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I think that’s only half right… the financialization is driven via a priority of short term profits that are incentivized by the market to executives. They p

I think that’s only half right… the financialization is driven via a priority of short term profits that are incentivized by the market to executives. They play the BS game to just get rich and then dip, company be damned in the long run.

CPLX 3y ago
This is the closest thing to an answer. The economy has essentially been ruined by looting. People finding ways to strip out assets from companies. Variations on this include private equity racking up debt and bankrupting companies. Executives doing stock buybacks to boost their options while hollowing out the company's resources. Hedge fund management fees. It's everywhere.
- lumost 3y ago
  Is the looting behavior just a response to US industrial policy? US policy has made US manufacturing tenuous for decades. Meanwhile US policy has also provided the means and mechanisms to ship manufacturing abroad. Given the above, isn’t the optimal strategy to maximize profit extraction in order to invest in new industries?
  - TheOtherHobbes 3y ago
    It's a response to a planetary economy incentivised to reward resource extraction, rent seeking, and individual greed over collective intelligence and creative strategy. The US corporate right evangelised this culture as "freedom", and now it's being eaten from the inside out by it.
  - jdk354 3y ago
    Its likely that if many things were made in the US, they would be too expensive for most people to afford, a smartphone might cost $5000. The US could re-industrialize but it takes a lot of robotics due to high labor costs in the US.
    - lumost 3y ago
      My understanding is that robotics were being heavily developed in the US in the 80s/90s to improve costs. Then outsourcing took the wind out of the sails for robotics. Maybe the tech was to far out, or maybe we would have had vastly more advanced industrial robots.
- chii 3y ago
  > People finding ways to strip out assets from companies. If those people don't own the company, what is the owner doing by allowing this to happen? If those people _are_ the owners, then there shouldn't be a problem, since it's their own company, and they ought to be allowed to do anything they wish. Including short term reward for long term loss (if it is worth it in their eyes). So i dont think it's "looting" (implying it's being stolen without knowledge of the owner).
  - junofan 3y ago
    I think fiduciary duties get way more nuanced. You can’t always do anything you wish to a company, even if you own it outright.
    - chii 3y ago
      > fiduciary duties only agents acting on behalf of the owners have fiduciary duty. Of course, if you are a majority owner, but there exists minority owners, you cannot screw the minority owners to profit yourself - i guess this is a form of fiduciary duty. But if you own it outright 100%, then you don't have such a fiduciary duty to yourself.
      - junofan 3y ago
        You’re missing the concept of foreseeable injury.
        chii 3y ago
        It is not an injury to an employee to sell the company's operations overseas and close shop in the US. Forseeable injury is applicable to negligence suits, and it is not negligent to change the business model resulting in the employee being out of work. A company has no legal responsibility to maintain the livelihood of their employees at the cost of the business' profit margins.
        blq10 3y ago
- sitkack 3y ago
  Everyone incentivized by percentage of money changing hands ends up looting whatever asset they have access to, esp if the resource they are burning isn't on the books somewhere. PMs loot products by throwing in needless features to game some metric, or cutting features that users want but are "too expensive". Engineers loot by burning resilience and multi-dimensional reliability to eek out 5% more straight line speed. Sales folks loot by offering huge discounts to get huge deals signed, etc. They look like heros, then they move on, leaving the place worse than they found it.
  - lifeisstillgood 3y ago
    That's a good insight - the whole article is deep food for though thansk
- bboygravity 3y ago
  It's way worse than that: there's also deliberate cellar boxing (bankrupting) of companies on a large scale. Hedge funds working with consultant buddies (BCG) to take over the board/leadership of a victim company. The consultants then deliberately destroy the company from the inside while their hedge-fund buddies (naked) short it into literal bankruptcy. It's a very easy game, it's tax-free (because the short position is technically never closed? or something) and it only very very rarely fails and backfires (GME).
