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The current market conditions in the US seem more like a Capital strike than “Capital inefficiency”: https://en.m.wikipedia.org/wiki/Capital_strike https://en.
by bugglebeetle 3y ago
The current market conditions in the US seem more like a Capital strike than “Capital inefficiency”:
https://en.m.wikipedia.org/wiki/Capital_strike https://en.m.wikipedia.org/wiki/Capital_strike
The pandemic created both labor shortages (and thus higher wages) and improved conditions for many workers. Capital owners are now doing everything in their power to claw back those gains, though not without newly-emboldened resistance from organized labor.
- readthenotes1 3y agoYou left off that the response to the pandemic in the US revived a marker for capital that hadn't existed for 15 years, and made all other risk taking much more expensive
- bugglebeetle 3y agoHigh interest rates are certainly erasing some forms of irrational allocation that can’t be sustained under them (e.g. all the crypto stuff), but the collusion between firms on things like return to office, wage suppression, and price gouging is largely independent of them.
- yibg 3y agoYou keep talking about collusion. Do you have any supporting data to back this up?
- bugglebeetle 3y agoEvery FAANG simultaneously decided they needed to layoff roughly the same percentage of workers, and even more through return to office, with no justification or demonstrated impact on profits, productivity etc, they share large investors, and oh, yes, they all got busted for colluding in the past? It’s all pretty much out there in the open.
- IX-103 3y agoNot to mention they're immediately hiring to replace those workers that they laid off. The management is either incompetent or they're trying to depress wages. They openly admit they're trying to achieve "durable savings" which seems like it may be an MBA code word for depressing wages.
- soupfordummies 3y agoWhat if it’s not a decision made in a smoky back room behind closed doors but rather monkey-see-monkey-do/“hey we can get away with it”? Definitely is weird to say the least. Even small companies often have HUGE investment firms behind them of course.
- thrway63245 3y agoThis is exactly what you would have said the last time there was proven collusion. It takes a while for the proof to come out, but as the sibling comment says: it's awfully convenient that all the RTO policies and layoff ratios are in alignment.
- alexashka 3y agoCollusion is the default human condition. It is absence of collusion that has to be proven. Or are we assuming governments around the world are effectively preventing collusion of multi-national corporations? Now that would require incredible proof.
- braelen7 3y ago[flagged]
- nyssos 3y agoThose things don't constitute a capital strike. Businesses don't suppress wages to strongarm the government, they suppress wages because they want higher profits. Likewise with prices. Return to office might be more organizational pathology than rational self-interest, but it's still not an attempt to influence policy.
- sharts 3y ago> Businesses don't suppress wages to strongarm the government, They do threaten to relocate operations overseas. And when they do, the wages paid may indeed be "higher" than average in the new regions.
- bugglebeetle 3y agoMaybe, but there was also bipartisan legislation to crush the rail strike, simultaneous dismantling of pandemic protections on the state and national levels, the removal of the child tax credit, and so on and so forth.
- anon1199022 3y agoThat crypto part is an assumption. If you want real irrational allocation, check back to office and how and of capital overlords are pushing it for no rational reason.
- bugglebeetle 3y agoI would say it’s more rational than crypto as the tech companies investors and commercial real estate investors have a significant degree of overlap. Crypto was little more than digital tulip mania.
- anon1199022 3y agoyou know that's exactly what they said in 2017 about crypto and now Blackrock is pushing an ETF. what a tulip that was pushed by biggest financial org. isn't it. 0 handsight about future
- bugglebeetle 3y agoThere’s a sucker born every minute.
- tyrfing 3y agoHere's the problem: "crypto stuff" is just the easy, low hanging fruit. That went away when the Fed began hiking. We're long past that now, with 30 year treasuries at 5%, and venture capital defines itself by extremely long duration speculative investment. That's irrational allocation in a world with high real rates.
- willcipriano 3y agoMargins are up across the board from 2021 onward: https://fortune.com/2022/03/31/us-companies-record-profits-2021-price-hikes-inflation/ https://fortune.com/2022/03/31/us-companies-record-profits-2... There is room for workers wages to go up but right now the higher prices are mostly benefiting investors and owners.
- cperciva 3y agoMargins need to be up in order to pay for the increased cost of capital.
- hotnfresh 3y agoYou don’t pay costs out of margin. That’s what‘s left after costs.
- marcosdumay 3y agoOwn capital costs are exactly the thing that margins pay for.
- willcipriano 3y agoIf they were paying lots for capital, they'd have lower margins.
- mr_toad 3y agoOnly if it’s debt financed.
- roenxi 3y agoAdding in that the economy was partially parked up through COVID and the risks of being shut down by the government turn out to be much higher than people realised hitherto. Margins need to go up in that sort of environment to push everything back to how things were pre-pandemic, otherwise nobody will bother. Not many are crazy enough to put lots of money into low-margin businesses that are at high risk of being shut down. Capitalists are greedy but not stupid.
- pc86 3y agoThis seems like an overly simplistic "capital owners greedy/labor-good-capital-bad" kind of take. I don't know if you've applied for any tech jobs recently but at least outside of super-senior and FAANG positions that I'm familiar with, it's pretty brutal. When I applied for my current role I was basically going against 3-4 other people and we all matched about 80% of the qualifications for the role. My boss is hiring right now and within a day received over 100 applications, and as of last week he has at least dozen who fit 100% of the qualifications for a comparable role to mine.
- bugglebeetle 3y agoThat’s not really in conflict with anything I wrote? Firms are colluding on layoffs to force these kinds of conditions and drive down wages.
- Plasmoid 3y agoWhat do you mean by collusion? Do you mean an explicit agreement like the old FAANG no poaching agreement? Or something more subtle?
- bugglebeetle 3y agoReturn to office is largely layoffs in disguise, all of FAANG is doing it, and have more or less explicitly stated that they have no rationale beyond “we can make you do this, so we are.” As you pointed out, they already conspired in the past with their no poaching agreements, so draw your own conclusions.
- IX-103 3y agoYep. Not too mention the actual layoffs that are going on. If you actually look at the hiring for the companies with these layoffs then you find that they are actually growing their workforce while still announcing layoffs. That seems almost designed to depress wages...