means to that end). Government's power comes from having a monopoly on violence. These are very different and one has to be very far removed from government violence to think otherwise.

[_jal]

This is definitionally correct, but frequently far from reality.

Desperate people with no practical negotiating leverage may have the theoretical power of foot-voting, but it provides zero practical value.

Given that a lot of regions outside of urban areas are varying degrees of labor-monopsonies with a very few large employers, not having an official right to shoot your workers really doesn't make a massive difference in the amount of control they can exert.