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What a dumb article. Corporations exist for the purpose of returning money to shareholders, not for the purpose of permanently employing unneeded workers.
by NotYourLawyer 3y ago
What a dumb article. Corporations exist for the purpose of returning money to shareholders, not for the purpose of permanently employing unneeded workers.
- eatsyourtacos 3y agoAh what a world we have constructed. Those with money do nothing to keep getting more money, while those that do the actual work hardly get any consideration. Got it.
- commandlinefan 3y agoDo you have a (workable) alternative?
- stefantalpalaru 3y ago[dead]
- greenie_beans 3y agothis is such an antagonist way to start a discussion. i'm gonna assume that you'll shoot down any alternative anybody proposes
- ClumsyPilot 3y agoDo you think the financial system has not changed in the past 150 years? Just withing Capitalist countries. we have tried like 4 or 5 different forms of capitalism. When eneconomic growth was highest in US history, college was free and share buybacks were illegal. 40% oftax reciepts were corporation tax. (now <10%)
- eatsyourtacos 3y agoI could write you a book on this. But let's just say the "alternative" is all in attitude and what we care about in society. The person I responded to literally just says "well the corporation only exists to give profit to the shareholders!! that is their legal obligation!" As if that is some kind of fact of nature? That is a debatable topic. As in- SHOULD that be the case? The older I've gotten the more I realize we are taught all of these constructs and never to question their actual intentions. What is the intention behind the construct of a corporation that the primary responsibility is to give back to the shareholders? Green & rewarding people that already have money. Why can't the main intention be a company to given stable employment to workers and adequate rights? To pay reasonable taxes on your profits to give back to the welfare of society? But no.. we have a system in place here where a company is basically not required to give paid sick leave, no maternity leave, limited healthcare, zero paid time off, no sort of retirement/safety nets, no guarantee that you won't be fired the next day and have zero severance.. etc etc etc Everything that's wrong with not helping people in our society is all intermingled right now. We need to increase taxes significantly on corporations and the wealthy. We need to guarantee healthcare, early childcare, significant maternity leave, paid sick days, vacation, way more higher education assistance. Then even if corporations get to continue to be more greedy, at least they are paying their share and have to provide way more benefits to people. Now since we are on HN- someone is going to say "Intel and X tech corporation do that!" And hey, fair enough they do a lot of that. But you know what? They are giving benefits to the people WHO HAVE MONEY! We are literally in a society where the people with the best benefits are the ones who make enough money where they could manage without them. Yet most of the workforce that does more random jobs are the ones who get screwed with basically no benefits while making shit money. Long story short? It's all connected and so much needs to change. But I have little hope any of this will in the US.
- martindbp 3y agoAnd a glorious world it is. We had to go through millenia of chaos and violence before we found a system which can channel greed and status and power seeking into something mostly productive.
- amrocha 3y agoUnless you're poor, in which case you just die I guess
- dartharva 3y agoWell that has never not been true.
- martindbp 3y agohttps://blogs.worldbank.org/opendata/dataviz-remake-fall-extreme-poverty-best-news-world https://blogs.worldbank.org/opendata/dataviz-remake-fall-ext...
- amrocha 3y agoThe world bank! That classic charitable organization that definitely does not make predatory loans to poor countries and force them to privatize their industries
- RivieraKid 3y agoMost owners of Intel do work. Many people in this thread co-own Intel and also have a job.
- dragonwriter 3y ago> Most owners of Intel do work. Most (by ownership) direct owners of Intel aren't even natural persons.
- RivieraKid 3y agoOk, but that's just an implementation detail, it doesn't matter whether I own a share directly or through some fund.
- eatsyourtacos 3y agoBuying shares in Intel and holding them means you are doing literally zero work for Intel.
- RivieraKid 3y agoYes (unless you're employed at Intel). Not sure what's your point though.
