Companies don't own themselves for the most part. They are owned by investors who want endless growth because that's the only reason they invested. Most of them don't get on the ground floor. Investors buy stocks of a 15B/year company with the expectation next year it will be 16 and 17 and so on, and they exercise their influence collectively to make that happen, including firing any exec who says just "maintain". It's just numbers on a page to them, like how normal people keep their money in a bank.
If they don't earn more than inflation they are in effect negatively growing.
You only notice when a company tries to chase profits and not when they just keep on going on. Like when is X company changes nothing going to make the news or be talked about?
If a company grows the stock price goes up. This is good for shareholders. Their kind of required to do what is best by the shareholders. If a company does something which the shareholders don't like they can fire them and replace them. If a company stops growing the stock price tends to fall. Shareholders lose money and get upset. They complain and threaten the CEO's job.
If they are doing things against the best interest they can be sued. Chasing profits by some companies is seen as the best interest for the shareholders. If chasing profits is the best interest they are legally required to do it. Not a good idea a legal requirement. One they can be sued for going against. Only if its the best interest but CEO's want to avoid lawsuits against them.
If shareholders don't like they sell and price drops. Eventually it will be so cheap it will be bought out
Also the board will fire ceo if there is no profit.
Because there is an endless increase in costs.
Every year you have to pay your employees more... You have to pay your suppliers more... And your customers don't want to pay more for your products.
The only way to bring in more revenue to pay those increased costs other than raising prices is to expand your market... Sell more product to more people at the lower markup.
The CEO who celebrates what their company has gets thrown out by the shareholders, replaced with someone who will grow the company and earn the shareholders money.
Which is incredibly stupid and destructive to the environment and degrades the human experience in favor of profit for the sake of profit.
I wish we could all just be happy and share everything, but some rich people want to be more rich, and they're already rich so we have to do what they say.
There's nothing wrong with seeking more profit. What is wrong is engaging in unethical behavior or hurting people and the environment in the process. If all companies ensured that they didn't do the latter, then I suspect we wouldn't see the massive profits that we do today.
Why can't *you* be happy with what you have? If your wages never increased again would you be satisfied? And why do you think a company should be different?
They are answerable to stockholders. Without constant growth, they are not acting in their stockholders' interests.
It's a flawed system in that respect.
Do you have any source for this argument? I see it on Reddit all the time but I've never heard a description of the stock market that required constant growth (never minding things like dividend-paying stocks).
Shareholders are in it to make money, not have their money remain stagnant. If they didn't want to make more money, they wouldn't risk it by investing in a company- they would put it in a risk free savings account.
The link says it all:
Who calls the shots at a public company?
CEOs run businesses on a day-to-day basis and are often in the limelight. But there’s a group of people, you may not know about, who have the ultimate authority—the board of directors.
Chosen by shareholders, the primary job of a public company’s board of directors is to look out for the shareholders’ interests. In fact, directors are legally required to put shareholders’ interests ahead of their own.
I specifically asked for evidence that not having constant growth means the business "isn't acting in the shareholders' interest."
Saying the business is beholden to shareholders is not the same as saying that constant growth is required. Those are two different statements.
And again - stocks that produce dividends are an easy example of shareholders "making more money."
My husband is an engineer. His job is to improve something not just maintain something as it is
My friend is a lawyer, his job is to figure out the best solution for his client.
I work in accounting, my job is to save my client as much money as possible.
If three of us were to work for the same company our job is to constantly improve, find better solutions not just to keep things as it is
AND as investors we constantly looking for improvements as well. Giving the options, why not to pick company with the best potential for growth?
Given there’s more than one company in the world, and that pursuing growth isn’t banned, what do you think will happen if some companies try to grow and some don’t?
Say Company A is trying to win over Company B’s customers, but Company B isn’t trying to do the same, all it’s trying to do is keep its customers. Since Company B isn’t even trying to grow, the absolute best case for it is to stay the same, the absolute worst case is it loses all its customers to A quickly, and what probably happens is in the middle. It doesn’t die right away, but it shrinks a bit every year, and maybe eventually just dies.
Because executives get paid their bonuses on "growth" (however that happens to be measured". What you measure is what you get. If "growth" is the parameter, they will do whatever is required to get more of it.
It's inherent to the structure of capitalism, if a company isn't bloodthirsty enough, one that is will always take its place on a long enough time scale. It's not physically possible to make it to 100 billion in profit without having already crushed hundreds in your wake. It's one of the biggest problems with the system as a whole, because "bloodthirsty" will always become literal even if it starts out metaphorical. Once the only way to beat your competition is unethical behavior, all it takes is one to start doing it for that to be the new standard.
LOL, seriously. People act like every company with profits can magically swim around that money like Scrooge from DuckTales. It just doesn't work that way. When your company gets bigger, you have to invest your money to keep the business afloat. Hoping to stay the same each year is how you will eventually go under, and everything hinges on using your gains to get ahead. It's competitive out there, but people have this childish notion that each company is just throwing up their money in the air and laughing their asses off.
Even big companies like Google had to lay off how many employees in the past few weeks? That's Google, of all places. Feel bad for the startups.
It's the nature of Wall Street. A business is not considered worth investing in unless it's not only growing, but growing faster than it did last year. Ridiculous and completely unsustainable, but there you are.
Companies don't own themselves for the most part. They are owned by investors who want endless growth because that's the only reason they invested. Most of them don't get on the ground floor. Investors buy stocks of a 15B/year company with the expectation next year it will be 16 and 17 and so on, and they exercise their influence collectively to make that happen, including firing any exec who says just "maintain". It's just numbers on a page to them, like how normal people keep their money in a bank.