  - RandomLensman 3y ago
    Do you have an example (incl. evidence) of such coordinated and deliberate action between consultants and hedge funds?
    - anomaly_ 3y ago
      He doesn’t because it’s conspiracy bullshit. There are some valuable points in this thread but the OP above is not one of them.
  - TheOtherHobbes 3y ago
    https://edition.cnn.com/2018/10/16/investing/retail-sears-private-equity/index.html https://edition.cnn.com/2018/10/16/investing/retail-sears-pr... Hard to imagine the delightful people involved leaving money on the table by missing an opportunity to profit from shorting.
- wisty 3y ago
  I think China deciding to dig itself out of poverty is a big factor with both good and bad effects (and absolutely staggeringly big effects).
  - SyzygistSix 3y ago
    Can you imagine the magnitude of the humanitarian and environmental crisis China would be if they had not industrialized and joined the global market? A country that size full of uneducated farmers and first generation coal power plants would be a nightmare for everyone, not just China.
    - rorroe53 3y ago
      Well, the planet would be better off without Chinese middle class and elite flying around and buying stuff. Countries that are full of poor "uneducated farmers" tend to have much lower carbon footprint than richer ones, even with the higher birth rates. Despite its admirable investments in reneweable tech, China still keeps building new coal plants as well.
      - OfSanguineFire 3y ago
        Carbon isn’t the only pressing environmental damage though. For example, Madagascar is an island full of poor “uneducated farmers”, and it is precisely their farming that has been deforesting the island through slash-and-burn agriculture, a practice that has accelerated over the centuries due to the high birthrates.
      - jeffreyq 3y ago
        Would your comment read any differently if you replaced "Chinese" with "United States", or "France", or any other Western civilized nation? I'm curious to understand why China is to be blamed, exclusively? Correct me if I am misunderstanding your premise.
- katbyte 3y ago
  started by jack welch at GE, the first corporate raider - https://www.iheart.com/podcast/105-behind-the-bastards-29236323/episode/part-one-jack-welch-is-why-114741686/ https://www.iheart.com/podcast/105-behind-the-bastards-29236...
  - walthamstow 3y ago
    Was Welch a raider? I thought he worked his way up internally. My understanding, possibly biased by my Britishness, is that Jim Goldsmith was one of the earliest raiders who took over companies and asset-stripped them.
- jdk354 3y ago
  Private equity really makes life miserable for regular investors and the general economy. I think stronger provisions against buyouts of public companies preventing a single investor from buying more than say 10% of a company and preventing public companies from therefore being gobbled up by private companies would go a long way to solving these problems. Its also vitally important that rules for fiduciary responsibility to a companies shareholders have teeth and also the INDEX act to prevent companies from being subverted .
yterdy 3y ago
Not quite. As GGP mentioned, the necessity of keeping stock prices (and property values, and anything else securitized) high so as to not impoverish pension funds, 401Ks, IRAs, etc., is real. That is, if you care about Silent, Boomer, and Gen X retirees - who invested, but didn't save - being able to cover their myriad outlays. Millennials and younger need not apply, of course; we're just never going to be able to retire (Or afford a house. Or...). You are right about one thing: "get rich and then dip" is the mantra. Not just for executives, but for the elder half-ish of Americans in general.
- madengr 3y ago
  Saving is futile with a 3% loss on your money each year. Unless you invest it you are losing it.
  - radlad 3y ago
    FYI, your account might be shadow banned. I vouched for this comment, but most of yours are dead.
  - layer8 3y ago
    Investments come with risks. The trade-off of cash losing its value over time is that it’s relatively less risky. You split your assets into cash and investments to achieve an overall combined risk profile. In that sense, cash is just another investment with a certain risk-return ratio (even when the return is negative).
    - jdk354 3y ago
      Your cash over time is guaranteed to lose almost all its value. While, if you invest in something, it could be even gold or silver, could be a house, could be a global market cap index fund, it holds more of its value than a fiat currency does. So no, fiat currencies lose everything and even with risks involved with other investments, the risks are still less than cash. Cash over time is one of the worst investments.