- f6v 3y agoThere was a time plantations existed for black people to work on them. Not arguing working at publicly traded companies is a “modern-day slavery”. But it’s not inconceivable to me that the nature or corporations(and society) can change over time. The workers can demand it.
- hindusi 3y ago[dead]
- NotYourLawyer 3y agoNo, that was never why plantations existed.
- hindusi 3y ago[dead]
- MichaEiler 3y agoI'd recommend reading about stakeholder capitalism. E.g. "Stakeholder Capitalism: A Global Economy that Works for Progress, People and Planet" written by the founder of the world economic forum.
- baggy_trough 3y agoIt’s a good idea to read about it so one can learn what a bad idea it is.
- pclmulqdq 3y agoI don't know why anyone likes his books. They tend to be very light on facts and evidence, and heavy on inflating his own ego. Maybe read it if you want to understand the current zeitgeist in the world of managers, but I wouldn't look for wisdom in them.
- MichaEiler 3y agoRealizing that a business has more responsibilities than just satisfying the shareholders is incredibly important. I honestly just listed it as an example, there might be better books. I only had brief look at this particular one, since I got the impression that most of it's content is common sense here in Europe...
- NotYourLawyer 3y agoI’ve read lots about stakeholder capitalism. It’s a bunch of nonsense. If management is beholden to a bunch of competing groups, then in any given situation they can do whatever they want and justify it by saying “well yeah the shareholders (or whoever) don’t like it, but this is what we need to do for the sake of the employees (or whoever).” I’d rather have the shareholders in charge than unaccountable management doing whatever they feel like.
- wbkang 3y agoStrictly speaking that's not true and, it's not fair to call it a dumb article. Corporations are supposed to what's best for the shareholders. Milton Friedman equated it to maximizing profit, but it's not necessarily so. Even if you assume that the profit is the sole reason for the corporation, it's not clear laying off 20% worker would necessarily lead to maximizing shareholder profit in the following years (e.g., it could lead to stifled innovation, lower employee morale, etc).
- danielrpa 3y agoThe management team believes this is the case. They have a lot of information on the company and individual performance. Do you have any reason to believe they are wrong with this particular choice?
- jehb 3y agoI would counter that this suggests the management team believes layoffs will be beneficial to management. What is beneficial to management may or may not actually be in the best interest of shareholders (and neither incentive necessarily aligns with the interests of either customers or employees).
- anthonyskipper 3y agoThe dividend keeps the stock price high, which is good for both shareholders and employees. Cutting employment is how you manage to pay the dividend when you losing money. Not paying the dividend would crash the stock price and make lots of things harder. If you believe Intel will be profitable again in the near future then paying the dividend really does make sense. Unfortunately there have been lots of companies that thought that was true when it wasn't and the dividend is how they ran out of runway quick.
- ClumsyPilot 3y ago> If you believe Intel will be profitable again in the near future then paying the dividend really does make sense If you believe your company will be profitable you should reinvest all avaliable capital into the business to grow it. What you are advocating is contrary to every shred of logic and common sence.
- chasing 3y agoA purpose of a corporation is to enrich shareholders. It's hardly the only purpose.
- tyingq 3y agoEven if we assume a system that doesn't give a shit about human beings, there's nothing efficient about overhiring, then having to lay off workers already past the initial curve of how to work in the company. There's a fair amount of inefficiency in a cycle of layoff, hire new, wait out their acclimation ramp up.
- stu2b50 3y agoHindsight is 20/20, though. The narrative from the company isn’t that “we purposefully overhired and are now laying the excess off for fun”, it’s that they believed they would have use for the excess given the trajectory of the company and the overall economy but they were mistaken. Which is not particularly strange - the future is famously hard to predict.
- tyingq 3y agoI agree to a certain degree, but not when "Speculating As Much As 20% Workforce Reductions". They have tools like taking advantage of natural attrition.
- brewdad 3y agoNote that the 20% workforce reduction is within one relatively small portion of the company. IIRC, this is also the portion of the company that works on the Intel branded servers they were somehow still building in 2023. They are finally exiting that business and those workers are redundant. What would you have these workers do when their entire reason for being hired and employed no longer exists?
