profit margins exist outside of the stock market, this is more a critique on capitalism as a whole than stocks alone

by Anonymous 11 months ago

I disagree. The reason is related to the specific concern OP has raised. While yes, profit margins do exist outside of stock markets, nearly every company that is not publicly held is held by either an individual or a small group of holders. An individual owner can decide that they are happy with an 6% return per year coupled with an increased quality of life of employees or society but that is the decision they make. A CEO of a publicly traded company (actually doesn't have to be publicly traded is also true of any time there is a silent partner) does not have this prerogative. Ford versus Dodge Brother (1919, filed in 1916) set the precedent that if you do not have 100% ownership (or 100% support) you must treat the company as a going concern that is intended to maximize shareholder value. A company that is publicly traded faces a serious uphill battle to try to justify how "overpaying" employees or not trying to grow is in the best interest of common shareholders. While you may not like it the alternative is to allow the founder to make whatever decisions they choose while ignoring the rights of the legal owners of the company.

by Anonymous 11 months ago

> An individual owner can decide that they are happy with an 6% return per year coupled with an increased quality of life of employees or society but that is the decision they make. > > A CEO of a publicly traded company (actually doesn't have to be publicly traded is also true of any time there is a silent partner) does not have this prerogative. It's no different if there's a board of shareholders or an individual owner. The individual owner is not necessarily the CEO, they're different roles. The Walton family owns a majority stake in Walmart, but they don't usually hold the CEO position. The CEO of Walmart would still have a hard time convincing the owners of Walmart to do decisions that wouldn't increase the profits that Walmart generates. There isn't really anything from preventing the shareholders of a company from getting involved in it's governance at a shareholder meeting and telling the CEO that they aren't concerned with profits as much and would be happy with a 6% return per year. The only reason this doesn't happen is because most investors aren't concerned with governance, they're concerned with returns. It's about capitalists flexing their capital to maintain or entrench their positions. It doesn't matter if they founded a company they no longer run but still own, or if they've got a diverse portfolio of a few shares in hundreds of companies. Doesn't matter if that's publicly traded or privately traded or privately owned; this behavior of chasing wealth is just an inherent part of capitalism and would exist whether the stock market exists or not. The Stock market just makes it easier by adding a layer of abstraction where you make it so that the owners of a company is a democratized system, where only those who are already wealthy capitalists who might want to stay wealthy capitalists can participate.

by Anonymous 11 months ago

Stock market just incentivises profit margins more because of shareholders. If only a handful of truly passionate people have shares in a company, they don't need to justify investments that aren't directly related to profits. But companies that have to answer to shareholders must justify how every single action will increase profits. Shareholders won't be interested in anything else other than more profits.

by Anonymous 11 months ago

Yeah, I wonder if that's why private companies are the way. But then again, many big private entities also strive for growth and have internal shareholders. Maybe once a public company gets big enough, they should become public services or non-profit? Like a government rule. Although that sounds like too much power for the government (i think china does that), I don't know if that helps the public, workers, environment and society in general.

by Anonymous 11 months ago

Every system has this. Feudal lords fought for more land and power. Communist directors push to expand their control and personal power. Growth for growth stake is just part of humanity .

by Anonymous 11 months ago

The basic idea of selling shares in a company is good, especially when workers own the shares Turning it into a casino is bad I would support changing the rules to reduce the gambling part and increase the investment part

by Anonymous 11 months ago

Investment is just gambling on good odds. What else do you think is going on in the stock market?

by Anonymous 11 months ago

IOW - kill off the day-traders? Would you somehow ensure that anyone who purchases a share of stock has to hold onto it for a certain period of time?

by Anonymous 11 months ago

Make short term capital gains tax absolutely horrendous to where it's not worth doing it anymore.

by Anonymous 11 months ago

What an absolute disaster that would be

by Anonymous 11 months ago

Lol it would drop the market very fast.... But makes for a great long term buying opportunity

by Anonymous 11 months ago

Hmm, that is a good idea. Do you think this would affect the 401k and retirement funds? I know they are stuck for a longer period of time but maybe there's something I'm missing?

