5 ms·

Post-pandemic, the trend of Corporations raking in higher and higher profits, while needing fewer and fewer staff scares me. The most obvious and likely outcom

by nojvek 3y ago

Post-pandemic, the trend of Corporations raking in higher and higher profits, while needing fewer and fewer staff scares me. The most obvious and likely outcome is it drastically separates the ultra wealthy from middle class. With rise of AI and automation, that trend will likely accelerate. The top 10% hold more than 50% of wealth. It's likely in a few decades, the top 1% will hold more than 50% of the wealth. They already hold 28% of wealth. https://fredblog.stlouisfed.org/2022/10/the-wealthiest-0-1-of-households/ https://fredblog.stlouisfed.org/2022/10/the-wealthiest-0-1-o... https://fred.stlouisfed.org/graph/?g=UdXz https://fred.stlouisfed.org/graph/?g=UdXz

TexanFeller 3y ago
Things are probably just going back to normal. Companies went on hiring binges while unprecedented cash was pumped into the economy and interest rates were historically low. Now that all that is being walked back employment levels are going back to 2019 or a bit before.
- eastbound 3y ago
  How is that different than the IMF pumping cash in 1998 into the Russia economy, only so that private companies take the profits and create oligarchs and various lords, who then emigrated to the French Riviera with women who became widows there, empoverishing the Russian land even further, as shows by the economist Joseph Stieglitz in his book Globalization and its Discontents?
  - SpicyLemonZest 3y ago
    Presumably it’s different because the point of the cash was to support people whose livelihoods were disrupted by the pandemic?
    - eastbound 3y ago
      Are you talking about the economic crisis of 1998 in Russia or about the pandemic? Both were emergencies with lives at stake.
cglan 3y ago
isnt this just massive overhiring due to free money during the pandemic? Not sure this is an example of needing fewer and fewer stuff. Spotify is just not profitable except barely like 1 quarter
Aurornis 3y ago
The pandemic trend at many of these companies was to aggressively overhire. If you look at headcount for many of these companies it’s still significantly above 2020 levels and even often above the old trend lines. If you hire an unprecedented number of people in short period of time, you’re almost always going to have to cut a significant number of them later. Hiring is hard and even during good times a rapid expansion like we saw during COVID hiring is going to bring in people and departments that don’t work out. > The most obvious and likely outcome is it drastically separates the ultra wealthy from middle class. I think this doesn’t obviously follow. Like I said, hiring trends aren’t all that distorted if you average out the recent layoffs with the excessive COVID hiring.
next_xibalba 3y ago
> Corporations raking in higher and higher profits, To what is this claim responding? Spotify only turned a profit in 1 of the last 5 quarters. It has never turned an annual profit. I actually think the story is quite different here. Tech companies had been hiring like drunken sailors leading up to the pandemic. They're only in the last year rationalizing down to levels that are necessary and productive. I have close friends at a few FAANGs and the stories of bureaucracy, bloat, and entitlement are mind blowing. Meta/Facebook made the right move by taking a hatchet to middle management. Let's hope the other big ones do the same before the plague spreads further.
- apwell23 3y ago
  > Meta/Facebook made the right move by taking a hatchet to middle management. They are all back( layer reduction was never really done in practice). It was just a dog and pony show. Meta is hiring aggressively again and middle management is bloated than ever before.
lettergram 3y ago
The poor today are the middle class of 15-20 years ago and the kings of 300 years ago. It’s not perfect but a rising tide does raise all ships. Regarding the ultra wealthy, the disparity was actually greater in the past. All that said, you distribute wealth by reducing taxes on the poor and increasing it on wealthy. Alternatively, shifting the growth differential such that the poor grow faster than the wealthy (hard in a capitalistic economy). That said, I don’t see the wealth disparity as a problem itself; if you have the top 1% gain more wealth but it’s easier to become the top 1% or the top 1% rotates out often it’s probably better
- KineticLensman 3y ago
  > a rising tide does raise all ships The thing that has always bothered me about this analogy is that a sea level rise affects all ships uniformly while the magnification of wealth doesn't. It's more like everyone standing on a plain and then the centre deforms upwards, creating a peak of wealth while most people are on the (only slightly higher) foothills.
- gusgus01 3y ago
  The poor of today (2023) are the middle class of 2003-2008? That's a hard comparison with the housing crash of 2008, but I don't think the tide has risen enough for that comparison to be accurate.
  - freedomben 3y ago
    Yeah I agree, I don't think that's true overall. Maybe in some very small senses, like many of the poor today have iPhones, which are way more capable than even the middle class phones of mid 00s. But yeah middle class in the mid 00s owned a decent house. Most of those houses haven't changed much since then.
- CodeMage 3y ago
  > The poor today are the middle class of 15-20 years ago and the kings of 300 years ago. I've yet to hear this claim from someone who has been truly poor at least once in their life. When you have to live paycheck to paycheck, and stress out every single month over the uncertainty, not knowing if you'll be able to pay the bills and have enough to eat, let me know if you feel like "the king of 300 years ago".
emodendroket 3y ago
They’re not “taking in higher and higher profits” so much as abandoning speculative investments.
marcosdumay 3y ago
Short term profits are almost completely defined by historic investment (and thus, historic staff). How long term profits will react to those changes is entirely still to be seen. There's nothing telling you profits will get higher and higher, or that they will diminish, or anything else.
csmiller 3y ago
Spotify isn’t really profitable, and their deals with the labels mean that they probably never will be IMO
zehaeva 3y ago
Can't wait for the Butlerian Jihad to begin! Flippancy aside, as others have pointed out, Spotify isn't turning a profit. Other than the tangency of blaming AI for all of our ills, this seems like a non-sequitur.
Vicinity9635 3y ago
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by nojvek 3y ago

