this post was submitted on 09 Sep 2023
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Part of the problem is that corporate greed is just so prevalent everywhere that when I see higher prices, my immediate first thought is that they're just shafting us because they can. It could cost $0.02 more per unit to produce, and they'd still charge $10 more, if they thought they could get away with it.
I'm willing to compromise - as in, if it costs them $4 more to produce, they charge $2 more for it, we're splitting the difference. Fine. I don't believe that's what's happening. Maybe it is, but the perception is what matters, and we've been taking it up the ass for so long, it's hard to believe they're going to pull out on this one point.
If a public company did this, one that has a board of directors and is traded on the stock market, the managers would be liable for not doing their fiduciary duty to maximize shareholder value. Well, they would liable if it wasn't part of a long term strategy to capture the totality of consumer surplus.
That is a common myth:
https://legislate.ai/blog/does-the-law-require-public-companies-to-maximise-shareholder-value
https://www.nytimes.com/roomfordebate/2015/04/16/what-are-corporations-obligations-to-shareholders/corporations-dont-have-to-maximize-profits
Oof. That's fair. That explains Woke, Inc. and other critiques of wokism in the boardroom: because these initiatives are argued to be detracting from shareholder value by creating unnecessary inefficiencies.
So, okay, cool. Thanks for the update.
I'm not quite understanding your point, could you elaborate?
To be fair, while companies may not be legally obligated to maximise profit/shareholder value, CEO bonus structures often do incentivise doing exactly that. And perpetuating the myth does give boards an excuse to do whatever they want.
Uh... from an economic point you just can't split the additional cost in half if it costs 4 dollar more. If something costs 20 dollars to make and they sell it for 25 to price in the other costs and a slight profit margin and then it costs 30 to make when doing it sustainable they can't sell it for 20 + (10 / 2) +5 = 30. They would make a minus then. They could sell it for 35, with gaining the same profit as before.
This is all under the assumption that the original price was a fair price.
They don't need to make the same profit as before. They could make $2 less profit, and charge $2 more. Frankly I don't care, and neither should anyone else who isn't a shareholder, if their profit margin is reduced slightly.
If doing that makes them unprofitable, they probably shouldn't exist, because their business isn't viable when done sustainably, and they're relying on being allowed to fuck up the planet to maintain themselves.
(pst profit shouldn't exist)
Profit is fine, it allows a good idea or business model to start small and grow organically to fit the need that it fulfills. The trouble begins with accumulation of capital, which is of course a core tenet of Capitalism. Beyond enough that you can reasonably expect to be fed and sheltered for the rest of your natural life, any further accumulation is antithetical to a good society. We can have currency, competitive markets, and free exchange of wealth for goods and services (for some industries, not all), but a line must be drawn at how much wealth any one person can be allowed to control.
Profit is theft and good ideas can exist without the profit motive.
Though no argument that the accumulation of wealth shouldn't exist either.
A salary is profit. Are saying we should do away with money?