Tag Archives: capitalism

Margins over manpower

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Amazon just laid off over 14,000 people. According to Beth Galetti, Senior Vice President of People Experience and Technology at Amazon, who wrote that they are ‘Staying nimble and continuing to strengthen our organizations’, “The reductions we’re sharing today are a continuation of this work to get even stronger by further reducing bureaucracy, removing layers, and shifting resources to ensure we’re investing in our biggest bets and what matters most to our customers’ current and future needs.”

What are the ‘biggest bets’ they they are investing in? Chips. AI chips. Profits before people. Margins over manpower. The human equation in a company no longer matters. People are as expendable as office supplies. Need cost savings? Fired employees save a lot more money than reducing the cost of paper and staples.

The shareholder model of capitalism is slowly collapsing. It’s the middle and upper middle class that is getting laid off. Meanwhile, large companies like Nvidia invest billions of dollars in Open AI, and Open AI takes that money and buys Nvidia chips. Simultaneously, all these companies lay off staff to amplify margins, buy more chips and grow even larger.

Top executives who are already making millions hit their shareholder targets and get bonuses. Meanwhile regular employees face layoffs and have no job security. You think your $200,000 job is safe? Only until the next quarter’s earnings are going public, or until the merger is completed after your small company is swallowed up by one of the big guys.

If it was just Amazon, that would be one thing, but similar reports of layoffs have recently been announced at IBM (9,000 jobs in the US alone), UPS (34,000 jobs), Nestle (16,000 jobs), Intel (24,500 jobs)… the list goes on. What happens to the global economy when hundreds of thousands of people become jobless while large companies recycle their money, reinvesting in each other in circular deals where funding is promised back to the investors in product purchases?

What happens in a world where profits and margins matter more than people?

We are the consumed, not not the customer

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There is so much BS on the internet these days. There are posts that either exaggerate or confabulate research data to sell ideas and products that don’t do anything they promise to do. I look up topics like reducing snoring or tinnitus and then for the next month I’m bombarded with ads for ‘cures’ of these annoyances. I’ll get detailed, directly-marketed-to-me advertisements including things like, “We are looking for males over the age of 55 in Coquitlam” to participate in a tinnitus study”.

I won’t just get pop up windows, and still ads, I’ll get videos embedded in my stream. I’ll get long format ads where it takes 5+ minutes to get to the point, because advertisers know that if they can keep people watching long enough they will feel invested in getting answers.

And here’s the thing, my ad algorithm will be completely different to yours. It’s targeted to our individual interests, our searches, our likes, shares, clicks, and even the things we say. We are not the customer we are consumed based on our interactions. We are data points that provide identifying features to be exploited. Targeted not for our benefit but to the benefit of companies that pay to learn that our data points are relevant to their products.

Click on an ad, even accidentally, and you can expect similar products to be fed to you many more times. Is this to serve you what you need or to serve advertisers what they need? The answer is clear. It’s not about us. We are data points consumed by an advertising machine. We are the target, the product, and not the actual consumer. On the internet of things, on social media platforms, we are just nodes of data sold to advertisers, we are products… And advertisers are the ultimate consumers of the data points (our data points) that they pay for.

Morality and Accountability

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I saw this question and response on BlueSky Social and it got me thinking:

Why are ethics questions always like:

“is it ethical to steal bread to feed your starving family?”

And not:

“is it ethical to hoard bread when families are starving?”

Existential Comics @existentialcoms

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Because the first question shifts the blame to the desperate, making their morality the focus, while the second question demands accountability from the powerful. It’s easier to question survival than to challenge greed.

Debayor @debayoorr.bsky.social

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That last sentence really struck a chord in me, “It’s easier to question survival than to challenge greed.”

We separate morality from accountability in ways that don’t really make sense. To me it’s the difference between a socialist and a capitalist democracy. A socialist democracy infuses accountability with morality, while a capitalist democracy separates the two.

Another way to look at this is with a quote from the comic book Spider-Man: “With great power comes great responsibility.” A socialist democracy takes the quote literally. A capitalist democracy redirects the focus: “Holding great power becomes my responsibility.”

Accountability to others versus accountability to power and self. Morality takes a back seat to greater control, and greater success. And that is who we idolize… the rich and famous. The ones with power and influence. Morality doesn’t come into play. Accountability doesn’t come into play.

