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Economic health has always been measured in industrial and agriculture output and probably along with other ways also. I'm no economic wiz but I know some of the basics. Now in this months Fortune magazine I read that 5 of Americas 7 most valuable companies do not manufacture anything. Those companies are Apple, Microsoft, Alphabet, Facebook, and Amazon. What puzzles me is when there is no tangible item that is being manufactured nothing can be bought and sold and so where does the flow of money go but into a few big companies where it accumulates instead of being filtered around into the pockets of workers and what they buy and spend their money on. It just doesn't add up. If those big 5 companies manufactured articles to be sold and traded I could see where it would add to the economic health of this country. Maybe I am missing something. If so fill me in.
Yup, you are missing something. Lets take a look at google, and why its insanely valuable despite not producing anything.
Times have changed. Production is often multiplied by productivity enhancers. Google provides this in spades. Additionally its widely suspected that Google is very close to creating human level AI's. And thats what most of these big companies are-they are productivity multipliers.
Economic health has always been measured in industrial and agriculture output and probably along with other ways also. I'm no economic wiz but I know some of the basics. Now in this months Fortune magazine I read that 5 of Americas 7 most valuable companies do not manufacture anything. Those companies are Apple, Microsoft, Alphabet, Facebook, and Amazon. What puzzles me is when there is no tangible item that is being manufactured nothing can be bought and sold and so where does the flow of money go but into a few big companies where it accumulates instead of being filtered around into the pockets of workers and what they buy and spend their money on. It just doesn't add up. If those big 5 companies manufactured articles to be sold and traded I could see where it would add to the economic health of this country. Maybe I am missing something. If so fill me in.
Well a company doesn't necessarily need to produce a physical product to sell. A service or information/data can be just as important to other companies as a actual item. Sometimes even more so.
Ok take Facebook (which I personally detest)
You go on there and you put all your personal info for all/some to see. Now as soon as you post pics or info on Facebook they CAN take all your information which most likely becomes THEIR property (if you bother to read the long disclaimer when you first sign up ")
So now what do you think it's worth yo a company you know you like say Nike or Ford or Carhartts jackets. Do you think they can follow you around when you we surf to try to entice you into buying something? Maybe they can send direct emails prompting specials or coupons. Do you think that a company knifing they gave 30 million people wanting to buy their items could have a decision on them raising or lowering prices? Maybe offering discounts? Finding out WHERE their sales are weak?
Knowing what a certain person likes to shop for is invaluable to OTHER companies.
What puzzles me is when there is no tangible item that is being manufactured nothing can be bought and sold and so where does the flow of money go but into a few big companies where it accumulates instead of being filtered around into the pockets of workers and what they buy and spend their money on.
It isn't the lack of manufacturing. It's high profits with little payroll. It's part of what is causing the huge wealth/income disparity, and basically undermining consumer capitalism. The "investor class" gets rich but jobs and wages are lacking.
Economic health has always been measured in industrial and agriculture output
Tell that to strong service based economies like Singapore and Hong Kong. Meanwhile examples of countries with a relatively high proportion of their economy based on agriculture and industry are Guinea, Indonesia, and North Korea.
I believe the OP has a good point. In former times, the biggest companies typically employed the most people: US Steel, GM, GE, etc. They were huge organizations and rivaled militaries in their complexity. It took layers and layers of control and authority, sometimes too many layers, to manage them. They employed all kinds of people from all kinds of backgrounds ranging from Ivy League graduates to cotton pickers. Engineers, metallurgists, tradesmen, laborers all had their roles.
Managing them took the greatest skill of the best trained minds in America.
It's not like that with Apple, Google, etc. They have a small core of computer programmers at the top. They invented or developed the code that is the company's product. Then they have a larger level of programmers who add bells and whistles. They also have ancillary functions that handle financial and legal affairs.
Most everyone in these companies tends to be educated the same. Few skills are needed and only the sliver of the workforce that has them is employed.
What the new titans produce compared to their predecessors seems trivial. Parking lots aren't full of it. Hardly anyone has an uncle who had a hand in making it and no one got a huge set of biceps from working there.
I don't know if it's better to have Google than a shiny Buick in the driveway but the economists have ways of telling you it is.
There is a disconnect between what FaceBook offers and the income that they receive.
FaceBook sells advert space just like the TV networks and radio stations and newspapers and magazines. Ford buys advert space and then people go out and buy Fords. But which advert sent them to Ford? Hard to tell.
As long as people waste hours of their lives looking at FaceBook, the advert revenue will continue to roll in. It will only drop once a newer advert platform comes along that displaces FaceBook. It will be a long slow decline just like what is happening to the newspaper industry today.
So, yeah, FaceBook doesn't build anything but an advert platform. No one is going to pay for Stupid Cat videos.
Economic health has always been measured in industrial and agriculture output and probably along with other ways also. I'm no economic wiz but I know some of the basics. Now in this months Fortune magazine I read that 5 of Americas 7 most valuable companies do not manufacture anything. Those companies are Apple, Microsoft, Alphabet, Facebook, and Amazon. What puzzles me is when there is no tangible item that is being manufactured nothing can be bought and sold and so where does the flow of money go but into a few big companies where it accumulates instead of being filtered around into the pockets of workers and what they buy and spend their money on. It just doesn't add up. If those big 5 companies manufactured articles to be sold and traded I could see where it would add to the economic health of this country. Maybe I am missing something. If so fill me in.
There is huge amount of value with those companies, not typically added into GDP for example. Aside from all the real dollars that they do add selling their respective services.
As a result of those companies our standard of living is perceptibly raised. Huge value, but how to quantify it?
Microsoft lets me play my games. Huge value, but how to quantify?
Apple lets my wife instantly communicate with me, our kids and friends. Huge value, but how to quantify?
Amazon saves me good money almost every week. Savings is value. Preserves my wealth. And I can then spend it on other things.
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