Why is a "Fair Profit" no longer good enough?

[user_id]

Originally Posted by Randomdude

I only contested that you arent either, and are in no position to attempt to correct me.

Sure I am, what you're saying is wrong and I know much more about it than you. To say it again, there is just not experts and non-experts.

[Jonotastic]

Originally Posted by crystalblue

In the olden days, so the legend goes, companies were happy with a fair profit.

Today, it seems like a company isnt happy unless they can Mr Krab you (for the unspongebob initiated, it means sucking every penny outta you!).

I recall reading somewhere that is actually illegal for a publicly traded company not to do everything they can to suck every cent from you.

Is this true? And if it is, is this really how we want it?

If a company would offer you $500,000 per year to do a job that should only pay $30,000...would you say "NO, I'M HAPPY WITH A FAIR INCOME, I WILL ACCEPT $30,000 AND NO MORE!"???

Also, do you know how many businesses have gone bankrupt in the last few years? Do you know that 80% of restaurants fail within the first 1-2 years? Have you heard of ridiculous lawsuits, example McDonald's being sued for serving overly hot coffee and the person who spilled it on herself won millions? Do you know how much debt the average business contains and how a down year could cause a business to file for bankruptcy?

This is a typical employee comment...

[mainebrokerman]

compared to years ago- look at the expense ratio for healthcare/energy/advertising/ also corp. taxes

states' nickel and dime businesses with countless licenses and taxes-

also keep in mind a vicious cycle- years ago more products were American made (manufacturing jobs)
now, with most businesses being squeezed by government policies- they buy on the cheap-foreign made.

[woami]

I think what OP is trying to get at in his first post is that companies are becoming more geared towards nickel and diming consumers. There are definitely examples of good and bad companies in the good ol' days and in modern times, but companies seem to be more geared towards profit and not the products/services they offer.

Things made in the 20th century seem to run a lot longer than things made in the 21st century. Taking washing machines for example. My father said that his old washing machine lasted 15 years. He could probably could have used it more, but he was moving and he had to give it away.

In modern times, many companies look to create products that have a certain use period. They even have specialized divisions that test how long a product lasts and reduce its life if it gets too long. Product quality is reduced in order to make the company more profit. There are many computer graphics cards that are exactly the same, yet they run at different speeds. I forgot which company it was, but the production process would go something like this:
1. build graphics card
2. tweak a pin or chip to limit the speed on some graphics cards to sell as cheaper alternative
3. sell a more expensive version that's not limited and sell the cheaper version as well.

The company has the resources to create faster graphics cards, but chooses to make more profit by creating classes of graphics cards when there really shouldn't be any.

Of course, you could argue that I don't have any facts to back this up and that today's products are so complex that their life is inevitably the tradeoff that consumers endure for more convenient products. Then explain to me why there is a need to actually limit products by reducing quality and still charging a higher price?

Originally Posted by Jonotastic

Also, do you know how many businesses have gone bankrupt in the last few years? Do you know that 80% of restaurants fail within the first 1-2 years? Have you heard of ridiculous lawsuits, example McDonald's being sued for serving overly hot coffee and the person who spilled it on herself won millions? Do you know how much debt the average business contains and how a down year could cause a business to file for bankruptcy?

This is a typical employee comment...

McDonald's is a really bad example, since they had many, many warnings about the temperature of the coffee. It helps to get the complete story rather than just skimming through newspaper propaganda. It's like telling a bad child not to write on walls, only to see him do it again and again, and again. If minor slaps on the wrist won't work, there really is no choice than to escalate the punishment. (And no, I don't condone hitting children, just an example. =P)

[f_m]

Originally Posted by woami

Things made in the 20th century seem to run a lot longer than things made in the 21st century. Taking washing machines for example. My father said that his old washing machine lasted 15 years. He could probably could have used it more, but he was moving and he had to give it away.

That's because competition is tougher between companies today, with so many people being able to sell knock-off products and generic products, the name brand companies have to do similar things to compete. Also, a company is supposed to be a long standing organization, so it must have profits to help balance out the times of losses. If you lose $1 million this year, you had better have made profit in the past to balance it out, otherwise you go out of business.

Originally Posted by woami

In modern times, many companies look to create products that have a certain use period. They even have specialized divisions that test how long a product lasts and reduce its life if it gets too long. Product quality is reduced in order to make the company more profit. There are many computer graphics cards that are exactly the same, yet they run at different speeds. I forgot which company it was, but the production process would go something like this:
1. build graphics card
2. tweak a pin or chip to limit the speed on some graphics cards to sell as cheaper alternative
3. sell a more expensive version that's not limited and sell the cheaper version as well.

The company has the resources to create faster graphics cards, but chooses to make more profit by creating classes of graphics cards when there really shouldn't be any.

You don't need to buy computer graphics cards to live, and there is competition in the marketplace. But again, it's the same reason as I stated, the companies have to make profit because eventually they hit a time of lose which will eat into the profit (if there was any). If you design a product (which costs a considerable amount) the probability that each one is a hit is low, you have to balance the hits with the misses. No different than Hollywood studios, some movies make lots of money and some movies tank.