TexanFeller 3y ago

Things are probably just going back to normal. Companies went on hiring binges while unprecedented cash was pumped into the economy and interest rates were historically low. Now that all that is being walked back employment levels are going back to 2019 or a bit before.

eastbound 3y ago
How is that different than the IMF pumping cash in 1998 into the Russia economy, only so that private companies take the profits and create oligarchs and various lords, who then emigrated to the French Riviera with women who became widows there, empoverishing the Russian land even further, as shows by the economist Joseph Stieglitz in his book Globalization and its Discontents?
- SpicyLemonZest 3y ago
  Presumably it’s different because the point of the cash was to support people whose livelihoods were disrupted by the pandemic?
  - eastbound 3y ago
    Are you talking about the economic crisis of 1998 in Russia or about the pandemic? Both were emergencies with lives at stake.

cglan 3y ago

isnt this just massive overhiring due to free money during the pandemic? Not sure this is an example of needing fewer and fewer stuff. Spotify is just not profitable except barely like 1 quarter

Aurornis 3y ago

The pandemic trend at many of these companies was to aggressively overhire. If you look at headcount for many of these companies it’s still significantly above 2020 levels and even often above the old trend lines. If you hire an unprecedented number of people in short period of time, you’re almost always going to have to cut a significant number of them later. Hiring is hard and even during good times a rapid expansion like we saw during COVID hiring is going to bring in people and departments that don’t work out. > The most obvious and likely outcome is it drastically separates the ultra wealthy from middle class. I think this doesn’t obviously follow. Like I said, hiring trends aren’t all that distorted if you average out the recent layoffs with the excessive COVID hiring.

next_xibalba 3y ago

> Corporations raking in higher and higher profits, To what is this claim responding? Spotify only turned a profit in 1 of the last 5 quarters. It has never turned an annual profit. I actually think the story is quite different here. Tech companies had been hiring like drunken sailors leading up to the pandemic. They're only in the last year rationalizing down to levels that are necessary and productive. I have close friends at a few FAANGs and the stories of bureaucracy, bloat, and entitlement are mind blowing. Meta/Facebook made the right move by taking a hatchet to middle management. Let's hope the other big ones do the same before the plague spreads further.

apwell23 3y ago
> Meta/Facebook made the right move by taking a hatchet to middle management. They are all back( layer reduction was never really done in practice). It was just a dog and pony show. Meta is hiring aggressively again and middle management is bloated than ever before.

lettergram 3y ago

The poor today are the middle class of 15-20 years ago and the kings of 300 years ago. It’s not perfect but a rising tide does raise all ships. Regarding the ultra wealthy, the disparity was actually greater in the past. All that said, you distribute wealth by reducing taxes on the poor and increasing it on wealthy. Alternatively, shifting the growth differential such that the poor grow faster than the wealthy (hard in a capitalistic economy). That said, I don’t see the wealth disparity as a problem itself; if you have the top 1% gain more wealth but it’s easier to become the top 1% or the top 1% rotates out often it’s probably better

KineticLensman 3y ago
> a rising tide does raise all ships The thing that has always bothered me about this analogy is that a sea level rise affects all ships uniformly while the magnification of wealth doesn't. It's more like everyone standing on a plain and then the centre deforms upwards, creating a peak of wealth while most people are on the (only slightly higher) foothills.
gusgus01 3y ago
The poor of today (2023) are the middle class of 2003-2008? That's a hard comparison with the housing crash of 2008, but I don't think the tide has risen enough for that comparison to be accurate.
- freedomben 3y ago
  Yeah I agree, I don't think that's true overall. Maybe in some very small senses, like many of the poor today have iPhones, which are way more capable than even the middle class phones of mid 00s. But yeah middle class in the mid 00s owned a decent house. Most of those houses haven't changed much since then.
CodeMage 3y ago
> The poor today are the middle class of 15-20 years ago and the kings of 300 years ago. I've yet to hear this claim from someone who has been truly poor at least once in their life. When you have to live paycheck to paycheck, and stress out every single month over the uncertainty, not knowing if you'll be able to pay the bills and have enough to eat, let me know if you feel like "the king of 300 years ago".

emodendroket 3y ago

They’re not “taking in higher and higher profits” so much as abandoning speculative investments.

marcosdumay 3y ago

Short term profits are almost completely defined by historic investment (and thus, historic staff). How long term profits will react to those changes is entirely still to be seen. There's nothing telling you profits will get higher and higher, or that they will diminish, or anything else.

csmiller 3y ago

Spotify isn’t really profitable, and their deals with the labels mean that they probably never will be IMO

zehaeva 3y ago

Can't wait for the Butlerian Jihad to begin! Flippancy aside, as others have pointed out, Spotify isn't turning a profit. Other than the tangency of blaming AI for all of our ills, this seems like a non-sequitur.

Vicinity9635 3y ago

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