Why are corporations doing so well as the economy struggles?

[Direckshun]

This is something I'd like to see your explanations on.

Corporations are recording record profits in 2012. Not good profits, record profits.

And yet our economy struggles at a little under 3% growth and a high unemployment rate.

Why, in your opinion, is the economy so bad yet businesses are doing so great?

http://economix.blogs.nytimes.com/20...orate-profits/

Record Corporate Profits
United States corporate profits reached a record high in the third quarter of this year, even adjusted for inflation, according to a report from the Bureau of Economic Analysis.
By CATHERINE RAMPELL
November 29, 2012, 3:00 pm



The increase from the second quarter was entirely a result of stronger business at home. Profits received from American-owned businesses abroad fell slightly in the third quarter, which may not be surprising given the recession in Europe and the slowdown in China.

Additionally, all of the growth in domestic corporate profits was accounted for by the financial sector.

Domestic profits of financial corporations rose $71.3 billion in the third quarter, after falling $39.7 billion in the second. Domestic profits of nonfinancial corporations, on the other hand, decreased $1 billion in the third quarter, after rising $27.8 billion in the second quarter.

[chiefzilla1501]

Originally Posted by blaise

It's less about defending CEOs and more about not concerning myself with their bonuses.
Lack of ambition and laziness keep more Americans from realizing the American dream than any CEO has.

They are both a problem. Doesn't make one any better than the other. Americans can't expect handouts, but at the same time, we shouldn't excuse corporate greed

What's the problem with a corporation having profits? They don't have any obligation to hire more people than they need. That's like you getting a $500 bonus at your job and me telling you you have an obligation to hire landscapers.

I don't have a problem with a corporation having profits. I have a problem with executives crippling the corporation from making more profits and, worse, being rewarded handsomely for it.

The biggest problem in our economy isn't as much about laziness. It's more about innovation. If the private sector would again focus on investing back into the economy instead of executives hoarding money, our economy would be in much better shape. The problem is at both the top and the bottom, and it's the people in between that get screwed.

[chiefzilla1501]

Originally Posted by blaise

Defend what practice? Paying CEO's? It's called compensation.

That are set by board members, who are often in bed with the CEO. I don't care about executives being compensated handsomely, but they need to be in support of LONG-TERM objectives. A CEO that creates massive losses to his company should NOT be rewarded handsomely, but they are. A CEO that boosts short-term stock price but fails to make the company 3-year competitive should NOT be rewarded as handsomely.

Until these things change, executives will cripple the economy. Sadly, the Steve Jobs' of the worlds are becoming fewer and further between. Jobs was one of those executives who made a lot of money but was motivated to turn his company into an empire. CEOs these days are just there to collect checks.

[BWillie]

Corporations profits will of course rise in the short term after ppl are laid off or after big fiscal cuts. They are scared as hell of the current state of the economy so many are shutting down a good portion of production, limiting their inventory and down sizing. Look, corporations are around because they provide a good or service better than everyone else. They also employ most ppl in the work force. This notion that they are evil, need to be hindered by regulation, and taxed out the wazzu is the complete opposite thinking of what should be going on.

[Fish]

Originally Posted by chiefzilla1501

That are set by board members, who are often in bed with the CEO. I don't care about executives being compensated handsomely, but they need to be in support of LONG-TERM objectives. A CEO that creates massive losses to his company should NOT be rewarded handsomely, but they are. A CEO that boosts short-term stock price but fails to make the company 3-year competitive should NOT be rewarded as handsomely.

Until these things change, executives will cripple the economy. Sadly, the Steve Jobs' of the worlds are becoming fewer and further between. Jobs was one of those executives who made a lot of money but was motivated to turn his company into an empire. CEOs these days are just there to collect checks.

Exactly. It's not about CEOs deserving money. It's about CEOs thinking they deserve 400 times the money the underlings are making, and sacrificing the health and future of the company to obtain it.

I gave an example of how Hostess ****ed over their workers by demanding pay cuts and not paying their employee pensions for months upon months, while bankrupting the company repeatedly. And during final liquidation, the executives who had repeatedly failed, caused hundreds of thousands to lose their jobs and their pensions, still gave themselves bonuses. And blaise responds with "What's the problem. Yah capitalism. Herp derp."