- deleted 3y ago[deleted]
- JumpCrisscross 3y agoThere is also genuine benefit to overhiring and then laying off laggards: interviews aren’t perfect, and you can find hidden gems by taking risks on unconventional candidates.
- BenoitP 3y agoAlternatively it also means Intel's management isn't inspired enough to make use of human and physical assets. As an investor, I'd take it as sign that they think they're done, packing up assets and becoming a lower sized structure. Maybe buying some goodwill in the markets for future opportunities. Buy let's face it: TSMC has won that winner-takes-all market.
- RC_ITR 3y agoEh, the opposite is usually true. Kodak should have laid off every single person working in film development and pivoted hard to digital sensors, but for a variety of reasons, decided that they were done in that market, so they kept paying people to make better disposables. Not saying they would get there, but Sony makes c.$2bn a year in profit there, so realistically Kodak could still be a multi-tens of billions of dollars company if they had done that.
- User23 3y agoKodak had already become an accounting control fraud by that time. It's just that the absolutely insane profit margins on film masked the utterly corrupt senior leadership. It wasn't digital that killed them, it was corruption.
- RC_ITR 3y agoNo. Regardless of corruption, the market for film tanked.
- User23 3y agoDid you know that they were the technology leader in digital? A Kodak engineer invented the digital camera[1]. They were first to market with a self-contained digital camera. Kodak had the best inventors in the business and numerous foundational patents on digital photography. You sound like someone repeating a just so story you heard nth hand for some large n. My information comes directly from the participants. It was absolutely managerial corruption and not a lack of technical ability that tanked them. And that's where the real lesson is to be learned. [1] https://en.wikipedia.org/wiki/Steven_Sasson https://en.wikipedia.org/wiki/Steven_Sasson
- ok_dad 3y agoCapitalism is supposed to help the people via efficient allocation of resources, not make money for a select few. The original goal of any economy is to enable specialization and still provide for the basics. People aren’t just workers.
- 988747 3y agoEffective allocation of resources means firing people that are not necessary for the company. Also “people aren’t just workers” might be true in general sense, but for the company they are exactly that: workers. Their private lives are not the company’s concern. They shouldn’t be. The thing I hate the most is when my employer tries to take care of my wellbeing outside work. I consider that invasive of my privacy.
- dmreedy 3y ago> Capitalism is supposed to help the people via efficient allocation of resources, not make money for a select few. I am far from convinced this is even a goal of capitalism, much less the goal. There is a reason it trends towards monopoly. While I violently disagree with the moral position of the GP's post, I think their mentality is much more closely aligned with a working definition of the thing, which is to optimize for output of material wealth, while allowing individual people to benefit from private ownership of the means by which that wealth is created. At no point does the concept of "helping people" enter that definition; it only "allows" people to help themselves, if they can, within the limitations of a framework that compounds generational and socioeconomic success (and thus, already have some degree of "help" to stand on). > The original goal of any economy is to enable specialization and still provide for the basics. People aren’t just workers. I'd add some nuance here. The goal of any economy is to enable specialization towards the goals of the drivers of that economy and provide the basics for people who enable those goals. Not for people in some holistic, humanistic sense. And under capitalism, since that goal is production of capital, those people are absolutely just workers, except for the owners of capital, and the ones who fall out of the machine and become so many loose parts rotting on the floor.
- ok_dad 3y ago
- zoobab 3y agoThis is why shareholders like AI, they can spare unneeded workers.
- 988747 3y ago[dead]
- gedy 3y agoAn American corporation protected by the American taxpayer has some duty to its workers.
- NotYourLawyer 3y ago[citation needed]
- bastardoperator 3y ago[flagged]
- NotYourLawyer 3y agoThese employees were evidently net negative value for the company, or they would have kept their jobs.
