this post was submitted on 01 Mar 2024
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So many companies cut their workforce as much as 10-15% citing that those jobs can be fully automated by the use of AI but I am still waiting to see any meaningful price cuts of their products from the said companies, etc.

Otherwise this will mean that they are doing this just to increase their profit margins and please their shareholders and don't care about their customers or workforce.

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[–] [email protected] 132 points 9 months ago (3 children)

Nope. Worker productivity has increased many fold over the last 50 years, meaning each person can produce many times more goods.

Wages have been stagnant and cost of living is through the roof, despite all of this increased efficiency, productivity, fewer workers and much cheaper operating costs.

We're fucked lol

[–] [email protected] 23 points 9 months ago (1 children)

But the number, and wealth, of billionaires is way up!

[–] [email protected] 18 points 9 months ago

"For a beautiful moment in history we created a lot of value for shareholders"

[–] [email protected] 6 points 9 months ago (4 children)

Genuine question. Why hasn't free market forced the prices to drop? If company X makes Y twice as cheaply, it could drop its prices like 20% and having way more customers and way higher profits. Why hasn't this ever happened?

[–] [email protected] 13 points 9 months ago (1 children)

Good question. I personally think it's because of conglomerates and large companies. Nestle has so many brands that it'd be a full time job to avoid their products. They are unfathomably huge, and so are many other food companies. They know how to play ball with each other, people have to eat, and they will pay anything.

Additionally supermarket chains likely play into it, same concept. Walmarts, targets etc killed off many small business and local grocery stores, they can also charge whatever they want. In fact the dollar store would go to tiny towns, compete and murder the local grocery with low prices, and monopolize the towns food needs with processed crap, these are called food deserts.

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[–] [email protected] 2 points 9 months ago* (last edited 3 weeks ago)

To some degree barrier of entry. Let's say I want to create a smartphone. I know it's possible to do it cheaper, without selling customer data or with special features.

You would need crazy amounts of start captial to even enter the market and the current leaders would make your entry as miserable as they could with huge sales and temporary minor pro consumer moves.

If you could get the captial you would probably fail there or cave and accept some kind of deal where you become rich and your company gets ingested and dissolved by current market leaders.

[–] [email protected] 2 points 9 months ago

Well it has but it isnt going to be commented on. My house was built in 1899 and we have a shortage of closet space remember once getting annoyed and wondering out loud "did people just have less clothing at one point". I said that as a man who quite literally did an engineering internship with a textile machine company. Of course clothing has gotten a lot cheaper.

Now cost disease is hitting us all where it hurts so of course it is the thing we all comment on.

But hey we can't afford a degree, a doctor, a place to live, or to go to a restaurant anymore but on the plus side you can buy anything mass produced for very little.

[–] [email protected] 2 points 9 months ago (1 children)

I hope UAW gets and starts the 4 day workweek trend. I doubt employers will suddenly start paying decent wages so that might be the best we get.

[–] [email protected] 2 points 9 months ago

I hope they lead a general strike in 2028

[–] [email protected] 64 points 9 months ago

Are you discovering capitalism now?

[–] [email protected] 59 points 9 months ago* (last edited 9 months ago)

Son as we finish swimming!

As soon as we finish swimming...

[–] [email protected] 56 points 9 months ago (4 children)

Your first mistake was thinking large companies care about customers - you’re just an obstacle to your wallet

[–] [email protected] 9 points 9 months ago

The most amount of your money possible should spend the least amount of time possible in your bank account. In fact, you’re probably a terrorist if you don’t simply sign over your entire monthly income to BigCorp, you terrorist.

[–] [email protected] 9 points 9 months ago

Workers are just obstacles to their labour

[–] [email protected] 6 points 9 months ago

Just like paying decent wages is just seen as a loss of money for them.

[–] [email protected] 2 points 9 months ago

My father once tried to tell me that capitalism was fundamentally about making people happy. Because, see, the whole point is bringing to market a product that people want to give you their money for. That's the whole point, you see. The people wanting things. The money is just a by-product, you probably shouldn't pay too much attention to it. It's not like another word for money is "capital" or anything.

What a riot.

[–] [email protected] 45 points 9 months ago* (last edited 9 months ago) (1 children)

Otherwise this will mean that they are doing this just to increase their profit margins and please their shareholders and don't care about their customers or workforce.

Oh my sweet summer child... that's exactly what it means. Always has.

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[–] [email protected] 37 points 9 months ago (1 children)

Yeah economics is about "how do I maximize profit and never reduce prices." Then they just lie about how supply and demand works or how productivity increases and mergers will help prices go down. Prices only ever go up.

NO COMPANY WILL WILLINGLY GIVE UP MORE PROFIT.

[–] [email protected] 14 points 9 months ago (1 children)

The way supply and demand works is the thing that forces companies to give up profit is a competing company willing to take a little less profit (and hence undercut prices).

It doesn’t work if there’s no competition, or insufficient competition.

[–] [email protected] 8 points 9 months ago (2 children)

So in other words, it doesnt work in the real world

[–] [email protected] 6 points 9 months ago (2 children)

It does work in the real world. That’s why food doesn’t cost a billion dollars a meal.

That being said, the forced business closures we had a couple years ago definitely consolidated markets, reducing competition and driving prices way up.

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[–] [email protected] 2 points 9 months ago (2 children)

exactly

economics is a dumb field, we should get rid of it (and the economy)

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[–] [email protected] 25 points 9 months ago (2 children)

If you were to follow Adam Smith to the letter, it will Eventually® get cheaper: lower production cost leads to increased supply, and unemployment leads to decreased demand. Both forcing the prices down.