[chiefzilla1501]

Originally Posted by BWillie

Corporations profits will of course rise in the short term after ppl are laid off or after big fiscal cuts. They are scared as hell of the current state of the economy so many are shutting down a good portion of production, limiting their inventory and down sizing. Look, corporations are around because they provide a good or service better than everyone else. They also employ most ppl in the work force. This notion that they are evil, need to be hindered by regulation, and taxed out the wazzu is the complete opposite thinking of what should be going on.

I am a big fan of the private sector. It's where I work and I would never want to work in the public sector. But the argument that we need to tax them less is a LOT harder to make when you know that any excess money these corporations get doesn't get invested back into the business. Instead, they go into boosting bonuses for executives.

If lower taxes encouraged a company to invest in R&D and technology and new factories and retail operations, great. But it's not. They're being invested in turning an executives' $20M compensation into $25M. There is overwhelming evidence to indicate that a disproportionate amount of money is being spent in this way.

[chiefzilla1501]

Originally Posted by Fish

Exactly. It's not about CEOs deserving money. It's about CEOs thinking they deserve 400 times the money the underlings are making, and sacrificing the health and future of the company to obtain it.

I gave an example of how Hostess ****ed over their workers by demanding pay cuts and not paying their employee pensions for months upon months, while bankrupting the company repeatedly. And during final liquidation, the executives who had repeatedly failed, caused hundreds of thousands to lose their jobs and their pensions, still gave themselves bonuses. And blaise responds with "What's the problem. Yah capitalism. Herp derp."

Exactly.

Compensation is a scary issue. In many cases, you have boards of directors who are in bed with executives, so many executives get paid very handsomely if they do well and still handsomely even if they sink the company. And then they can roll away with a multi-million dollar golden parachute when they're fired.

The other issue is short-term vs. long-term compensation. There are ways to boost your profits for 1 year instead of focusing on 5-year growth. For example, many companies will give more commission to sales instead of investing in R&D or marketing. When you don't invest in R&D, American companies struggle to come up with the new ideas that create jobs and develop products/services that other countries want to buy from America.

[blaise]

Originally Posted by Fish

Exactly. It's not about CEOs deserving money. It's about CEOs thinking they deserve 400 times the money the underlings are making, and sacrificing the health and future of the company to obtain it.

I gave an example of how Hostess ****ed over their workers by demanding pay cuts and not paying their employee pensions for months upon months, while bankrupting the company repeatedly. And during final liquidation, the executives who had repeatedly failed, caused hundreds of thousands to lose their jobs and their pensions, still gave themselves bonuses. And blaise responds with "What's the problem. Yah capitalism. Herp derp."

Yeah, herp derp. A thread about corporations making profits and your response is "herp derp, CEOs HOSTESS!" You sound like a bumper sticker. "CEOS AND GREED AND LOOK AT ALL THAT MONEY THAT CEO MAKES HERP DERP!"
You're apparently under the impression that these companies making profits should just run out and spend the money on what?

Guess what? If you're sitting around waiting for some CEO to take a pay cut to improve your life you're a sap. And if you think we're going to ever end up in some pollyanna universe where you can count on working for a company for 40 years, getting a pay raise every year, and then retiring on a pension then you're sucker. You might as well long for the days of cassette tapes, because those days are gone. You can spend your life crying about CEOs all you want.

[Stewie]

You really don't understand why corporate profits are soaring? It's the last ditch effort of the Federal Gov't and the Federal Reserve to move anything forward in this economy. They pay corporations to borrow money and yet look at the bond ratings of said companies. Bond ratings are much more transparent than some "profit graph."

[whoman69]

Originally Posted by chiefzilla1501

I don't have a problem with outsourcing. Outsourcing is a great thing. It means we get better prices. The theory of comparative advantage (in economics) is that if your country isn't great at making it, they should rely on another country to do it cheaper.

Rather than worry about outsourcing jobs, we should be encouraging the innovation that creates jobs that are uniquely American.