- bastardoperator 3y agoI'm sure it had nothing to do with mismanagement at the top allowing for a 36% slippage in revenue.
- NotYourLawyer 3y agoArmchair quarterbacks are the best quarterbacks, always undefeated.
- bastardoperator 3y agoThat's a pretty good description of the C-Suite, I like it.
- NotYourLawyer 3y agoI was referring to you.
- bastardoperator 3y agoOh really? Thanks Captain Obvious....
- NotYourLawyer 3y agoYou’re quite welcome, armchair team captain.
- scarface74 3y agoIt’s not like Intel is miles ahead of the competition. Even if you believe that layoffs were necessary, the money should go into R&D unless Intel believes it’s so incompetent that it can’t find a better use for the money.
- UweSchmidt 3y agoCompanies certainly have to make money, the more the better, and your description is not technically wrong, and yet short-circuits. Nobody in any productive and creative activity has dollar signs in their eyes. It's about building, creating, optimizing, allocating and yes, also removing. At least some part is long-term (certainly longer than the reporting interval of a "quarter"), and positive contributions compound. Alternatively you can just withdraw, and eat the seeds now - stock market and executive bonus agreements would reward that, and that's the mentality that cannot create. The sense is that those formerly exciting companies are a little lame right now, and maybe lack the right visionary leadership? Why does the new AI boom not create excitement for Intel, to make chips for AI or to use AI to make chips or w/e. The sentiment is a disappointment in the tech sector that had been good for so long.
- fallingknife 3y agoYes they absolutely lack the visionary leadership. Problem is that the first CEO of a successful company gets there by being a good CEO. The 2nd through last CEOs get there by being good at office politics.
- photochemsyn 3y agoCorporations in Germany have governing boards with equal representation for shareholders and employees. It's a much better system and should be adopted by the US, i.e. encoded legally.
- sib 3y agoAnd yet, looking at a list of the top 10 tech companies in the world (by market cap), not one comes from Germany. The top seven are all from the US. Only one from Germany in the top 20 - SAP at #17, with a market cap of less than half of the #10 company. So maybe it's not a much better system.
- ClumsyPilot 3y agoWho said this is the right metric to use? Maybe you should be looming at productivity or innovation. I gave my own metric, biggest parasites. Looking at the top 10 tax avoiding, etm, sorry, minimising organisations, the top ones are also from the US. Why should I support the biggest and fattest freeloaders? I pay for roads and police, Starbucks just uses them and pays zero tax. And the coffee is shit. They don't even have excuse of 'innovation' like google does. If Starbucks HQ gets nuked from orbit tomorrow, the world would just lose a parasite. They would be replaced by mom&pop coffee shops overnight, and they would pay tax and make better coffee
- sclarisse 3y agoPretty sure Starbucks, its franchisees, and affiliates all pay state and federal fuel and payroll taxes, and state/local sales taxes. When they own a location they will also pay state property tax; if not, their landlord will pay that tax with their rent. The fuel tax is especially relevant insofar as it’s explicitly meant to be a direct fee on the users of the roads to pay for the roads. Their drivers and those who contract for them in logistics will also pay for licensing, registration, and tolls. There’s a variety of meaningful discourse to have on the proper tax structure for Starbucks… but representing them as freeloaders on the roads and the police does not belong as part of it.
- 3y ago
- skynetv2 3y agoThey are not returning money to shareholders, they are artificially inflating the stock price through short term band aids like dividend. If you are suffering an existential crisis, you try to invest all you can in positioning yourself to be successful in the long run. If I am an investor, and I am, I want long term return on the full value of my investment, not a $1 dividend on a stock I bought for $40, which is not worth anywhere near it now. This is the same nonsense Pat's predecessors did, laid off long term experts in manufacturing & design and replaced them with fresh grads. And see how where we are.
- jefftk 3y agoA dividend is literally giving money to shareholders. Each shareholder receives money in proportion to the number of shares they hold: https://www.nasdaq.com/market-activity/stocks/intc/dividend-history https://www.nasdaq.com/market-activity/stocks/intc/dividend-...