by Anonymous 11 months ago

Hedge funds, etfs and 401ks use day trades and shorts to cushion losses

by Anonymous 11 months ago

Sweden has tried using a tiny transaction tax on the stock market but it didn't really have any benefits.

by Anonymous 11 months ago

You sound naive, its a free market economy. What are all these companies gonna do "no I'm fine you go ahead"...."no you take it"...."no you go ahead". This was a ugly mess long before the stock market.

by Anonymous 11 months ago

What would you advocate for? A stock market is just a central market to trade stock, people would still buy and sell company stock without the market, it'd just be less easy for the everyday person to join in.

by Anonymous 11 months ago

Everyone's retirement plans are tied to it also because of inflation. I would argue inflation is the bane of society because everyone is freaking out about the value of their hard earned money going down the drain and we just accept it as normal. It's a very screwed up system.

by Anonymous 11 months ago

Long run inflation around 2% is healthy for an economy and promotes economic growth - it's not a bane of society.

by Anonymous 11 months ago

I agree with this. I'm getting annoyed when businesses care more about the needs of the shareholders, which is making more revenue every 3 months, than the needs of their consumers. Anytime I wonder why a product went downhill when they were doing just fine before, I have to assume that they needed to cut corners to appease shareholders so they know they're getting money. But guess what happens, your clients/customers don't want to do business with you anymore causing your quarterlies to go down and those same shareholders, you were kissing up to, just sold all their shares and walked away with all of the money you have been saving for them. They are just holding you hostage and will end you after you meet their demands.

by Anonymous 11 months ago

The market is one of the only realistic ways for us average folk to have a retirement one day. We are lucky to have a free market. Ill take our capitalism over communist china

by Anonymous 11 months ago

Even mainland China has stock exchanges. It has them in Shanghai and Shenzhen. China went from communist to fascist.

by Anonymous 11 months ago

Increasing profits is generally from increasing the quantity of goods or services delivered or increasing the efficiency in delivering those goods. Neither of these things is inherently a bad thing. Beyond that, not all companies are striving for perpetual growth. Many companies, often including utilities but not limited to utilities, offer dividends to investors because they have saturated their market and further growth is limited. This is a completely viable way to run a company, and are often ideal investments for certain types of investors (pension managers and retirees)

by Anonymous 11 months ago

I think you mean to say that unrealistic markets are a problem. You want people to raise money to start businesses or not? What if the business they are starting is going to make the next energy breakthrough? Do you think the funding that lead to innovations in medicine, transportation, infrastructure and communications were free? Do you think the device you are looking at was magicked into existence by good-willed elves? You live and breathe the benefits of capitalism but complain like you've never considered that.

by Anonymous 11 months ago

I'm not complaining about capitalism. I did mention and recognize it is very important for society in general. It is the shifting of focus to maximize profits in any way possible to meet the demand of growing profit margin. You can still have technological advancement and all the breakthrough while maintaining a consistent profit margin.

by Anonymous 11 months ago

But you are not drilling down the the real problems of crony capitalists -- the cheaters are not adequately punished. The people who hate financial regulation hate that it is so unfairly enforced. Your regurgitation of Marx's critique of capitalism is ridiculous and was outdated 5 minutes after he wrote it. Amazon is not employing children or abusing workers, it is a profitable company that enriches the lives of millions and helps to lift people out of poverty. Strawman arguments from uninformed children on labor and capital are always like this. Take a business class and read a book.

by Anonymous 11 months ago

No. Globalism is a bane on society. Before that in the US, companies had a social contract with their workers where good pay, pensions, healthcare, and lifelong careers were the norm. That was until the 90s when companies realized two things. First, they could outsource their workers offshore with the blessing of the US Government after NAFTA. Second, the MBAs now running companies could line their pockets by pursuing quarterly profits. The stock market is literally the last place the middle class has even a hope of improving their financial position.