That whole thing is bull. We've been fed this line that Americans can't make good products. What is to stop those "uniquely American" jobs from being sent overseas too?

[Fish]

Originally Posted by blaise

Yeah, herp derp. A thread about corporations making profits and your response is "herp derp, CEOs HOSTESS!" You sound like a bumper sticker. "CEOS AND GREED AND LOOK AT ALL THAT MONEY THAT CEO MAKES HERP DERP!"
You're apparently under the impression that these companies making profits should just run out and spend the money on what?

Guess what? If you're sitting around waiting for some CEO to take a pay cut to improve your life you're a sap. And if you think we're going to ever end up in some pollyanna universe where you can count on working for a company for 40 years, getting a pay raise every year, and then retiring on a pension then you're sucker. You might as well long for the days of cassette tapes, because those days are gone. You can spend your life crying about CEOs all you want.

Your response is tough luck. That's classy. The US economy is a crumbling pile of shit, and you reply with "Quit crying, that's the way it is." Great plan to make things better.

Corporations have gotten all sorts of incentives over the last few decades because supposedly they were the job creators and the force behind the economy. Since Reagon, the government has lowered regulations and taxes to encourage free trade and get out of the market's way. Things like removing regulations like Glass-Steagall were meant to give corps freedom to grow the US economy. But here we are decades later, economy in complete shambles, record unemployment, outsourcing of jobs, poor US manufacturing, complete shit housing market, gazillion dollars in debt. All the lowering of taxes and regulations, and corporations have contributed little in return other than making the 1% at the top filthy rich while destroying small business nationwide and laying off the majority of US workers. Creating the most drastic income inequality in the world, and giving a bleak future to our next generation.

We've given corporations everything they've wanted for several decades. And what have they contributed back into the US market that they're taking advantage of? Jobs? Nope. Reinvestment? Nope. Further US development? Nope.

The current system doesn't help you. Still unsure why you're defending it. You can't come up with a single reason why this kind of capitalism is good for America as a whole. I've asked you multiple times, but you can't provide any answer. All you can do is blindly defend a minority of billionaires that you'll never be a part of. Ever.

This system doesn't help either of us. The only difference between our positions is that you're accepting the destruction of our economy thinking that nothing can be done to change it.

[scott free]

Originally Posted by Fish

Your response is tough luck. That's classy. The US economy is a crumbling pile of shit, and you reply with "Quit crying, that's the way it is." Great plan to make things better.

Corporations have gotten all sorts of incentives over the last few decades because supposedly they were the job creators and the force behind the economy. Since Reagon, the government has lowered regulations and taxes to encourage free trade and get out of the market's way. Things like removing regulations like Glass-Steagall were meant to give corps freedom to grow the US economy. But here we are decades later, economy in complete shambles, record unemployment, outsourcing of jobs, poor US manufacturing, complete shit housing market, gazillion dollars in debt. All the lowering of taxes and regulations, and corporations have contributed little in return other than making the 1% at the top filthy rich while destroying small business nationwide and laying off the majority of US workers. Creating the most drastic income inequality in the world, and giving a bleak future to our next generation.

We've given corporations everything they've wanted for several decades. And what have they contributed back into the US market that they're taking advantage of? Jobs? Nope. Reinvestment? Nope. Further US development? Nope.

The current system doesn't help you. Still unsure why you're defending it. You can't come up with a single reason why this kind of capitalism is good for America as a whole. I've asked you multiple times, but you can't provide any answer. All you can do is blindly defend a minority of billionaires that you'll never be a part of. Ever.

This system doesn't help either of us. The only difference between our positions is that you're accepting the destruction of our economy thinking that nothing can be done to change it.

[Mr. Flopnuts]

Originally Posted by Fish

Your response is tough luck. That's classy. The US economy is a crumbling pile of shit, and you reply with "Quit crying, that's the way it is." Great plan to make things better.

