>pursuing quarterly profits and forgetting to look up
"Forgetting to look up" implies a desire or intent to do so. The United States - former leader of the collective West - made the choice decades ago to sacrifice everything on the altar of quarterly profits. All that remains are the consequences of that decision.
My counterpoint is that it’s not possible to buy appliances which last for decades anymore, because the entire industry has changed. Consumers eventually don’t have a choice
They have much less choice because all of those businesses that cared about quality have gone out of business!
100 years ago clothes were expensive items. Which is why they were class signals - less because of fashion and more because if you were poor you needed to buy long lasting fabrics. Clothes for the poor were expensive as well as the rich.
You can buy those same quality items today but nobody will because we expect clothes to be cheap and not have to repair them.
Take flights... For all the complaints about lack of legroom etc the price of a flight 50 years ago was the same as first/business class today. And yet how few people will pay for it. They'll grumble about small seats and bad snacks but hardly anybody will fork out for the upgrade. Not because they can't actually afford it but because they believe it should be cheaper.
When a manager at GE decided to turn into a bank and get rid of all the making stuff, how was the consumer supposed to continue buying quality things that didn't exist?
When Sears was looted by management, how were consumers supposed to continue purchasing quality stuff from a historic company?
You've got your cause and effect backwards. American companies fired everyone who was paid enough to afford good stuff, and replaced them with workers in other countries, and then those people didn't really have a choice but to buy the junk because it was the only option left on the market and they couldn't afford anything else
What happened was that American business theory abandoned the American worker.
You can round it down to Milton Friedman as the ideology and Jack Welch at GE in the 80s as the implementation and figurehead, but the original seeds were in the SEC mandating quarterly reporting as part of regulation after the great depression.
We can all agree to blame Jack Welch as shorthand though, I think.
It's not real. Companies routinely lose money for years in pursuit of long term growth. But for some reason people love to use this as an explanation of everything wrong in our country.
I'd cite as a counterexample in recent memory Sears, GE, Boeing, and Intel. I think collectively they've destroyed close to a trillion dollars by focus on quarterly results over long term, and they're not alone.
I sometimes wonder what a Drucker or ishikawa would say of today's "vaunted American management". Speed roughly short term thinking is too strong of a force in our American thinking. Heck I've counted three recent HN posts this month pushing for speedy software development too.
Yes, and we all saw what happened. They've experienced serious financial consequences, some went out of business. This is exactly what is supposed to happen when you do dumb shortsighted things.
There's also risk in investing in very long-term things that may not pan out.
FAANG-like stock, in general, has paid little to zero dividends for long periods of time post IPO, their rational stock values being based on hypothetical future dividends only after the initial self-investment phase is over.
Don't most tech startups lose money for years before they maybe make a profit?
I mean, I agree that such companies are over-represented in thinking about small businesses if that's what you mean. Normal companies have to be profitable quickly for sure.
It feels like tons of companies get valued based on userbase or revenue or theoretical breakthrough rather than ever having to really think about breaking even, but I know that's just because those folks get all the press.
> Companies routinely lose money for years in pursuit of long term growth.
But much of that long term growth now is just the company growing to displace competitors in existing markets, often by subsidizing prices and dodging regulations - see: Uber, Lyft, Air BnB, etc.
We've all seen the playbook a dozen times now: move into a market, keep prices artificially low until the existing competitors are displaced, then the raise prices to return the initial investment and more. That kind of growth-by-displacement is genuinely necessary sometimes but in these cases it's more like a fungus than a plant, just metabolizing an existing system.
It's not the same thing as actually expanding a market or investing in concrete assets (steel mills, power plants, boats, railroads) or R&D that compounds future growth. When the actual investment is just spent artificially lowering prices there's no actual efficiency gains and the consumers ultimately pay the price and more when the company hits the peak of the existing market and shift to enshittification mode to really extract wealth.
I would just be careful to discount the capitalist West. You’d have to be blind to ignore the massive overbuilding of property in China, which they are now demolishing. All of that wasted capital. Authoritarian regimes with controlled media always seem successful… until it doesn’t. Up until the USSR collapsed there were many prominent people in the West saying it was the superior system. The market test - meaning floating prices and the response to them - is a superior way of allocating capital. We need to see how all of this plays out
I swear I've been reading about overbuilding in China since, like, 2012. And I've definitely used it in arguments myself. Not only China hasn't collapsed, but it has improved massively since then, as far as I can tell.
