It is common now for services such as cleaning of offices to be contracted out, so that the company does not have to pay benefits to the cleaners. That isn’t the result of automation. The gig economy may be enabled by computers, but it is not caused by computers.
In the short term these strategies make sense, but if they result in an economy where the lower 50% or 60% can’t afford the products of the companies cutting costs, it might not be a good idea in the long run. But few managers have the clout to think long term.
Given the obesity crisis, making packages smaller might be a good thing.
But if stores really cared, they’d make the unit price much bigger and more prominent on shelf labels - and make the shelf labels be closer to the product. I check this stuff, and sometimes it is real tough to figure out which label goes with which box.
I disagree.
If a company knowingly puts out a product that fails to live up to its implied guarantee (if they sell a garden hose that does not transmit water, for instance) or if a company lies about what its product does (that the garden hose cures cancer); that’s fraud. A company has a fiduciary obligation to it’s customers not to commit fraud.
If a company charges a captive consumer group an exorbitant price, for no other reason than that they can; that’s profiteering. A company has a fiduciary responsibility to its customers not to be profiteers.
Fiduciary is about more than money, it’s about trust.
I would argue that a company’s primary fiduciary obligation is to the community in which it operates and that includes it’s customers.
And maybe there is no law specifically barring a company from selling 10 oz of macaroni in the same box they used to sell 12 oz in, but that’s a clear violation of that trust.
mc
IIRC, the Trump Administration is trying to turn back the new rule that financial advisors must act for the benefit of their clients. Or should try to. So you can scratch that one from your list.
Wasn’t it Ms. Samantha Tisdale of North Wales who said “Capitalism is the worst system of economics … except for all the others which have been tried from time to time.”?
Key is to find compromise between free enterprise and having jackbooted statist police control macaroni factories at gunpoint.
Anti-trust legislation; the rise of labor associations unfettered by “right-to-scab” laws; government-controlled central banks; Keynesian fiscal policies; regulations for employee safety, truth in advertising and packaging, and clean environment; high standards of public education; prosecutions for fraud and other malfeasance; and a corporate income tax so that the most successful entrepreneurs would share their success with society’s less fortunate — these are things which made America very prosperous and a beacon to the rest of the world for most of the 20th century. If you want this back, start enforcing laws already on the books. Reject the political party which opposes all regulations and taxes; and passes “right-to-scab” laws, etc.
As recently as the 21st century, Wall Street firms were giving deliberately bad advice to their clients and one top executive (Jamie Dimon?) admitted as much in testimony before Congress. A law was passed only very recently affirming that investment advisers had a duty to offer sound advice.
I worked for a small food manufacturer. When the cost of ingredients went up, we had few choices: lose money on the product, raise the price of the product, reduce the size of the product, or use cheaper (worse) ingredients/packaging. Customers hate getting less product for the money, but they also hate paying more for the same size product (and will buy another company’s product if it’s cheaper). We occasionally would have to discontinue favored products when sales would drop off after raising the price. But we also had to pay rent increases, and give rare raises to the production staff. There was no price-gouging taking place. Customers would call us, yelling about how the jars were now plastic instead of glass, or how the price was higher, and what greedy bastards we were.
You can’t have it both ways. When costs go up, the price has to come up, or the size has to come down.
this has indeed been the case for many years with large corporations.
There are many reasons to contract out cleaning services for large company or even a medium sized on. Since the cleaning services companies market depends on the national regulation(which for many countries requires the benefits payable in such contracting companies, but it is a trend that is wide, it is unlikely “not paying benefits is the key explanation.”
Indeed no, it is decades old. But since I said nothing of the subject, it is a strawman
the gig economy is not automation, and aside from the easy journalist articles, in the economic data it is not even clear it is anything but a mirage that techno journalists repeat from the PR of tech companies.
But again irrelevant to the observation.
Perhaps.
It is an assertion, I might not even disagree with it, but it is not relevant to the observation that the computer enabled automation is driving the large changes in the economic production, and which is structurally giving the better economic rewards to the higher skilled labor.
What you have described is not a fiduciary relationship.
Unfortunately this discussion is likely to continue in this direction of assertions from sentiments not the real laws or economic relationships.
this is unlikely to lead to any useful insights, but may be emotionally satisfying.
I don’t necessarily know that this is true, that we are paying a larger percentage of our wages on less product.
I don’t know of any figures on macaroni, but other staples, like flour, has gone up by 1488% since 1913. Which sounds outrageous, until you consider that average annual income since 1913 has increased by 4010%. (Cite.)