CPLX 3y ago

This is the closest thing to an answer. The economy has essentially been ruined by looting. People finding ways to strip out assets from companies. Variations on this include private equity racking up debt and bankrupting companies. Executives doing stock buybacks to boost their options while hollowing out the company's resources. Hedge fund management fees. It's everywhere.

lumost 3y ago
Is the looting behavior just a response to US industrial policy? US policy has made US manufacturing tenuous for decades. Meanwhile US policy has also provided the means and mechanisms to ship manufacturing abroad. Given the above, isn’t the optimal strategy to maximize profit extraction in order to invest in new industries?
- TheOtherHobbes 3y ago
  It's a response to a planetary economy incentivised to reward resource extraction, rent seeking, and individual greed over collective intelligence and creative strategy. The US corporate right evangelised this culture as "freedom", and now it's being eaten from the inside out by it.
- jdk354 3y ago
  Its likely that if many things were made in the US, they would be too expensive for most people to afford, a smartphone might cost $5000. The US could re-industrialize but it takes a lot of robotics due to high labor costs in the US.
  - lumost 3y ago
    My understanding is that robotics were being heavily developed in the US in the 80s/90s to improve costs. Then outsourcing took the wind out of the sails for robotics. Maybe the tech was to far out, or maybe we would have had vastly more advanced industrial robots.
chii 3y ago
> People finding ways to strip out assets from companies. If those people don't own the company, what is the owner doing by allowing this to happen? If those people _are_ the owners, then there shouldn't be a problem, since it's their own company, and they ought to be allowed to do anything they wish. Including short term reward for long term loss (if it is worth it in their eyes). So i dont think it's "looting" (implying it's being stolen without knowledge of the owner).
- junofan 3y ago
  I think fiduciary duties get way more nuanced. You can’t always do anything you wish to a company, even if you own it outright.
  - chii 3y ago
    > fiduciary duties only agents acting on behalf of the owners have fiduciary duty. Of course, if you are a majority owner, but there exists minority owners, you cannot screw the minority owners to profit yourself - i guess this is a form of fiduciary duty. But if you own it outright 100%, then you don't have such a fiduciary duty to yourself.
    - junofan 3y ago
      You’re missing the concept of foreseeable injury.
      - chii 3y ago
        It is not an injury to an employee to sell the company's operations overseas and close shop in the US. Forseeable injury is applicable to negligence suits, and it is not negligent to change the business model resulting in the employee being out of work. A company has no legal responsibility to maintain the livelihood of their employees at the cost of the business' profit margins.
        blq10 3y ago
sitkack 3y ago
Everyone incentivized by percentage of money changing hands ends up looting whatever asset they have access to, esp if the resource they are burning isn't on the books somewhere. PMs loot products by throwing in needless features to game some metric, or cutting features that users want but are "too expensive". Engineers loot by burning resilience and multi-dimensional reliability to eek out 5% more straight line speed. Sales folks loot by offering huge discounts to get huge deals signed, etc. They look like heros, then they move on, leaving the place worse than they found it.
- lifeisstillgood 3y ago
  That's a good insight - the whole article is deep food for though thansk
bboygravity 3y ago
It's way worse than that: there's also deliberate cellar boxing (bankrupting) of companies on a large scale. Hedge funds working with consultant buddies (BCG) to take over the board/leadership of a victim company. The consultants then deliberately destroy the company from the inside while their hedge-fund buddies (naked) short it into literal bankruptcy. It's a very easy game, it's tax-free (because the short position is technically never closed? or something) and it only very very rarely fails and backfires (GME).
- RandomLensman 3y ago
  Do you have an example (incl. evidence) of such coordinated and deliberate action between consultants and hedge funds?
  - anomaly_ 3y ago
    He doesn’t because it’s conspiracy bullshit. There are some valuable points in this thread but the OP above is not one of them.
- TheOtherHobbes 3y ago
  https://edition.cnn.com/2018/10/16/investing/retail-sears-private-equity/index.html https://edition.cnn.com/2018/10/16/investing/retail-sears-pr... Hard to imagine the delightful people involved leaving money on the table by missing an opportunity to profit from shorting.
wisty 3y ago
I think China deciding to dig itself out of poverty is a big factor with both good and bad effects (and absolutely staggeringly big effects).
- SyzygistSix 3y ago
  Can you imagine the magnitude of the humanitarian and environmental crisis China would be if they had not industrialized and joined the global market? A country that size full of uneducated farmers and first generation coal power plants would be a nightmare for everyone, not just China.
  - rorroe53 3y ago
    Well, the planet would be better off without Chinese middle class and elite flying around and buying stuff. Countries that are full of poor "uneducated farmers" tend to have much lower carbon footprint than richer ones, even with the higher birth rates. Despite its admirable investments in reneweable tech, China still keeps building new coal plants as well.
    - OfSanguineFire 3y ago
      Carbon isn’t the only pressing environmental damage though. For example, Madagascar is an island full of poor “uneducated farmers”, and it is precisely their farming that has been deforesting the island through slash-and-burn agriculture, a practice that has accelerated over the centuries due to the high birthrates.
    - jeffreyq 3y ago
      Would your comment read any differently if you replaced "Chinese" with "United States", or "France", or any other Western civilized nation? I'm curious to understand why China is to be blamed, exclusively? Correct me if I am misunderstanding your premise.
katbyte 3y ago
started by jack welch at GE, the first corporate raider - https://www.iheart.com/podcast/105-behind-the-bastards-29236323/episode/part-one-jack-welch-is-why-114741686/ https://www.iheart.com/podcast/105-behind-the-bastards-29236...
- walthamstow 3y ago
  Was Welch a raider? I thought he worked his way up internally. My understanding, possibly biased by my Britishness, is that Jim Goldsmith was one of the earliest raiders who took over companies and asset-stripped them.
jdk354 3y ago
Private equity really makes life miserable for regular investors and the general economy. I think stronger provisions against buyouts of public companies preventing a single investor from buying more than say 10% of a company and preventing public companies from therefore being gobbled up by private companies would go a long way to solving these problems. Its also vitally important that rules for fiduciary responsibility to a companies shareholders have teeth and also the INDEX act to prevent companies from being subverted .