In practice, though, there are at least two problems with this reasoning:

  • The hand of the market has Parkinson's. Sure, it might "eventually" put things in place, but before that the hand will keep shaking things up and down, while people still need to live.
  • Smithsonian supply and demand assumes an infinitely competitive free market. There's none - and specially not in this current situation, where you got oligopolies everywhere, and plenty services+goods have huge natural costs of entry.

In those situations I'd simply ditch Smith and look at Marx instead.

[–] [email protected] 18 points 9 months ago* (last edited 9 months ago)

This. The invisible hand doesn't work if monopolists buy control of all the fingers.

I think Smith would probably prefer playing ball with Marx over whatever this hellscape is

[–] [email protected] 3 points 9 months ago (2 children)

Got any book recommendations on this topic?

[–] [email protected] 2 points 9 months ago

Capital. It's the biggest and best for a reason.

If that's too daunting, read Wage Labor and Capital as well as Value, Price, and Profit. Both combined are far shorter than 1 volume of Capital.

[–] [email protected] 2 points 9 months ago

Cowbee already answered it. But really - I recommend going straight to the sources: The Wealth of Nations and The Capital. Preferably in annotated versions, specially for Marx as it's a bit harder to digest (sadly I can't recommend a specific one as I didn't read either book in English).

[–] [email protected] 23 points 9 months ago (1 children)

Otherwise this will mean that they are doing this just to increase their profit margins and please their shareholders and don't care about their customers or workforce.

All for profit business moves are always in the direction of lowering the cost to maximise the profit.

There have been instances where shareholders have removed executive officers because they wanted to go down that path but that goes against the priorities of the shareholders.

[–] [email protected] 6 points 9 months ago

If I recall correctly, the shareholders also can and will sue you if you make a decision that earns them less money than if you had done something more profitable for them. So the companies have a legal incentive to only serve their shareholders.

[–] [email protected] 19 points 9 months ago* (last edited 9 months ago)

It just means billionaires can do another few victory laps around the Earth in their private jets while the world burns. We need to eliminate them and institute universal basic income

[–] [email protected] 19 points 9 months ago

In the pockets of investors?

[–] [email protected] 17 points 9 months ago (1 children)

The core thing the rich left out when they invented "Trickle Down Economics" was that it's not money that trickles down onto us.

Same goes for efficiency or productivity improvements. Those haven't done to the US workers since Nixon, and definitely not since Regan.

[–] [email protected] 22 points 9 months ago* (last edited 9 months ago) (3 children)

Trickle down wasn't invented in the 1980s. It was a rebranding of what was previously pilloried as horse and sparrow economics in that if you let horses gorge on oats, some undigested oat will pass through their systems and be deposited in the fields for the sparrows to eat.

Gee, I wonder why they rebranded.

[–] [email protected] 8 points 9 months ago

Human centipede economics.

[–] [email protected] 4 points 9 months ago

Far more accurate lol. Nothing's trickling down except some half-digested oats covered in horseshit

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[–] [email protected] 15 points 9 months ago* (last edited 9 months ago) (1 children)

Why the hell would they do that when their customers are already willing to pay the current prices?

Suppose you make widgets at a cost of $50 and sell them online for $100 each. Through the use of AI, you were able to fire half of your employees and now the cost of producing a widget is down to $30, a net saving of $20.

Why would you choose to lower the price of the widget from $100 to $80 instead of continuing to sell the widget at $100 and pocketing the $20 for yourself? What incentive have you got to reduce your price?

It may sound cold and cruel, because it is, but this is just how capitalism works. It is not in their economic interest to reduce their prices.

[–] [email protected] 2 points 9 months ago

Exactly. And the same thing will happen when fusion energy is figured out: energy prices remain the same, almost 100% of revenue gets pocketed as profit. "Limitless free energy" my ass.

[–] [email protected] 12 points 9 months ago* (last edited 9 months ago) (1 children)

Often companies don't charge based on productions costs, they charge based on what they can get people to pay. If every competitor in an industry agrees to do the same there's no incentive to lower selling price. The company doesn't have to worry about customers leaving for a meaningfully cheaper competitor because everyone is charging as much as consumers will bear. Without that "best/cheapest" outside pressure any efficiency increases can be put into lowering costs like labor and thus increasing profits. It's why prices don't drop and suddenly there's a lot more people within a few missed paychecks of serious trouble (the economy being roughly tuned to keep the most people possible paying as much as they can sustain).

Disclaimer: this is just my two cents, with some research but admittedly not a lot and no formal economics education. Feel free to tell me if I'm wrong.

[–] [email protected] 3 points 9 months ago

You're not wrong. It's only criminal on paper and when it makes the news, but the fines to stop and prevent it are minimal.

[–] [email protected] 9 points 9 months ago

I never heard of any company promising price cuts due to AI and layoffs. Even if they had, I wouldn't have believed it one bit.

[–] [email protected] 9 points 9 months ago

Those extortionate licensing fees are not going to pay themselves!

[–] [email protected] 4 points 9 months ago

They are doing this just to increase their profit margins and please their shareholders and don’t care about their customers or workforce

[–] [email protected] 3 points 9 months ago

When a company saves money they almost never pass it on to the customer. Just a sad reality.

[–] [email protected] 2 points 9 months ago* (last edited 9 months ago) (2 children)

No no, the value proposition is not that it's cheaper. It's more consistent. 24/7, same output, no sick days or vacation, no own opinion... It does what you tell it, to the T.

The cost is the same and paid by the companies to the ai suppliers. Same as with the medication that cured hepatitis. The pharmaceutical company calculated the total cost of care for a terminal hepC patiënt, and then set the price of the medication to 80% of that.. it's cheaper so we're the good guys.

Corporations will charge what the market will bare.

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