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Comment by sco1 | Hacker News Reader

> Corporate earnings are through the roof. They’re doing great. The consumer is hanging in there. The labor market is hanging in there.

Are we though?

Thank god corporate profits are ok...

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> "Corporations are people, my friend. Of course they are. Everything corporations earn ultimately goes to people. Where do you think it goes? Whose pockets? Whose pockets? People's pockets. Human beings, my friend."

- US Presidential candidate, Mitt Romney, 2011

It's strange how they agree with that statement until it comes time for legal culpability or personal responsibility of any kind.

My friend.

No they're completely in accord with what they say. You see, if Dupont has a chemical spill who'll suffer the consequences? The people! Human beings /s

Presumably the concern is that the profits are not fairly distributed among the people in that company - instead corporations are usually a mechanism for wealth accumulation.

Don't corporate profits depend on the 99% (the poors) spending? If the consumers fail, and stop spending, how long before the corporations feel mildly inconvenienced?

Well, actually they have a new model. I call it the "Apple" model. Low volume sales on high value items where you can charge more.

Even NVidia has moved to this model: make your money from selling high-end GPUs for Data Centers and forget the low-profit margin (GeForce) GPUs for gamers/consumers.

The whole economy is moving to that model for many things.

Auto sales, airline ticket prices (notice the expansion of 1st, business, and comfort class seats), etc.

Apple has low volume sales? You might have picked the wrong company for that example. Nvidia in the consumer market might fit, I would agree there.

>Apple has low volume sales?

In comparison. Android phones (in total) outsell iPhones because they are cheaper/more affordable. Sure Macs and iPhones may sell more than an individual non Apple brand, but collectively all together, the non-apple brands outsell Apple.

But it is certainly true that making high quality products doesn't necessarily mean low sales.

Apple has 70% of sales share and 80% of usage share in the US. Your comment is true world-wide, but this thread is about the US.

That’s a strange comparison. What we’re looking at here when we look at Apple is the market leader. They have the plurality of sales. You may as well add up the sales of every car company that isn’t Toyota and declare Toyota being out sold. It might be a true statement, but it doesn’t mean anything.

I'm not sure about the 99%, but I think we've established in the last few years that the economy can keep humming along quite nicely in the short term with only 10% of the population increasing their spending significantly in real terms. I doubt it would work with 0.1%. 1% might be enough.

This.

I'm unsure why people still believe we need the middle class to lead consumption for our economy to be "good"? At this point I feel like there is a lot of evidence out there directly contradicting that belief.

Do I think that's good for the nation? Not at all.

But I think fixing the fact that such an economy is terrible for the nation should be a separate discussion. Obviously we need to do something to support the 90%, and I support doing something in service of that goal. We should do it as soon as possible.

But I think people like Kashkari are thinking only about the economy itself. Which is kind of his job. It's the job of our elected officials to fix issues arising from the inability of the 90% to take advantage of the economy as well as they had historically.

> Don't corporate profits depend on the 99% (the poors) spending? If the consumers fail, and stop spending, how long before the corporations feel mildly inconvenienced?

50% of consumer spending is by the top 10%, and that trend is getting more extreme as wealth concentrates further. Is there a breaking point? Sure. But capital is willing to see how far it can push this before it breaks.

Not this quarter, and this quarter matters for bonuses! What happens with the next quarter is a "then-problem".

Same for politicians, 4/5 years matter, if the world collapses after, it's the next governments problem.

And in financial terms, those are really long periods, at least compared to HFT.

Historically, yeah. In a "k-shape" economy, one where the upper end of the economic scale does most of the buying and selling and the lower end is struggling, that's not true. Gross inequality has serious knock-ons in longer term outcomes around stuff like public safety, average quality of life, probably innovation too but not all consumers factor equally into to the great big rollup of behavior and incentive the Fed tracks.

Could you point to some evidence that we are not? Or at least an anecdote or an opinion on what the issue is or anything at all of substance rather than a provocative question and a bit of snark? What am I supposed to take away from this- I don't even know whether 'we' refers to the consumer or participants in the labor market

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