Hacker News Reader

Comment by nojvek | Hacker News Reader

Post-pandemic, the trend of Corporations raking in higher and higher profits, while needing fewer and fewer staff scares me.

The most obvious and likely outcome is it drastically separates the ultra wealthy from middle class.

With rise of AI and automation, that trend will likely accelerate. The top 10% hold more than 50% of wealth. It's likely in a few decades, the top 1% will hold more than 50% of the wealth. They already hold 28% of wealth.

https://fredblog.stlouisfed.org/2022/10/the-wealthiest-0-1-o...

https://fred.stlouisfed.org/graph/?g=UdXz

View on HN

> Corporations raking in higher and higher profits,

To what is this claim responding? Spotify only turned a profit in 1 of the last 5 quarters. It has never turned an annual profit.

I actually think the story is quite different here. Tech companies had been hiring like drunken sailors leading up to the pandemic. They're only in the last year rationalizing down to levels that are necessary and productive. I have close friends at a few FAANGs and the stories of bureaucracy, bloat, and entitlement are mind blowing. Meta/Facebook made the right move by taking a hatchet to middle management. Let's hope the other big ones do the same before the plague spreads further.

> Meta/Facebook made the right move by taking a hatchet to middle management.

They are all back( layer reduction was never really done in practice). It was just a dog and pony show. Meta is hiring aggressively again and middle management is bloated than ever before.

The pandemic trend at many of these companies was to aggressively overhire. If you look at headcount for many of these companies it’s still significantly above 2020 levels and even often above the old trend lines.

If you hire an unprecedented number of people in short period of time, you’re almost always going to have to cut a significant number of them later. Hiring is hard and even during good times a rapid expansion like we saw during COVID hiring is going to bring in people and departments that don’t work out.

> The most obvious and likely outcome is it drastically separates the ultra wealthy from middle class.

I think this doesn’t obviously follow. Like I said, hiring trends aren’t all that distorted if you average out the recent layoffs with the excessive COVID hiring.

Things are probably just going back to normal. Companies went on hiring binges while unprecedented cash was pumped into the economy and interest rates were historically low. Now that all that is being walked back employment levels are going back to 2019 or a bit before.

How is that different than the IMF pumping cash in 1998 into the Russia economy, only so that private companies take the profits and create oligarchs and various lords, who then emigrated to the French Riviera with women who became widows there, empoverishing the Russian land even further, as shows by the economist Joseph Stieglitz in his book Globalization and its Discontents?

Presumably it’s different because the point of the cash was to support people whose livelihoods were disrupted by the pandemic?

Are you talking about the economic crisis of 1998 in Russia or about the pandemic? Both were emergencies with lives at stake.

They’re not “taking in higher and higher profits” so much as abandoning speculative investments.

isnt this just massive overhiring due to free money during the pandemic? Not sure this is an example of needing fewer and fewer stuff. Spotify is just not profitable except barely like 1 quarter

Spotify isn’t really profitable, and their deals with the labels mean that they probably never will be IMO

Short term profits are almost completely defined by historic investment (and thus, historic staff).

How long term profits will react to those changes is entirely still to be seen. There's nothing telling you profits will get higher and higher, or that they will diminish, or anything else.

Can't wait for the Butlerian Jihad to begin!

Flippancy aside, as others have pointed out, Spotify isn't turning a profit. Other than the tangency of blaming AI for all of our ills, this seems like a non-sequitur.

The poor today are the middle class of 15-20 years ago and the kings of 300 years ago.

It’s not perfect but a rising tide does raise all ships.

Regarding the ultra wealthy, the disparity was actually greater in the past.

All that said, you distribute wealth by reducing taxes on the poor and increasing it on wealthy. Alternatively, shifting the growth differential such that the poor grow faster than the wealthy (hard in a capitalistic economy). That said, I don’t see the wealth disparity as a problem itself; if you have the top 1% gain more wealth but it’s easier to become the top 1% or the top 1% rotates out often it’s probably better

> a rising tide does raise all ships

The thing that has always bothered me about this analogy is that a sea level rise affects all ships uniformly while the magnification of wealth doesn't. It's more like everyone standing on a plain and then the centre deforms upwards, creating a peak of wealth while most people are on the (only slightly higher) foothills.

The poor of today (2023) are the middle class of 2003-2008? That's a hard comparison with the housing crash of 2008, but I don't think the tide has risen enough for that comparison to be accurate.

Yeah I agree, I don't think that's true overall.

Maybe in some very small senses, like many of the poor today have iPhones, which are way more capable than even the middle class phones of mid 00s. But yeah middle class in the mid 00s owned a decent house. Most of those houses haven't changed much since then.

> The poor today are the middle class of 15-20 years ago and the kings of 300 years ago.

I've yet to hear this claim from someone who has been truly poor at least once in their life. When you have to live paycheck to paycheck, and stress out every single month over the uncertainty, not knowing if you'll be able to pay the bills and have enough to eat, let me know if you feel like "the king of 300 years ago".

People are better off in absolute terms, yes. That is incontrovertible.

What matters to the human psyche is relative well-being compared to one's peers. And by those measures, the 'middle class' is demonstrably worse off than 50 years ago.

> People are better off in absolute terms, yes. That is incontrovertible.

That people are better off now than 15–20 years ago (see OP) is absolutely not obvious.

> What matters to the human psyche is relative well-being compared to one's peers.

Uh, see the Neoliberal shift that happened some decades ago. Things got worse. The rich got richer and the rest got poorer.

This isn’t some psyche thing for crying in the sink.

We're on the same side of the argument.

> What matters to the human psyche is relative well-being compared to one's peers

Like it or not, that's how we primates work, yes.

Of course, in aggregate that distribution never changes. If you or your group gets lower status, someone else gets higher. It's a true zero sum game. And half of us will always be below average.

No this is not correct. Half of us will always be below the mean, this much is true, but we can obviously do something about the spread of the distribution.

Depends on if you think people care about their place in the social ranking, which is what I thought of, or if it is their wealth compared to the average, which is maybe your theory.

There is probably some of both, now that I think of it.

I see where you're coming from.

I think that wealth compared to the average is more important because it's so hard to place oneself in the social ranking when much of it is driven by priorities. For example where I live it wouldn't be unusual for an electrician to drive a nicer car than a doctor. On the other hand they might spend less on vacations. But as long as most people are somewhat close to the mean I think they are not so concerned about precisely where in the ranking they are. At least compared to a world where some people live like serfs while the upper middle class can afford drivers, maids and cooks.

Middle class 15-20 years ago was able to buy, or even finance building of their own houses. How many poor you know who do that?

Only thing that has really improved is access to cheap Made in China goods, and perhaps plane tickets. But actual necessities like housing are becoming more and more unaffordable.

> But actual necessities like housing are becoming more and more unaffordable.

That has to do with supply restrictions with NIMBY and environmet regulatory capture by nimbies. Blame your local boomer neighbor not a billionaire.

por que no los dos?

should ask parent commenter that. haha.

"a rising tide raises all ships." What happens to the ships when the proverbial glass runneth over?

Reply on news.ycombinator.com