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It's a well known phenomenon that over time profits tend to fall [1]. Investors demand growth however so the consequence is obvious: all companies will tend to
by jmyeet 3y ago
It's a well known phenomenon that over time profits tend to fall [1]. Investors demand growth however so the consequence is obvious: all companies will tend to try and increase prices and/or cut costs to maintain profits.
Raising prices tends to lower demand. It might be the case that a lower volume at higher margin leads to a higher gross profit but often it doesn't. So raising prices tends to be limited to where demand is ineleastic or you have or can construct a monopoly or enclosure of some kind.
So most companies have to resort o cutting costs. This means suppressing wages and doing what Boeing has done in spades: using subcontracting to lower costs. Being is now in the FAFO phase of cost-cutting. Since around the time of the McDonnell-Douglas merger, the engineers lost and the accountants won.
Once again, this Steve Jobs quote [2] is apropos.
[1]: https://en.wikipedia.org/wiki/Tendency_of_the_rate_of_profit_to_fall https://en.wikipedia.org/wiki/Tendency_of_the_rate_of_profit...
[2]: https://www.youtube.com/watch?v=tGKsbt5wii0 https://www.youtube.com/watch?v=tGKsbt5wii0
- resource_waste 3y ago>So raising prices tends to be limited to where demand is ineleastic or you have or can construct a monopoly or enclosure of some kind. United States Medical Anyway, outside of that, this typically is a good thing. $200 flat screen tvs make it easier to live life. I remember moving out of my parents house and being amazed at how affordable the minimum products were. Yes offbrand TV with 50 hz, yes you $2/lb meat with 30% fat, yes your shower curtain was a pain in the butt to install... But making 19k/yr, I could afford it.
- GartzenDeHaes 3y ago> $200 flat screen tvs make it easier to live life. From what I've been reading, those cheap TV's won't last more than 3 years. So those poor people will end up spending more on TV's than if they bought an old-style expensive TV. Same thing with shoes, rent, cars, etc.
- resource_waste 3y ago? I am still using my 200 dollar tv from 2012. If you want to repeat a fiction story about boots, that's fine, but its still a fiction story.
- avidiax 3y agoThat's more typical of the "Black Friday special". That TV cuts corners that don't make sense to cut, but the reputational damage that a super cheap low volume TV causes is minimal to none.
- inemesitaffia 3y agoTV's from Hisense and TCL are fine
- constantcrying 3y agoTotal nonsense. Do you not know what is happening in the airline industry right now? Boeing is not facing a stagnant market, they have customers even now begging them to give them planes as soon as possible. What Boeing is trying to do is fill enormous demand, they actually could easily grow if they had the leadership capacity to do so.