- thefaux 3y agoSemantically, sure, they are giving money back but the OP has a reasonable point that a dollar given back today may ultimately cost far more than a dollar in lost future returns.
- btilly 3y agoIt can go either way. Management should give money back when they do not think that they can generate future returns with it that are worth more to investors than the money. If management is right, then attempting to keep the money is taking value away from shareholders. Given my knowledge of Intel's situation, I believe that management is making the right call here. We've known for decades that CISC based architectures don't scale as well. For a long time Intel compensated by investing enough to be able to iterate faster despite their advantages. But now ARM has taken over mobile, and is moving into data centers. Intel lost, they can't invest enough to overcome their innate disadvantages. This isn't news, but there is a huge chunk of x86 out there. Unfortunately they've lost their moat on that to AMD. AMD now has better designs and more money to put into research. AMD also has outsourced manufacturing to TSMC, which (because they also build lots of ARM devices) has better economies of scale and manufacturing than Intel can hope match. And even if Intel tried to copy AMD here, there is a long learning curve to working with outsourced manufacturing that Intel would have to go through. The result looks pretty grim. There is not one area in which Intel has an institutional advantage. And there is every reason to believe that Intel is not long for the world. Therefore extracting maximum value from current assets is probably their best management strategy. Rather than engaging in wishful thinking about a return to their former glory.
- greenie_beans 3y agomaybe that idea should be challenged.
- marricks 3y ago> Corporations exist for the purpose of returning money to shareholders Wow, no wonder our lives are worse than our parents’.
- schlauerfox 3y agoCorporations exist as a privilege granted by the government as protection against certain liabilities that would discourage individuals and groups from doing riskier things all the way back to the charter days. The meme of 'it exists to return money to shareholders' is reductive and sounds propagandistic. What purpose an organization turns it's work to is up to the people who make the decisions, and varied.
- thunky 3y ago> What purpose an organization turns it's work to is up to the people who make the decisions, and varied. The article is about Intel, so what do you believe the purpose of Intel is if not for profit? What do you think shareholders expect to gain?
- 1propionyl 3y ago> What do you think shareholders expect to gain? A stronger onshore chipmaking industry could be one thing. There are plenty of other reasons individual shareholders might have to park their money in one place as opposed to another which don't simply have to do with maximizing returns. People have ethical considerations, ideological considerations, patriotic considerations... The purpose of Intel is to manufacture chips. Selling them to make money allows them to reinvest to make more chips. Offering shares on public exchanges raises funds to... you guessed it, make more chips. If the only true end goal of every corporation is to make money, then eventually we would eventually end up in a financial shell game where money is shuttled around ledgers while nothing of value is created. (Yes, I know.)
- thunky 3y agoYou have it backwards: > The purpose of Intel is to manufacture chips. No, the purpose of Intel is to make money. > If the only true end goal of every corporation is to make money, then eventually we would eventually end up in a financial shell game where money is shuttled around ledgers while nothing of value is created No, we end up with Intel manufacturing chips (in order to make money). If Intel becomes unable to make money manufacturing chips, I guarantee they will stop doing it.
- eternalban 3y ago> Corporations exist for the purpose of returning money to shareholders, not for the purpose of permanently employing unneeded workers. 'Let them eat cake'. There is a pov that societal interdependence is a fact, and that means that societal actions must ultimately be benefitial to the society at large. This point of view can then hold that liberal market economy is a good thing because it promotes and engenders productive social activity (induced by economic self-interest) that then results in greater societal well being. So here the "economic self-interest" is the frosting on the cake: the cake is "productive social activity". So we in the liberal West go and congratulate ourselves in that our 'greater good system' is also 'better for the individual' as well. It's great! But, some in our system do not hold to the view that societal interdependence is factual, or even if it is, it is desirable. To them, the cake of our system is "economic self-interest" and the societal well-being thing is, frankly, a nuissance, a "cost of doing business". This is the germ of the issue, imo.
