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The rise of the corporate colossus is a giant problem

economist.com

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Re: The rise of the corporate colossus is a giant problem

#61

Post by mathattack »

sharemywin wrote: post #8

In 1990 the top three carmakers in Detroit had a market capitalisation of $36 billion and 1.2m employees. In 2014 the top three firms in Silicon Valley, with a market capitalisation of over $1 trillion, had only 137,000 employees.

Market cap is the wrong number for auto companies. They are more debt financed than equity, especially relative to Silicon Valley.

Ford has four times the debt that it has equity. Enterprise value (debt plus equity) is a better measure.

The other thing that gets lost is jobs in the supply chain.

This may not change the end conclusion, but the existing methodology is flawed.

Re: The rise of the corporate colossus is a giant problem

#62

Post by sharemywin »

rogerbinns wrote: post #57
sharemywin wrote: post #35

Earlier quoted context omitted.

Funny cause amazon is closer to the 330K per employee mark. Wonder why their P/E is so high? Assuming it took all of walmart's sales it would only get 4 times bigger then now. how much profit can it extract?

I'll bite. How about for every incremental $1 in ecommerce spending, Amazon gets about 50 cents? And (roughly speaking) many new startups start out and grow on AWS providing new revenue as well as valuable intelligence. http://www.marketwatch.com/story/amazon-will-account-for-mor... https://stratechery.com/2016/the-amazon-tax/

Online sales in the United States are expected to reach $523 billion in the next five years, up 56% from $335 billion in 2015, and mobile devices are expected to be a key driver in that growth, Forrester Research Inc. says.

https://www.internetretailer.com/2016/01/29/online-sales-wil...

Re: The rise of the corporate colossus is a giant problem

#63

Post by soulnothing »

jackcosgrove wrote: post #32
throwaway729 wrote: post #21

Earlier quoted context omitted.

Gvien the forum we're on, it's worth pointing out that today's white collar laborers are capturing one or two orders of magnitude less of the value they're creating than the blue collar workers of 1990's detroit. 360 billion* divided by 1.2 million = 300000 "per employee". Typical salary to 40,000ish-100,00ish range for laborers/engineers. The disparity in those numbers isn't so bad at all. Conversely, 1 trillion div…

Not only that, but in US salaried status is routinely used to avoid paying overtime, when overtime is a tacit requirement of many jobs.

Even as a contractor with an hourly rate. The assumption is the rate given is for 40 hours a week. I've had a number of hourly contracts where I was told either work the over time or find a new contract. The lack of care to employees is appalling at times.

Re: The rise of the corporate colossus is a giant problem

#64

Post by AnimalMuppet »

sharemywin wrote: post #31
nonameface wrote: post #29

Earlier quoted context omitted.

That is a direct quote from the article. The article states $36B as well, not $360B. "None of this helps the image of big business. Paying tax seems to be unavoidable for individuals but optional for firms. Rules are unbending for citizens, and up for negotiation when it comes to companies. Nor do profits translate into jobs as once they did. In 1990 the top three carmakers in Detroit had a market capitalisation of $…

I look it up Ford, GM had sales over 100B that year. assuming maybe Toyota as the 3rd.

> assuming maybe Toyota as the 3rd.

Chrysler.

Re: The rise of the corporate colossus is a giant problem

#65

Post by Animats »

pmoriarty wrote: post #58
Animats wrote: post #46

Earlier quoted context omitted.

No, that's because the overvalued market caps wouldn't fly in an IPO. If Uber went public, they'd have to disclose real numbers, which probably indicate they're unprofitable. They're only worth $68 billion when the market doesn't have to pay out $68 billion. It's today's very low interest rates that fuel "private equity", which is usually debt at some level.

How much investment is actually done based on such fundamental analysis?

Everything Berkshire Hathaway does.

Re: The rise of the corporate colossus is a giant problem

#66

Post by uabstraction »

This article did a good job of staying relatively neutral for such a controversial subject. It seems as though an oligopoly of multinational conglomerates will be the only choice for essential consumer products in a short 10/20 years. Without competition from smaller open-minded businesses, only innovation in rent seeking will take place. The companies that end up in control of the infrastructure and hardware will end up having more power than most of the world's governments. The cynic in me feels like we're in for some turbulent times.

Re: The rise of the corporate colossus is a giant problem

#67

Post by sharemywin »

redorb wrote: post #50
sharemywin wrote: post #35

Earlier quoted context omitted.

Funny cause amazon is closer to the 330K per employee mark. Wonder why their P/E is so high? Assuming it took all of walmart's sales it would only get 4 times bigger then now. how much profit can it extract?

Amazon appears to be able to ramp of profit at will via controlling expenditures and promotions. Review this years numbers vs the prior years. I think they wanted to show a investor what it looks like when they 'wanted' to turn a profit instead of plowing money back into everything imaginable. https://www.google.com/finance?q=NASDAQ%3AAMZN&fstype=ii&ei=... If I'm wrong and they are still plowing money back into every…

I think AWS is masking the non tech size profits of a bunch of warehouses moving and storing goods.

Re: The rise of the corporate colossus is a giant problem

#68

Post by pessimizer »

jhayward wrote: post #27
BurningFrog wrote: post #20

A libertarian explanation is that in the age of the Regulatory State, it's often more important to be the biggest lobbyist than to make the best product. "In the Game of Crony Capitalism, you lobby or you die."

It would be helpful if you would supply the Libertarian explanation for the Facebook, Google, Microsoft, and Amazon monopolies as products of the regulatory state and crony capitalism.

I actively dislike libertarians, and even I think that they would have no trouble explaining those particular examples.

Re: The rise of the corporate colossus is a giant problem

#69

Post by rayiner »

> None of this helps the image of big business. Paying tax seems to be unavoidable for individuals but optional for firms

This kind of grinds me. There are tons of tax breaks for individuals: mortgage interest deduction, tax-free health care, etc. In fact, the exclusion of health care benefits from taxation costs the government more than all corporate tax avoidance schemes put together.

Re: The rise of the corporate colossus is a giant problem

#70

Post by x3n0ph3n3 »

rayiner wrote: post #69

> None of this helps the image of big business. Paying tax seems to be unavoidable for individuals but optional for firms This kind of grinds me. There are tons of tax breaks for individuals: mortgage interest deduction, tax-free health care, etc. In fact, the exclusion of health care benefits from taxation costs the government more than all corporate tax avoidance schemes put together.

If business can deduct all the costs needed to maintain existence, then why shouldn't individuals? Health costs are required for existence, as is housing. Frankly, I think food and rent should also be deductible as an individual if a business can deduct the cost of catering and office rent.
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