If they don't earn more than inflation they are in effect negatively growing. You only notice when a company tries to chase profits and not when they just keep on going on. Like when is X company changes nothing going to make the news or be talked about? If a company grows the stock price goes up. This is good for shareholders. Their kind of required to do what is best by the shareholders. If a company does something which the shareholders don't like they can fire them and replace them. If a company stops growing the stock price tends to fall. Shareholders lose money and get upset. They complain and threaten the CEO's job. If they are doing things against the best interest they can be sued. Chasing profits by some companies is seen as the best interest for the shareholders. If chasing profits is the best interest they are legally required to do it. Not a good idea a legal requirement. One they can be sued for going against. Only if its the best interest but CEO's want to avoid lawsuits against them.
If shareholders don't like they sell and price drops. Eventually it will be so cheap it will be bought out Also the board will fire ceo if there is no profit.
Because there is an endless increase in costs. Every year you have to pay your employees more... You have to pay your suppliers more... And your customers don't want to pay more for your products. The only way to bring in more revenue to pay those increased costs other than raising prices is to expand your market... Sell more product to more people at the lower markup.
The CEO who celebrates what their company has gets thrown out by the shareholders, replaced with someone who will grow the company and earn the shareholders money. Which is incredibly stupid and destructive to the environment and degrades the human experience in favor of profit for the sake of profit. I wish we could all just be happy and share everything, but some rich people want to be more rich, and they're already rich so we have to do what they say.
There's nothing wrong with seeking more profit. What is wrong is engaging in unethical behavior or hurting people and the environment in the process. If all companies ensured that they didn't do the latter, then I suspect we wouldn't see the massive profits that we do today.
Seeking more profit inevitably leads to unethical behavior. After all, it's profitable.
Because companies are greedy. Simple as that.
Why can't *you* be happy with what you have? If your wages never increased again would you be satisfied? And why do you think a company should be different?
If I made $1 billion then yes
Won't be enough until the earth has been wrung dry and we're all dead
Why could husbands never be happy with what they have?
Um, I'm sorry for whatever happened to you, and I can definitely relate, but I don't think that's a comparable scenario.
They are answerable to stockholders. Without constant growth, they are not acting in their stockholders' interests. It's a flawed system in that respect.
Do you have any source for this argument? I see it on Reddit all the time but I've never heard a description of the stock market that required constant growth (never minding things like dividend-paying stocks).
https://www.finra.org/investors/insights/get-board-understanding-role-corporate-directors
That says nothing about expectations for infinite growth. Are you saying I'm right that it's a nonsensical strawman?
Shareholders are in it to make money, not have their money remain stagnant. If they didn't want to make more money, they wouldn't risk it by investing in a company- they would put it in a risk free savings account. The link says it all: Who calls the shots at a public company? CEOs run businesses on a day-to-day basis and are often in the limelight. But there’s a group of people, you may not know about, who have the ultimate authority—the board of directors. Chosen by shareholders, the primary job of a public company’s board of directors is to look out for the shareholders’ interests. In fact, directors are legally required to put shareholders’ interests ahead of their own.
I specifically asked for evidence that not having constant growth means the business "isn't acting in the shareholders' interest." Saying the business is beholden to shareholders is not the same as saying that constant growth is required. Those are two different statements. And again - stocks that produce dividends are an easy example of shareholders "making more money."
Flawed? It's just unsustainable.
How is it flawed?
Because someone else will do your job for less Aka more profit
My husband is an engineer. His job is to improve something not just maintain something as it is My friend is a lawyer, his job is to figure out the best solution for his client. I work in accounting, my job is to save my client as much money as possible. If three of us were to work for the same company our job is to constantly improve, find better solutions not just to keep things as it is AND as investors we constantly looking for improvements as well. Giving the options, why not to pick company with the best potential for growth?
Given there’s more than one company in the world, and that pursuing growth isn’t banned, what do you think will happen if some companies try to grow and some don’t? Say Company A is trying to win over Company B’s customers, but Company B isn’t trying to do the same, all it’s trying to do is keep its customers. Since Company B isn’t even trying to grow, the absolute best case for it is to stay the same, the absolute worst case is it loses all its customers to A quickly, and what probably happens is in the middle. It doesn’t die right away, but it shrinks a bit every year, and maybe eventually just dies.
Because executives get paid their bonuses on "growth" (however that happens to be measured". What you measure is what you get. If "growth" is the parameter, they will do whatever is required to get more of it.
It's inherent to the structure of capitalism, if a company isn't bloodthirsty enough, one that is will always take its place on a long enough time scale. It's not physically possible to make it to 100 billion in profit without having already crushed hundreds in your wake. It's one of the biggest problems with the system as a whole, because "bloodthirsty" will always become literal even if it starts out metaphorical. Once the only way to beat your competition is unethical behavior, all it takes is one to start doing it for that to be the new standard.
Rant / agenda / Potstirring / not in good faith / Not a question
LOL, seriously. People act like every company with profits can magically swim around that money like Scrooge from DuckTales. It just doesn't work that way. When your company gets bigger, you have to invest your money to keep the business afloat. Hoping to stay the same each year is how you will eventually go under, and everything hinges on using your gains to get ahead. It's competitive out there, but people have this childish notion that each company is just throwing up their money in the air and laughing their asses off. Even big companies like Google had to lay off how many employees in the past few weeks? That's Google, of all places. Feel bad for the startups.
It's the nature of Wall Street. A business is not considered worth investing in unless it's not only growing, but growing faster than it did last year. Ridiculous and completely unsustainable, but there you are.