The US also had a period of time in which their government directed large construction projects, and they too were particularly prosperous in the time afterwards.
> I would just be careful to discount the capitalist West.
I would. It's showing the weaknesses and limitations of its ideology.
> You’d have to be blind to ignore the massive overbuilding of property in China, which they are now demolishing. All of that wasted capital.
So what?
> Authoritarian regimes with controlled media always seem successful… Up until the USSR collapsed there were many prominent people in the West saying it was the superior system.
The West is literally de-industrializing and can't seem to built shit except slowly and expensively. Industry after industry gets hollowed out as China takes the lead.
Do not make the mistake of reasoning about US vs China from the experience of US vs USSR. China doesn't have a command economy, outproduces the US, and controls many key industries. The US is resting on its laurels, and its people cope by thinking of the few industries where it's still ahead, but those are dwindling.
> The market test - meaning floating prices and the response to them - is a superior way of allocating capital.
That's not truth, it's a dogmatic assumption.
China has been able to exploit a dogmatic belief in the free market to siphon the real capital out of the West and into itself (industry and know-how) in order to achieve dominance. The US elite is content to have paper. We'll see how that works out.
> We need to see how all of this plays out
If you're rooting for China. If you're rooting for the US, by then it will be too late to course correct.
Yep, it's way better to overbuild than underbuild. Lack of houses for young people looking to start families / move in for better jobs has big negative societal impacts that we're only starting to see.
> You’d have to be blind to ignore the massive overbuilding of property in China
Isn't the same now happening with the US with the massive overbuilding of AI capacity? Seems like a tightly centralized capitalist system is not that different from a communist one.
Or rather thinking one step forward the question arises, whether we use the right words for the right things?
Does the capitalist West has any defining economics characteristics of a liberal free-market capitalism at all?
Private ownership of means of production: On an atomic, legal level of course. But if point at an NVIDIA based compute rack at a US based random datacenter, can someone tell me actually who owns it? I am interested in the actual natural person who has an ownership share of this capital asset, not the myriads of layers of corporate and financial networks of equity delegations through investment banks, but the actual owner?
Profit oriented: Of course, it is said so. But do really companies, entrepreneurs do things to maximize the profits of the actual owners, shareholders? Are the executives and boards really that keen on putting forward the interest - of the previously referenced unknown - actual owner of the capital assets?
Free market based: This has also multiple sub-characteristics, but most importantly something about competition, or rather the lack of collusion and that economic actors (including consumers, (natural person) investors) are all fully informed. How much is this true in the West?
>If it's not publicly traded, it's super secure from any public accountability.
Under the existing legal and regulatory model, yes.
But what abusing that model long-term will eventually result in government-level change that effectively bans the existence of such exploits, wide-spread vigilantism, and/or some sort of collapse.
> what abusing that model long-term will eventually result in government-level change that effectively bans the existence of such exploits, wide-spread vigilantism, and/or some sort of collapse
The endpoint of vigilantism and collapse is more economic opacity. Not less.
My personal view is companies with more than any of 1,000 employees, $10mm revenue or a $100mm valuation should have to file a simple annual disclosure showing the cap table ad balance sheet, a simple P/L, list of >5% beneficial owners and their auditor. But the path to that is through legislation in a complex, stable society.
Those are single-member LLC revenue numbers. You can get $10M in revenue just by being in a low-margin business. For industries with a 1% margin that's $100k a year in net income, i.e. wages and benefits for one person.
And how are you going to calculate valuation for a closely held private company? In particular, how are you going to calculate it without making them do the thing you don't know if they're required to do without having the calculation already?
> Those are single-member LLC revenue numbers. You can get $10M in revenue just by being in a low-margin business. For industries with a 1% margin that's $100k a year in net income, i.e. wages and benefits for one person.
I'm not sure I understand your argument? Wages come out of revenue not income? So the $100k would go to the owners, but as captical gains not wages.
It's a single-member LLC. The person doing the labor and the person who owns the company are the same person and whether they pay themselves the money as wages or dividends is not really the issue.
A thousand employees is a business on the scale of a mid-sized bank or companies like VeriSign or LendingTree or Iridium Communications. Companies with something like a billion dollars in revenue. $10M in revenue is a small business.
