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That’s not necessarily true. AMZN has had historically low razor thin net profit margins. I don’t think it has ever been more than 5%. Everything that is reinv
by jelliclesfarm 6y ago
That’s not necessarily true. AMZN has had historically low razor thin net profit margins. I don’t think it has ever been more than 5%.
Everything that is reinvested from the gross margins goes back into the economy for growth and jobs.
But with automation, it will not go up in the beginning but will eventually grow only when automation gains outstrips hiring costs.
I suspect Amazon has the capability to bring in more automation and cut existing jobs for increasing margins. They are just keeping the jobs on for now. There is no need for them to keep hiring like they do. A lot..not all..can be amenable to automation.
That’s just one example. I am sure it’s true for Uber and Airbnb and the like.
- ddingus 6y agoI did not speak to net margins.
- jelliclesfarm 6y agoOk. What did ‘higher margins’ refer to..sorry, I assumed net profit margins.
- cercatrova 6y agoGross margins. Of course if they made more gross profit and reinvested it all, net profit would look the same. Making 100 bucks and reinvesting 100 is the same as making 10 bucks and reinvesting 10, in net profit terms, so net profit is not really a useful metric when judging productivity.
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- jelliclesfarm 6y agoIt is being invested. And that means capital being ploughed back..new products and new jobs created. And more taxes. Why doesn’t that count? More 20 hour/week jobs. With more young people educated and coming out of schools..and a raising population, this is how economy keeps chugging. When Amazon builds more warehouse hubs, there is construction, more automation jobs, more drivers, more consumption, more taxes and more revenue. Most important ..more jobs. What is an acceptable alternative?
- cercatrova 6y agoIt counts sure but I'm saying on a balance sheet it's not useful to look at, per my example above. Increases in gross profits are much easier to look at, before they're used up for reinvestment.
- jelliclesfarm 6y agoThat’s why I gave the example of Amazon that has never posted anything more than 5% net profit margin ever..they do a good job at creating new jobs, new tax bases, reinvestment, Wall Street play, increasing business reach and new products. It’s a juggle. They are managing well so far. With a low profit margin. And they look pretty good.
- cercatrova 6y agoI think you're misunderstanding what I'm saying. It's fine if they reinvest profits, but I'm talking about for an observer, it's easier to tell how much more money a company is making through gross rather than net profits.
- ddingus 6y agoDoes not matter what is done with the higher margin. The fact is when it isn't shared in higher proportion with labor, hours go up and those dollars are not available to support demand either. Taking less is the alternative. And lets be real, nobody wants to do that, and there are great reasons too. This is why I said it is a political question above. Right now market rules permit current behavior. If we want different behavior, those rules must change. We can compete with existing money with government investment in the people, lands, infrastructure and do so with the behavior intended. This will pull others that direction, though not all. We can redistribute with more aggression. We can mandate compensation differently. We can mandate hours worked. Lots of possibilities. The way I see it, growing unrest leads to national priority discussions, new policy. Or, if there is growing happiness, that will not happen. It will resolve though. One way or the other.
- 6y ago