by Anonymous 11 months ago

Yes, unlimited trade to countries with low pay, low worker safety, and no environmental protection is a disaster for nearly everyone.

by Anonymous 11 months ago

Capitalism bad

by Anonymous 11 months ago

It's gambling for the rich.

by Anonymous 11 months ago

It's not about growth all the time. It's about how effective and valuable a company is divided by how many shares they issue and what kind of dividends or yes growth potential they have. Investing is as old as time. For the average person sacrificing use of money now for more later and "putting it to work" helping a private enterprise buy capital and hire labor is a fair trade to make, even if it comes with some problems.

by Anonymous 11 months ago

>It's about how effective and valuable a company is And what makes a company effective and valuable (to significant shareholders, anyway)? Their capacity of turning a bigger profit than they did last year. Shareholders leave and executives get fired even when the company still profits, but to a lesser extent.

by Anonymous 11 months ago

Funny enough, a corporation, is basically a self organized mini communist economy, because it is owned by different people and some people always seem to hold more power in the end.

by Anonymous 11 months ago

In communism, nobody can own a company

by Anonymous 11 months ago

Although capitalism which its included in is terrible, fair enough because stock trading generally just helps rich white people than middle and lower class people. Sometimes its good for them but generally not.

by Anonymous 11 months ago

There are stock markets in Japan, China, and South Korea, so stocks are not just for white men.

by Anonymous 11 months ago

I never said it was just for rich white people (not just men), I meant to say that stocks benefit them much more. Though, business in most Asian countries have caste systems where being more white = better.

by Anonymous 11 months ago

literally has nothing to do with race

by Anonymous 11 months ago

They would still have the same goals and treatment of workers without the stock market, but I would say it's regrettable that people make their money by manipulating money and not contributing to society.

by Anonymous 11 months ago

"Not contributing to society" Completely false.

by Anonymous 11 months ago

Agreed. Im a capitalist but if i could I'd eliminate corporations/shareholders/stocks all together, and make businesses just owned by a sole proprietor or a few people as a partnership.

by Anonymous 11 months ago

If you eliminate corporations, shareholders and stocks, you're dictating what people can do with their private property. That puts you outside the definition of "capitalist". This is not a critique, by the way.

by Anonymous 11 months ago

You don't have any idea of the impact of this do you?

by Anonymous 11 months ago

Boy its a good thing im just a random guy on the internet and not dictator of the world then, eh? Yeah i know it would literally collapse the entire world economy.

by Anonymous 11 months ago

This would likely lead to feudalism.

by Anonymous 11 months ago

Instead of everyone owning a part of big companies you want single people to lol you want more wealth inequality?

by Anonymous 11 months ago

I agree all companies should be solely owned by the founders. No sharing the profits

by Anonymous 11 months ago

Netflix should be hammering on password sharing. Being given a free ride saps you of the will to succeed.

by Anonymous 11 months ago

Not necessarily. Dividend aristocrats don't need quarter over quarter growth above inflation to pay out investors. Also why is it bad that these companies seek growth? Your argument makes no sense. Companies were jockeying for market share well before the stock market existed

by Anonymous 11 months ago

The issues you listed don't mean the stock market needs to be destroyed, just that companies need to be regulated so as to prevent their unethical cost cutting methods you listed.

by Anonymous 11 months ago

I think you already see the issues related to giving government control of any service. I will bring up a different perspective, as companies get larger we already (in the US and in nearly every country) do monitor them differently. Larger companies face much different (sometimes less but generally more) scrutiny than smaller companies. People can certainly argue the existence of crony capitalism but that is only one part. While there are many examples I would name a couple where the actions are treated differently, the obvious one is the disclosure of information (the larger the company the more transparency required) but a less obvious example is that when two very large companies wish to enter into a contact these contracts are generally reviewed by multiple government organizations (sec is just one) to determine not only legality but also potential damage to society.

by Anonymous 11 months ago