Was just trying to explain to someone why everything is going to shit, specifically companies, and realized, I don’t fully get it either.

I’ve got the following explanation. The sentences marked with “???” are were I’m lost. Anyone mind telling me, if they’re correct and if so, why?

The past few years, central banks were giving out interest rates of 0% or even negative percentages. Regular banks would not quite pass this on, but you could still loan money and give it back later with no real interest payments.

This lead to lots of people investing in companies. As long as those companies paid out more money than those low interest rates, it was worthwhile. But at the same time, this meant companies didn’t have to be profitable, because they could pay out investors from money that other investors gave them???

This has stopped being the case, as central banks are hiking interest rates again, to combat inflation???

  • Millie@lemm.eeEnglish
    2·
    1 year ago

    Literally money. More specifically, the financial need under a capitalist system for businesses to constantly grow and increase profits, and to focus on shareholder profits over making a good product. Most businesses on any sort of large scale today aren’t in it to do a good job at making whatever it is they make, they’re in it to make money. Their actual ‘business’ is just an incidental stop on the way to making more money.

    You see this literally everywhere. Remember Odwalla? They made these great, super-thick bottled smoothy-like juices. Easily the healthiest thing you could find to drink in most of the places they were sold. Then Coca-Cola bought them out, changed the name to Naked Juice, and watered them all down. What we have now, as a result, is a pale imitation of what we once had.

    Why? Because Odwalla was profitable, so it was profitable for Coca-cola to buy up a competitor for shelf space. But once they were bought up, there’s no incentive to deliver the same quality of product. They have no remaining competition, so they can release a shittier version and we’ll basically just suck it up because it’s still healthier than soda.

    Our reward for worshiping currency is for everything ever made out of love of a craft or an art to be exploited and turned into a shittier version of itself.

    The solution, to my reckoning, is to start making things you love because you love to make them and to refuse to sell out when they come knocking.

    • GFGJewbacca@lemm.ee
      2·
      1 year ago

      There’s only one thing I would alter in your statement. You said:

      …and to focus on shareholder profits over making a good product.

      I would say, "and to focus on shareholder profits over making a good product anything else, including life itself.

      It’s more profitable for a health insurance company to deny someone’s claim than to pay for their healthcare in the US. The insurance company won’t care if that ultimately leads to the person’s death - they have to answer to their shareholders.

      It’s more profitable for Nestlé or Google to siphon water from countries in the global South than it is to have sustainable practices that don’t exacerbate climate change. So what if that means that millions of people will die in the years to come? That’s their problem for being poor.

      We need to bring about the kind of change that has politicians recognize that there is more to human life than a dollar amount, and that poverty is not a moral failing on the part of the individual. But until that happens, poverty is akin to a death sentence.

      • Lemmylaugh@lemmy.ml
        01·
        1 year ago

        Ok but what you are asking is to crash the market, that will lead to more harm than good. Any better less drastic idea?

            • radix@lemm.ee
              1·
              1 year ago

              Is it evil to prioritize human life over the state of the market?

              Is it good to prioritize the economy over human lives?

    • Gyoza Power@discuss.tchncs.de
      2·
      1 year ago

      I wouls just add that it’s all about making profits and increasing them year per year, but always focusing on the short term. To the CEOs, shareholders and other directives, it doesn’t matter if the company goes bankrupt 10 years from now, as long as they suck in all the profits they can now.

      Even if the company is very successful, with a very good product(s) and they could just go into easy-ride mode continuing to provide those products. They only want to make as much money as quickly as possible and once they get their hands on the company, the enshitification for the sake of quick profits ensues.

      • Samus Crankpork@beehaw.org
        1·
        1 year ago

        This is why I feel bad about any company releasing their “best product ever”, because it’s all downhill from there. The only thing left for the shareholders to do is cut costs, worsening the product.

  • jet@hackertalks.comEnglish
    0·
    1 year ago

    Everything isn’t going to shit. The sky is still blue, food is growing, people have good lives.

    The current economic issues are cyclical in nature, due to our form of global capitalism, we have 7-10 year up swings and down swings.

  • IninewCrow@lemmy.caEnglish
    0·
    1 year ago

    It’s cyclical and it’s been happening for thousands of years. It’s part of our human nature.

    We all work together and build systems, societies and civilizations and do great things. We become wealthy and then slowly concentrate that wealth to smaller and smaller groups of people. Eventually the majority of the wealth is controlled by a very small group of people and everyone else has nothing. The system at this point can not sustain itself and collapses. Then the whole human system restarts again from the bottom.

    It’s happened many many times throughout human history.

    We are just at the height of one of those cycles.

    • OtakuAltair@lemm.eeEnglish
      1·
      1 year ago

      Maybe this can change in the software space with the advent of foss.

      It kinda is I suppose, even if very, very slowly.

  • mcgravier@kbin.social
    01·
    1 year ago

    Actually this is because quality of engineering goes down. Noone seems to be able to design a good user interface. My theory is it’s because the new generation of designers are rised on Facebook and Twitter. They never saw a good, clean UI in their lives.

  • ZombiFrancis@sh.itjust.works
    01·
    1 year ago

    Based on what you’ve posted here alone:

    Companies that don’t have to be profitable is not quite the case to make. They have to either provide a service valuable enough to gather continual revenue from investors or subsidies to exist… or they have to have a plausible promise of becoming profitable. Easy money really lowers the bar on how plausible that promise needs to be.

    Ripping up on that E brake by hiking interest rates has a twofold effect: first it raises back the bar on how useful a service or profitable a company is or aims to be for investors. Secondly it has an overall effect on the economy, including profitable companies with strong investments since all loans are subject to the interest rates. So while that can produce the intended deflationary effect, the whole economy has to recalibrate.

    And that’s where things tend to feel like they’re going to shit.