All these layoffs make me think: why do we need to do it ? The obvious answer seems to be "it's to cut cost and improve return on investment for shareholders". Ok, fair enough. But why is it so necessary to 'improve return' to shareholders that it must impact the lives and livelihoods of tens of thousands of people who are human beings just like the CEO and the people who decide on the layoff roster? Sure, there might be cases where it's totally needed: a company is at brink of bankruptcy and literally cannot make payroll without fewer workers, or has some extreme inefficiencies that clearly a result of having too many workers. Outside these extreme cases, it's just a matter of allowing the company to make 1 billion more dollars out of 10 billion that they already make, and making the top investors like those hedge fund managers several hundred million dollars richer. Is that worth impacting the livelihoods of all those laid off workers? It's not a rhetorical question. If I ask the hedge fund manager who demands layoffs of a company, "are you saying making you (and your clients) 100 million more dollars this year is more important than making 1000 people lose their health benefits, their income, etc?".If I am already making 200 million a year as a hedge fund manager investing in company A, and company A says "hey, I can lay off 2000 people and improve your ROI in our company by 15%, and you will make 100 million more dollars for you and your clients", I'd be like " no no no no no, please don't. I already make more than enough money and so do my clients, I don't need to increases my ROI by another 15%. My life is already content and happy. I already have 2 houses in the hamptons and 2 private jets. So what if your company is inefficient, let those workers, who make 0.01% of what I do, keep their jobs, even if they are slacking off. Profit maximization is not worth the human cost" But clearly those 'investors' think otherwise. Has any investor or 'shareholder' ever said to a CEO, 'oh god, please don't do a layoff, I don't need that extra cost saving or return on investment, I care more about the livelihood of those workers". How come no one ever says so? What am I missing here? Why must be we always achieve maximum efficiency and maximum profit regardless of cost? Is that the best way to organize our society? Someone explain to me like I'm five.
That’s the whole point. It’s never enough and those hedge fund guys just want everything and anything now, can’t wait long term. Meta wouldn’t have to layoff if Zuck took $1 salary for his mistake of over hiring.
Why do companies need to hire people? (Serious question)?
How tf did you get into Meta 🤦♂️ Business, shareholders, profit. Public company.
Why is the objective always to maximize profit? How come no shareholder ever says "let's not lay off so many people, even if it means making 10% less this year". Why is that not a reasonable thing to say ?
The prime motivation for one to invest is to obtain a return. Public company takes the money honoring a return. Margins are a proxy for sustainability and executives must focus on ensuring that metric. If you put $100 in and it goes to $0… was it a reasonable thing to say?
Capitalism is about money, not humanity.
Investors own the company. It's their money. If your job function or division isn't performing, naturally you'll get axed. Otherwise management isn't doing their job and blowing the shareholders' money.
So why would they care about maximizing the return of their money above eveything else? It's not like they are losing money, they are already making shitload of it, why do they want to squeeze out every dime ?
They are losing money. Have you heard of opportunity cost? The management can literally be sued if they don't perform their fiduciary duty of maximizing returns.
In an economic survival of the fittest, companies with governance structures that maximize shareholder value tend to be the ones that survive. Look at the whole openai debacle. The employees revolted against becoming a social good enterprise because they themselves are shareholders. This is more of a call for safety nets and communism, is it not?
Why does it need to be ''maximized"" Why not "give a decent return" to shareholder value?
Say you have two lemonade stands, A and B. A does everything it can to cut costs (ie layoffs when needed), while B pays employees more and keeps unnecessary ones. A makes more profit. This attracts investors, who want to become partial owners of A. They see that A makes money, so they give A lots of investment to scale operations. B can’t scale bc no investment. A dominates the market and crushes B. Fin.
Lol r u dumb
You don't seem to understand how "hedge fund managers" (or any investors for that matter) actually make money. There are two ways investors can make money: - Take profits - Increase the value of the company No companies these days share their profits. Meta does not pay a dividend. The only option for making money is increase the company's value. this is a natural consequence of chasing growth (which also happens to be the reason we all have these crazy jobs in the first place)
Short answer: I don't know. I agree with you. Long answer: I can't even think about how to explain to a five y.o. because it's pretty complex; here are some thoughts. In 20th Century you have guys like Milton Friedman the economist who say the whole point of a business is to increase profits or some such quote. So that formed the backbone of the "free market" economist/philosophers of the Chicago School, I believe, which dominated political and economic theory in the USA since its inception. You also have people like Jack Welch who in the 1980s? started the idea of "get rid of the bottom 10%" or whatever. So before that time you basically had a system where people would go to a company and stay with that company for their career, and if things changed then the company would more or less re-purpose you. Enter Jack Welch, and we have a new paradigm. Then, cherry on top of this is you have in the 1980s people like Reagan, Republicans, and a Supreme Court who have set in motion for nearly 45 years laws and legal and societal infrastructure which treats companies like they are people, and disenfranchises the working class (you might have heard the axiom "greed is good"). So now the net result of all of this, is: we have a society in the USA which does not care whatsoever about people and completely cares about money, because that's what we have been bamboozled into from about 60 years of law, thought, and manipulation. Voila, late-stage capitalism.
Finally, an actual based take. Kudos.
That's totally unfair! Capitalism absolutely does care about people, at least since the Citizens United decision.
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That’s how capitalism works.
But why ? I mean what is going on in the minds of the investors or shareholds? And why I don't think that way? What's the difference between them and me ?
Peasants like us think about adding zeros on the left side but hedge fund managers/ shareholders would like to add them on the right side. That’s the only diff.