yterdy 3y ago

Not quite. As GGP mentioned, the necessity of keeping stock prices (and property values, and anything else securitized) high so as to not impoverish pension funds, 401Ks, IRAs, etc., is real. That is, if you care about Silent, Boomer, and Gen X retirees - who invested, but didn't save - being able to cover their myriad outlays. Millennials and younger need not apply, of course; we're just never going to be able to retire (Or afford a house. Or...). You are right about one thing: "get rich and then dip" is the mantra. Not just for executives, but for the elder half-ish of Americans in general.

madengr 3y ago
Saving is futile with a 3% loss on your money each year. Unless you invest it you are losing it.
- radlad 3y ago
  FYI, your account might be shadow banned. I vouched for this comment, but most of yours are dead.
- layer8 3y ago
  Investments come with risks. The trade-off of cash losing its value over time is that it’s relatively less risky. You split your assets into cash and investments to achieve an overall combined risk profile. In that sense, cash is just another investment with a certain risk-return ratio (even when the return is negative).
  - jdk354 3y ago
    Your cash over time is guaranteed to lose almost all its value. While, if you invest in something, it could be even gold or silver, could be a house, could be a global market cap index fund, it holds more of its value than a fiat currency does. So no, fiat currencies lose everything and even with risks involved with other investments, the risks are still less than cash. Cash over time is one of the worst investments.