Hey JessiPhone users
I'm always amazed at how humans are able to pull the wool over their own eyes and the eyes of others and creative narratives to suit one's agenda. The need for self-gratification and self-enrichment is now so strong the lengths to which we would validate completely inefficient behaviour is far past non-sensical.
I understand I'm a bit of an idealist but in the business, world capital is meant to flow into inefficiencies in the economy. A business sees oh here is something we're taking too long to do or costs too much to do, here's a better way or product to do it faster and cheaper and then profit off of that service or product.
However as certain companies became bigger than they should have been due to checks and balances that should be there if we had hard money, we've seen tech companies explode as they're able to scale and absorb market share and then expand into new markets as well as other sectors.
Instant gratification became the order of the day and brought about short-sighted business practices.
Image source: - bankmycell.com
As companies got bigger the first bit of inefficiencies they abused was buy ups or buyouts, crashing the competition and consolidating them within their product. Sometimes, it would be to stop products from reaching the market or to stop customers from having alternatives that limit price discovery and price deflation of a product.
While it may be profitable for the company long term, it comes at the expense of the market trying to be efficient and the customer pays for this over the long term.
I've spoken about stock buybacks in the past which is a way to get around actually producing in the market and still providing shareholder value while enriching company executives. Instead of using money to give workers higher wages, to spend on research and development or shareholder dividends, companies instead buy back their own stock, remove it from circulation, pump up the price and reward individuals with free money.
This creates massive ineffeinceies ina. the company as capital is extracted to no benefit of the company and inflates the value of the company to allow them to borrow against the valuation and attract more capital that could have gone to more efficient businesses.
No company likes to pay taxes, especially big companies and when you scale to the size of a Google, Apple, Amazon, and Facebook it's almost impossible to spend all that money on acquisitions, buybacks, and operational costs so to avoid this they park money offshore with trillions just sitting in bank accounts doing nothing.
How inefficient is that use of capital? Sitting there dying in a bank account.
There was a time when companies made products that lasted and provided value to the user and looked to use that as a way to get more customers, the longer your product lasted the more value you provided the more customers you would get and more you could charge.
However, that wasn't the most profitable in the short term and it was better to release small updates each year and get a constant churn of purchases going to suck more money out of your user base. This strategy floods the market with subpar products and the waste in resources for the market that could be used for other things far outweigh the profitability of this method.
Then when all is said and done, these companies are still the same ones running to the government for bailouts so they provide a floor for malinvestment and rewarding complacency, not active risking of capital to drive innovation.
If we look at the amount of debt we need to create a single $1 of productivity its indicative of the inefficiencies as it costs more to produce and that's why we're slipping deeper into debt. This is now the nature of this non-sensical business cycle and why unfortunately it needs to come crashing down to be corrected.
Have your say
What do you good people of STEEM think? Have you met or known a millionaire that has lost it all?
So have at it my Jessies! If you don't have something to comment, comment "I am a Jessie."
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