What Did We Expect? When Every Year A Corp Has To Make More $'s Then The Preceding One....

[global1]

This to me is the fault of Wall Street. It forces Corps to find ways to squeeze profits out & raise prices; outsource jobs overseas; reduce the size of product & charge the same or more for it; etc. All at the same time they find ways to short their employees on wages & benefits. Once we're on such a cycle things keep spiraling down for the consumer who is at the butt end of this strategy. Somehow this strategy needs to be abated or at sometime in the future for example we'll be paying the same or more for a roll of toilet paper that only has a few sheets in order to assure corporate profits continue.

[TomClash]

1. That's the fault of the shareholders

They demand higher and higher returns.

[ewagner]

2. Give global1 a cigar...

The driving force of American-style capitalism is growth.

If a business is not growing every quarter (not year...QUARTER) then Wall Street considers it a failure and this attitude has been inculcated into every Business School and MBA program in America.

The incontrovertible truth is that markets are finite. Growth cannot be sustained infinitely so techniques have to be developed to squeeze more profit out existing markets and processes...lower labor costs to that the ultimate cost of labor will be zero....cut quantities and raise prices...that 12 oz bag of potato chips used to be 16 oz......merge to capture a larger share of the market...diversify to protect against change....find ways of creating money out of thin air (derivitives...insurance...options) even if the they build an unstable house of cards that will come crashing down later.

The whole business paradigm has to change...who has the courage to change it...who has the wisdom to change it?

[dkf]

4. If there is no growth why would you invest in it?

And everyone needs to at least beat inflation.

[Hugabear]

8. Surely you can see that such growth cannot be sustained

It's not enough to post profit. No, profits must be HIGHER than last year's profits, otherwise you've failed. That seems to the the corporate mantra.

[dkf]

15. Until your products have reached every country why not?

As long as you can sell more widgets you should grow.

[global1]

14. But The Current Strategy Just Feeds inflation....nt

[dkf]

18. I think this makes sense...

The reason that economic growth makes a debt system more stable is that we are dealing with a system in which a person (or company or government) borrows money at one date, and pays back that money plus interest at a later date. If the economy is growing rapidly, incomes tend to be rising, making the payback of loans, with interest, easier. A person who has taken out a home loan, or a loan for college expenses, will find that his higher income over time makes debt payments relatively affordable. Default rates tend to be low, so interest rates can be relatively low.

If there is no real growth (that is 0% economic growth), there will still be a few situations where loans make economic sense. These projects will have a good enough return that borrowed money can be used, and the return on the project will cover the interest on the loan. In general, the process will not work very well, however. Real incomes will not be rising fast enough to provide a cushion to make interest payments more affordable. Default rates will be quite high, so lenders will need to charge a higher interest rate to cover defaults. This will make loans affordable only in fairly rare circumstances.

http://www.theoildrum.com/node/2983

[global1]

12. I Myself Went Back To School For An MBA....

There seemed to be a period in the the late 80's & 90's where that was in vogue. It seems to me that much of are current problems might correlate highly with the rise of MBA's out there. So much of what the consumer is up against is promotional lies and deception. How can we pull the wool over the eyes of the consumer? This to me is another contributing factor to the downward spiral we're in. Why can't we be content with doing just as well as last year? Why does it always have to be leaps & bounds better than last year? With that strategy - where will this take us - where will this end? Can't we be creative enough to extend profits with better & more innovative and affordable products versus raising the prices on current products?

[Bake]

3. Steady, stable earnings aren't enough for Wall Street

Earnings have to be GROWING every year ... hell, every quarter. Stable earnings are boring.

Somehow, that mindset has got to change. Corporations cannot continue to suck more and ever more out of the economy. There's only so much there.

Bake

[OHdem10]

5. Actually, this was designed by Conservative Economic Fundamentalism

Reagan put one of the very first rules in place.
Businesses/Corporations have a responsiblity only
to the Shareholders. Therefore, they have no obligation
to workers or the country only the Shareholders..Their
only duty is to increase earnings and Profit for Shareholder

Prior to the eighties Business had some responsibility to
the workers and the country.

This was one of the most profound changes and the laid
the groundwork for many more changes.

[blindpig]

6. That's the way capitalism works.

Capital must accumulate and re-invest in order to remain competitive otherwise those capitalists who do will destroy them in the marketplace. There is no getting around this. It is madness which only benefits the winning capitalists. We must have a rational method of production and this ain't it.

[marginlized]

7. It's easy to demonize corporations. They're doing what they're ...

DESIGNED to do. They are just automatons. How much can one CEO do when corporate boards are instituted by law to make him do what the corporation is supposed to do: maximize profits?

If you could introduce one monkey wrench that would change corporate behavior, what or where would that be? For example, using current legal decisions which view corporations as citizens, what impact would imposing a corporate loyalty pledge to country and fellow citizens have on their behavior?

[dkf]

9. What happens to Toyota plants then?

Who are they loyal to? Japan?

[Indydem]

11. That's who pays their paychecks

I've long held that anyone who purchases a foreign car is a traitor.

[dkf]

13. You could say that about anything you buy.

[Indydem]

17. I buy American made whenever I possibly can.

Sometimes it isn't possible,but I try very hard.

[Evasporque]

10. Corporate Capatalism is not sustainable...it is destined to collapse...nt

[WingDinger]

16. What noone here gets is, it is built into the fed.

The Fed creates money. But, not the interest. So, we must have growth, to pay the interest, or die. Built in. So, Everyone dances to that tune. No choice.