The question is, would you buy a box of macaroni with two noodles in it? If so, then that’s what they will sell. If not, then they either increase the number of noodles, or lose market share to a competitor who does.
Regards,
Shodan
Unless they’re protected by IP law. Or barriers to entry. Or regulatory capture. Or legal shenanigans. Or any other abuse of corporate power.
Theory is cute, but reality is harsh. Capitalism is no less vulnerable to human nature than Communism is, and the idea that somehow is is a pervasive myth that opens the doors to even further abuse by shutting down conversation.
I often wonder if a lot of things we thought were much bigger when we were kids were actually the same size and just seemed larger because we were a lot smaller as an 8 year old.
But generally speaking, for most consumer products, I think that other than regulations for ensuring safety and accurate reporting of the ingredients, the market is sufficient for determining what and companies sell. Companies are certainly able determine the optimal price and portion size to maximize profitability. Just as you are free to explore alternative brands or foods.
Isn’t that the whole point of a great debate? To discover the distance between what is and what should be?
Words and concepts are more than their legal definition. If we want to know what the law says we can just open a book and read. How prosaic. But, if we want to know what the law should say, we talk to each other. We engage. We debate.
Brujaja has asked a philosophical question: What responsibility (if any) does a company owe society? How do we, as society, ensure that this responsibility is met?
Fiduciary is more than just a legal term; it is a concept. And as a society we have to get past the idea that the law is the beginning and end. Just because the law says what a fiduciary relationship in business must include, at a minimum, doesn’t mean that there isn’t a higher responsibility that implies what it should include as well.
Just as there is a social contract between men, there is an economic contract between business and society the goal of which is the betterment of all. Why do we have companies in the first place? It’s for the betterment of us all, not for the betterment of the companies. All too often people follow the literal word of the law and completely ignore the spirit. If we all agree that a company owes fiduciary only to itself then we’ve already lost.
It starts with recognizing that we’re all in this together.
mc
Here’s a picture I found of a box of Kraft Macaroni & Cheese from the 1970’s. The net weight is 7 1/4 oz.
Here’s a contemporary box. The net weight is 7.25 oz.
So it looks like they have not, in fact, reduced the amount of macaroni in the box.
Perhaps brujaja didn’t notice that she bought a different size or variety of box than she had in the past?
What regulations require that a company pay for health insurance or a 401K plan? Companies find it is publicly embarrassing to shortchange a certain part of their workforce, for instance by giving these benefits to regular workers but not to cleaners. If the cleaners are employed by a third party, it is not their problem any more. So benefits are a major reason.
Contracting out does have benefits in many cases - for instance a small company will find it much cheaper to do payroll using a third party rather than do it in house. But cleaning doesn’t have much of an economy of scale.
In fact this kind of thing exacerbates income inequality. And it has nothing to do with automation.
The gig economy is enabled by computers. In the old days if you wanted a logo made, for instance, you’d find a local graphic artist. Now you can get on one of the many gig economy sites and get it done by someone in Russia for almost no money. My wife is a free lance writer, and while she has steady clients for medical encyclopedia articles she more or less grabs a bunch on-line. Then there are Uber and Lyft which increased the number of people doing gig jobs (and taxi driving is not really a gig thing) and was made possible by apps.
Automation is a driving force, of course. But don’t think that being highly skilled is going to save you. My old company opened a design center in India (like most Silicon Valley companies) to reduce the cost of skilled labor. Some people moved from California to India, took a 50% pay cut, and still wound up relatively better off. This would be impossible without the net, of course. And in my career many jobs which would have been called highly skilled have been automated out of existence.
The national regulations. Of course in your American environment you do not have good regulations. But that is not the case in the other countries. (and of course the 401k is a purely american thing). And yet it is widely seen, the outsourcing of these kinds of services even in the countries with such regulations.
So your assertion is at the best too simple.
the specialized management of such a service seems to have scale advantages. This would not be surprising as the specialization in services has many examples of scale advantages otherwise the large service companies would never exist.
certainly it may. And has for the many decades. It is irrelevant to my observation and an odd obsession - straw man you attack.
It is certainly the dream of the Silicon Valley tech companies.
It is not clear this is in fact actually happening as an expansion of “gigs” contre simply the substitution to the Tech Company hyped platforms.
The actual datas available lead us to suspect the Silicon Valley styled and backed hype is very, very far ahead of the reality.
contrary to the automation investments, which we see in the datas.
this is again editorializing against a straw man.