- gamblor956 3y agoIn the U.S. corporations exist for the purpose of providing limited liability with respect to common investments in a business activity. (The original British concept of corporations did not provide for limited liability for shareholders, see e.g. Lloyd's of London.) It was only in the past few decades that a political ideology decided that corporations were about maximizing shareholder investments to the detriment of everything else.
- NotYourLawyer 3y agoNo, limited liability is not an end in itself. Ask yourself what we’re trying to encourage by granting investors limited liability.
- gamblor956 3y agoLimited liability with respect to investment in a business activity is the sole original reason for the corporate form, as you don't need a corporation to pursue a mutual business activity (that's what Partnerships are for).
- garbagecoder 3y agoCool cynical take, bro. It's almost like rashly hiring a lot of "unneeded workers" and then firing them is an indication they won't be able to return money to shareholders. German companies of a certain size have to have worker representation on their boards. Since Germany is perhaps one of the world's leading economies and hasn't been destroyed by not only returning money to shareholders, there is, at least, a viable alternative. But please continue to embody why we can't have nice things.
- benatkin 3y agoNot even a cool cynical take. It fails to take into account that Intel has taken tax incentives for providing jobs. They might be justified in what they're doing here and it might be mostly unrelated to these tax incentives, but they certainly don't have zero obligation to provide jobs. https://subsidytracker.goodjobsfirst.org/parent/intel https://subsidytracker.goodjobsfirst.org/parent/intel
- PedroBatista 3y agoIt's a "dumb" article, but your reasoning is inline with it. The problem with many of your "unneeded workers" is that when they become needed you can't flip the switch and they'll appear grateful for the bread you throw at them. See service industry after the Pandemic, now extrapolate for highly technical jobs ( even the sales ones ). And also it's not like these people have gold fish memory, they remember, and adjust accordingly. On the other side, Intel can't/shouldn't simply cancel the dividends because those 1.5B "saved" would cost them multiples of that since investors wouldn't buy their stock and many would sell - cutting their already big losses - So for Intel, capital would come only from the banks and the rates aren't exactly 0% now.. This is yet another example how Intel "star" execs ( and the board ) should have been competent 10 years ago instead of riding the wave. Now Intel is in a very tough position and it's really "no ones fault" of those who are there now.
- throw93 3y agoWhy do you think the workforce who generated record profits for Intel only a couple years back are suddenly "unneeded"? That's just reflects the dumb decisions made by the leadership. If anything the CEOs and upper management who made those bad decisions and still taking millions in bonuses should be fired.
- zmnd 3y agoHow is the previous revenue relevant? For a rational company, workforce is needed to increase revenue in one way or another. If the company is rational and wanted to increase their revenue, why would they decide to lay them off (and incur additional expenses)?
- throw93 3y agoIt's relevant because it proves that majority of the workers are competent. If you are not able to succeed with a competent workforce then you're just a bad CEO/leader and should step down. Also it's wrong to assume companies are rational. If you are constantly in a cycle of hiring and firing employees, then it indicates you have a no long term vision and no skills to navigate the market.
- zmnd 3y agoHow does it prove it? Why the same logic doesn’t apply to the upper management, they were at the company when it had record profits. So they are competent enough to recognize that certain efforts are not needed anymore and it’s time to cut losses.
- throw93 3y agoSame logic does not apply to the upper management because they are not directly involved in generating value for the company. Elon Musk is not out there writing code, Tim Cook is not assembling iPhone or even designing it. Telling someone what to do is not even close to the labor of person actually doing it. And when the "upper management" makes bad decisions and results in huge losses, bottom rung employees are the first one to go.
- closeparen 3y agoAnd holding onto unneeded workers is an actively anti-social thing to be doing in a tight labor market! The whole "corporations are good insofar as they provide jobs" thing was contingent on the Great Recession-era macroeconomy.