Why do it for entities of that size at all? It's not about their type of incorporation, it's about not adding more paperwork for small businesses.
You're using or. That means you don't need a low revenue number. You could use $10B because nearly all of the relevant companies would already be in on the basis of the number of employees regardless, so all you need is to catch the few outliers that manage to be major companies without hitting the employee threshold.
So? At 10M revenue what are the chances they don't have an accountant who does their taxes and already has all the relevant info? Asking their accountant to crank out one extra form is not going to break the bank.
> But what abusing that model long-term will eventually result in government-level change that effectively bans the existence of such exploits
After a couple of generations watching my government become increasingly captured by the lobbyists funding elections - I'm fairly skeptical that your optimistic assertion will come to pass.
Doubly so now that capture is rapidly accelerating into a hostile, fascist takeover.
The current pattern of resource allocation is a necessary requirement for the existence of the billionaire-class, who put significant effort into making sure it continues.
I listened to an interview with Summers in the run-up to the 2007-8 financial crisis, and what he was doing was obvious to any grade school student who has ever witnessed someone else sucking up to an authority figure.
>This person would not have been caught if it wasn't for this polygraphs screening.
The organization whose crimes she exposed claims she would not have been caught if its wasn't for the polygraph screening. Corrupt law enforcement types love things like polygraph tests because they give them a ready avenue for parallel construction.
That was my own interpretation... but admittedly maybe too strong of a statement. Maybe she would have be caught. That said, the psychological setup in those periodic interviews with a "maybe lie detecting machine" create opportunity to find real issues.
In terms of the details here, the leak wasn't to expose the crimes, it was to resist political pressure [my speculation anyways]. The crimes were being investigated anyways and the video was available internally fairly broadly (and I think maybe externally as well). There was a political storm as a result of the investigation and the arrests made. Apparently leaking the video is was not illegal (though that's subject to some interpretations) because the role of the chief prosecutor is independent but this became more complicated when it required lying to the supreme court to cover the leak.
But yeah, it's possible the Shin Bet already had an idea but just used the polygraph as an excuse/opportunity. While it's understandable in the political climate why the chief prosecutor would leak the video it's also unethical and poor judgement for someone in her role to do so, and then to cover it up. The role of the Shin Bet is to find people in sensitive roles who are secretly doing things they should not be doing (typically spies but more generally people betraying the trust put in them). For those not following, the plot got thicker because she proceeded to throw her iPhone in the Mediterranean and it was found by a swimmer some days later. She also tried to harm herself. It's pretty crazy stuff. Now there are arguments about who should oversee the investigation with the supreme court set to decide today. It's a pretty small/tight legal community and everyone knows everyone, especially at the top. The legal system has been in a battle with the government for some while with the justice minister refusing to accept the last appointment of the chief justice of the supreme court.
Anyways, the polygraph angle is interesting. That this machine survives as a practice in many places tells us something about its usefulness (or at least people's belief in its usefulness).
About a decade ago, "magic wand" bomb detectors and similar products were pretty big among security services in places like Iraq. [1] Their various supposed methods of operation were transparent BS, in ways that make the EM drive proponents look rigorous.
What always struck me about reporting on them was how there was a great deal of coverage about how fraudulent they were, but seeming puzzlement on why security services would keep buying such obvious BS. What seemed clear to me, was that the BS was the point. Similar to polygraphs and drug-sniffing dogs, the purpose of the tool is to give the investigator a seemingly-objective excuse to follow their intuition (or engage in arbitrary targeting and abuse; take your pick).
I was once in an airport in some third world country and one of those dogs was pointed at my luggage. I was really worried their operator would give them some secret signal to find "drugs" in my luggage. Nothing happened but I can imagine that's a thing.
Those wands were completely fake. Dogs do have a keen sense of smell and can be trained to sniff certain substances.
The polygraph I think is more in the disputed category. It actually measures some physiological signals which in theory could correlate to stress.
That said I don't disagree. These tools can be abused. At the end of the day you need various checks and balances in all these systems (e.g. FBI's internal investigation or whatever body is involved in the security clearances in the US in this example). Applying psychological pressure in various ways is a legitimate tool in these domains.
"Forgetting to look up" implies a desire or intent to do so. The United States - former leader of the collective West - made the choice decades ago to sacrifice everything on the altar of quarterly profits. All that remains are the consequences of that decision.
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