My post said nothing about saving you. Or any predictions of the future. Or anything of an advice.
It was the observation about the current reality in the recent historical changes in the economic structure and the returns to economic activity.
It is not the path to a successful debate to completely misuse words and to invent new meanings.
Maybe. But confusing yourself in misusing words is not usually successful.
The Fiduciary duty is a legal concept.
The Legal concepts are the legal constructs.
You desire to create some new legal obligations around the stakeholders. This is a different concept than the fiduciary duty that has the specific meaning (indeed it really is never used outside of the corporate law and in the related finances.
The misuse of terms will not get you very much clarity in exploring that.
If you mean duty to society, that is a different idea.
usually in fact this is a bad way to learn what law says as the law texts use specific terminologies that the persons not educated in the law tend to misunderstand when reading naively.
Actually the OP seems to be making a badly based complaint about how consumer goods provision based a biaised memory of the good old days versus the modern, a common banal thing.
A discussion of the role of the company in society is probably best to start with the understanding of the forms of the company and the tools of society including the government via the laws and via the oversight and regulations, such as the Consumer Protection regulation that in the 20th century helped very greatly level the playing field for the better company actors againts the companies that cheated, in the markets where the regulations exist and are well enforced.
The lack of such regulations contributes to our especially bad income inequality. Propose them here and you’ll be called a socialist or worse. And you’ll be told that countries with these regulations are suffering.
Now, just like the payroll example I gave, a company with a small office is going to contract out cleaning, since there won’t be enough to keep even one person busy. But that’s not true for large companies with multiple floors or multiple buildings.
16.5 million workers in the US are employed in contingent jobs. Cite. 6 million of these, or 3.8% of workers, are directly in contingent jobs as opposed to working for contracting agencies. Call that small?
Maybe your government doesn’t allow Uber in, but around here the significance of ride sharing services is no hype. When we wanted to get from Connecticut to New York we took Lyft - and got a car in five minutes. When we wanted to go back it took us 30 seconds to get a car.
The sites I mentioned are not hyped by Silicon Valley at all. They just exist. Care to give some specific examples of this hype?
Could you share this data?
Those who claim income inequality and automation is not a big problem often claim that low pay is the result of insufficient skills. The “highly skilled” worker will prosper., But the highly skilled worker is not immune from automation. I’ve seen plenty of people who would be considered highly skilled being unemployed for long periods. I got to look at their resumes.
And?
This is not responsive to what I wrote. I wrote
I call it not relevant. the question is the relative expansion and the difference in the trends.
Unless the taxi services are a majority of this employment this is merely the anectdote as analysis and not a real insight into the question of it the “gig” employment is in fact expanding in a real way different than before.
Compare your ten and twenty year trend line datas on the short-term employment.
Since I have not made any claims of this nature, you are responding to either some strange straw man you have constructed in your head or have not been able to understand what I wrote.
I call it a smaller percentage than it used to be, which everyone who gets their BLS data from BLS instead of journalists already knows.
The idea that a company has an obligation to generate profit for its owners is more a function of what sort of company it is. For-profit companies have that as their goal. Nonprofits and not-for-profits do not.
But there’s no legal or ironclad obligation that everything a company does has to be profitable. Plenty of companies donate money or sponsor things that have dubious returns in terms of PR and advertising relative to the amount of money spent. Or they may choose to source products from certain suppliers, or meeting certain specs because they value that more than sheer profits.
ISTR that the reason that package sizes decrease is less of a desire to hoodwink consumers as it is attempts to keep the price per package relatively constant in the face of increased costs. In other words, say… Folgers has kept the price per can/package relatively constant, while the size has decreased. Apparently people prefer this (as probably indicated by sales) versus keeping the package size constant and varying the price. The package size has definitely decreased- it was a 16 oz package (1 lb) back in the metal can days, but they’re 11.5 oz now.
I do agree that there needs to be better regulation of the way companies treat low wage workers. Not a higher minimum, but at least remove the differences between “part time” and “full time” hourly workers as far as benefits are concerned, so that companies don’t habitually work people 38 hours a week and then claim they’re part time and therefore ineligible for benefits.
The OP, as written, is flat out ill-informed, based on feels rather than easily checked facts. As has already been mentioned, food is far cheaper than it used to be. Seems higher quality with more options available, but I’m not aware of anyone measuring that.
brujaja may still have a valid argument if revised using better researched examples.