Corporations have gotten all sorts of incentives over the last few decades because supposedly they were the job creators and the force behind the economy. Since Reagon, the government has lowered regulations and taxes to encourage free trade and get out of the market's way. Things like removing regulations like Glass-Steagall were meant to give corps freedom to grow the US economy. But here we are decades later, economy in complete shambles, record unemployment, outsourcing of jobs, poor US manufacturing, complete shit housing market, gazillion dollars in debt. All the lowering of taxes and regulations, and corporations have contributed little in return other than making the 1% at the top filthy rich while destroying small business nationwide and laying off the majority of US workers. Creating the most drastic income inequality in the world, and giving a bleak future to our next generation.

We've given corporations everything they've wanted for several decades. And what have they contributed back into the US market that they're taking advantage of? Jobs? Nope. Reinvestment? Nope. Further US development? Nope.

The current system doesn't help you. Still unsure why you're defending it. You can't come up with a single reason why this kind of capitalism is good for America as a whole. I've asked you multiple times, but you can't provide any answer. All you can do is blindly defend a minority of billionaires that you'll never be a part of. Ever.

This system doesn't help either of us. The only difference between our positions is that you're accepting the destruction of our economy thinking that nothing can be done to change it.

BOOM!

[Calcountry]

Originally Posted by Direckshun

This is something I'd like to see your explanations on.

Corporations are recording record profits in 2012. Not good profits, record profits.

And yet our economy struggles at a little under 3% growth and a high unemployment rate.

Why, in your opinion, is the economy so bad yet businesses are doing so great?

http://economix.blogs.nytimes.com/20...orate-profits/

Record Corporate Profits
United States corporate profits reached a record high in the third quarter of this year, even adjusted for inflation, according to a report from the Bureau of Economic Analysis.
By CATHERINE RAMPELL
November 29, 2012, 3:00 pm



The increase from the second quarter was entirely a result of stronger business at home. Profits received from American-owned businesses abroad fell slightly in the third quarter, which may not be surprising given the recession in Europe and the slowdown in China.

Additionally, all of the growth in domestic corporate profits was accounted for by the financial sector.

Domestic profits of financial corporations rose $71.3 billion in the third quarter, after falling $39.7 billion in the second. Domestic profits of nonfinancial corporations, on the other hand, decreased $1 billion in the third quarter, after rising $27.8 billion in the second quarter.

I have a BA in economics and 25 years of experience in Business. I wouldn't give you two rats asses let alone an explanation.

[whoman69]

Originally Posted by Calcountry

I have a BA in economics and 25 years of experience in Business. I wouldn't give you two rats asses let alone an explanation.

So you got yours and fug everyone else is the answer.

[blaise]

Originally Posted by Fish

Your response is tough luck. That's classy. The US economy is a crumbling pile of shit, and you reply with "Quit crying, that's the way it is." Great plan to make things better.

Corporations have gotten all sorts of incentives over the last few decades because supposedly they were the job creators and the force behind the economy. Since Reagon, the government has lowered regulations and taxes to encourage free trade and get out of the market's way. Things like removing regulations like Glass-Steagall were meant to give corps freedom to grow the US economy. But here we are decades later, economy in complete shambles, record unemployment, outsourcing of jobs, poor US manufacturing, complete shit housing market, gazillion dollars in debt. All the lowering of taxes and regulations, and corporations have contributed little in return other than making the 1% at the top filthy rich while destroying small business nationwide and laying off the majority of US workers. Creating the most drastic income inequality in the world, and giving a bleak future to our next generation.

We've given corporations everything they've wanted for several decades. And what have they contributed back into the US market that they're taking advantage of? Jobs? Nope. Reinvestment? Nope. Further US development? Nope.

The current system doesn't help you. Still unsure why you're defending it. You can't come up with a single reason why this kind of capitalism is good for America as a whole. I've asked you multiple times, but you can't provide any answer. All you can do is blindly defend a minority of billionaires that you'll never be a part of. Ever.

This system doesn't help either of us. The only difference between our positions is that you're accepting the destruction of our economy thinking that nothing can be done to change it.

No, my response isn't, "tough luck." You're the one suggesting the corporations in question here; the ones in the OP, are handling profits in an unethical manner. What specifically are you saying the corporations in question should spend that money on?

I'm not defending anything. You're the one making a judgement on their profits. If that's the case then state what they should be doing, specifically, with their money that they're currently keeping as profits.

Aside from general BS like, "put it back in the economy."