If you came from another planet and witnessed the accumulation of wealth that happens at the expense of so many who lack wealth, what would you think of the morality of humans? Who would you admire more, the mother or father stealing a loaf of bread to feed their family, or the limo-driven CEO’s who earn 1,000% or more income than the thousands of employees under them?

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Price hikes and profits

I saw an article recently that said inflation has dropped to 4.2%, the lowest since August 2021. Yet our grocery bills are up 9.7%. What’s disturbing about this is that many grocery stores (or their parent companies) are reporting record profits. So are oil and gas companies while I’m paying $1.93 per litre of gas.

Some people can no longer afford their mortgage, others are being priced out of the market due to increases in mortgage rates, and yet companies are giving their shareholders huge returns. These price hikes we are seeing at this time are proof that the capitalist market ruled by profits is broken.

Shareholder good exceeds public good. Profits, not people matter. And those who can afford to be shareholders grow richer and richer while those who can’t afford the extra cash to invest suffer as their dollar is worth less and less… whether it’s mortgages or the price of eggs, what a dollar used to get you doesn’t go as far today as it did last year.

Got a 5% raise? That sounds great except food will still cost you more to buy than you had to pay last year, before your raise. In other words, your income is not growing as fast as your living expenses. And unless you are a shareholder getting great returns, that won’t change any time soon.

I don’t know how this changes? I just see a larger and larger gap between the haves and the have-nots, and the gap is widening. Is this sustainable? No. But what’s the solution?

A broken system

Here is the opening of the following article: Economist explains record corporate profits despite rising inflation

“Prices are up all over the place – at the gas pump, at the grocery store, at the car lot. This week, the [US] federal government reported a 7.5% increase in the cost of goods all across the board compared to a year ago. The consumer price index showed a 4% rise in housing, a 12% increase in the price of meat, and the cost to buy a used car is up more than 40%.

But here’s another reality. While families are dealing with sticker shock, profits for companies that put these goods on shelves – well, those are skyrocketing. Data from the U.S. Commerce Department shows that corporate profit margins are the largest they’ve been in 70 years…”

Essentially during the most difficult economic times we’ve seen in decades, companies have gouged consumers in order to maximize profits. While car owners pay dearly for transportation, oil and gas companies are recording record profits for their shareholders. Meanwhile the price of gas remains painfully high.

The shareholder model of capitalism is broken. The corporation might create or distribute a desired product, but neither the product nor the end user is what is being served. The customer is the shareholder, and their desire is profit; Not a great product, not a value to the end user, just profit per share.

The CEO does not meet bonus numbers due to end-user satisfaction surveys. The CEO does not answer to anyone except a board, who themselves want to see high profits. The middle managers knows that their main job is to manage and care for the people under them, but their incentives are almost always number driven, and they know that profit is the priority.

It’s the tragedy of the shareholder: self interest for personal profit, without consideration of anything else. Profit at the expense of common good. Maybe there was a time when companies cared about the end user, when customer satisfaction trumped shareholder satisfaction, but stock prices and shareholder greed are the only things capitalism seems to feed these days. The idea that during a pandemic, rampant inflation, and supply chain shortages, a company will seek maximum profits and gains is capitalism at its worst. The almighty dollar is all that matters.

Meanwhile, what are these companies doing with the excess cash? They are buying back shares which a) keeps the prices of shares up, b) pays their shareholders who get to ‘sell high’, and c) make themselves look more financially attractive to new investors. The high profits create the promise of still higher profits, providing wealthy shareholders a chance to see gains in a market that the people they are gouging with unnecessary price increases can’t afford to participate in or gain from.

The system is rigged so only the shareholders win. Oh, and will these companies share the windfall with their employees? Only the upper echelon who already earn healthy 6 and 7 figure salaries will see bonuses, but not the majority of workers who face high inflation and cost of living increases and are actually falling further behind. Their wage increases, if they get any, won’t match inflation.

I don’t know how to fix it, but the system is broken. While stories like this show promise, for providing fair wages to employees, the stock and shareholder model doesn’t really provide avenues for this to happen. Instead, while the vast majority of citizens around the world are poorer now compared to before the pandemic (with respect to buying power), shareholders are seeing the best returns in decades.