The Grand Illusion
CEO turnovers are up — considerably, at possibly the highest rate in years.
One of the reasons cited by analysts is that while the profits of the “Magnificent Seven” (Microsoft, Apple, Amazon, Alphabet, Nvidia, Meta Platforms, and Tesla) have ballooned in recent years, the returns of other corporations, while perfectly decent, aren’t keeping pace, and the corporate boards of other corporacions are demanding more from their CEOs.
So… everyone wants more profits, and CEO’s who don’t deliver get sacked or are forced out.
At the same time, there are only three ways to increase profits – be more innovative, cut costs, and raise prices. Being more innovative usually means using knowledge and technology to do more with fewer people or less material. Fewer people means more stress on those who remain, and even more stress on those who lose jobs. Less material means less durable products and higher costs to customers over time. Cutting costs means paying people less or paying fewer people and/or paying suppliers less.
In short, pushing for more and more profit screws pretty much everyone (and sometimes even CEOs) except large shareholders.
Or put another way, when is more profit too much? Or is it ever too much?
“… when is more profit too much? Or is it ever too much? …”
Profit is both a catalyst for and a product of efficiency, competition, continual improvement, growth, and progress that make a business successful. However, it is important to invest in the future to avoid negative consequences such as declining employee motivation and morale.
Only two old papers to answer your question (to which you knew the answer even if CEO’s may not).
https://www.businessinsider.com/there-is-such-a-thing-as-too-much-profit-heres-why-2016-6
https://hbr.org/2015/06/too-much-profit-can-doom-your-company
The notion of too much profit is just envy or ideologically motivated class warfare. Too much profit would only be possible if one entity or cabal had so much money that there wasn’t enough left to circulate freely, which is extremely unlikely.
However, the obsession with quarterly reports (remembering that one does still have to have a reasonable proportion of profitable quarters!) to the detriment of long-term profit and a base of stability on which to build or innovate, is not helpful. There are long-term advantages to experienced, capable, and reasonably happy employees, and to reasonably happy customers. But neither is the reason for existence.
When the CEO has a superyacht and the workers are barely getting by, getting injured, or worse, there’s too much profit.
I mean, what’s the point? What’s the point of accumulating a lot of wealth – or for that matter, anything, including knowledge and skills – if you’re not going to do anything with them?
I don’t understand the rich. All that money piled up, and for what? To look at? To buy yourself crap like yachts? Do something productive! You only get one life.
I think that part of the truth is that competitiveness is the biggest motivation for many humans. Money is great because it easily quantifies how big a winner you are.
Having good karma, being a great teacher, lending a helping hand… it’s just too hard for most humans to total up their winnings that way.
Money is addictive. This has been a problem for a long time. Even the bible says the love of money is the root of all evil. Scrooge has been around for a few centuries and still resonates with people.
Because it is addictive and necessary it causes difficult problems. It is like food and people addicted to food. You can’t stop eating and go cold turkey on food. You can’t not make money and survive. Making money starts as a virtuous cycle. The more money you make the easier life is. But at some point it tilts the other way. The act of making money becomes life. Companies push this all the time. If you work a little bit harder, you will get promoted and make even more money. One of the arguments for paying CEOs a lot is that it encourages the rest of the C-Suite to work harder to get that job which then encourages the next level down to work harder and so forth. Addicts pushing other people to be addicts like them.
The answer for too much profit is when it causes poor behavior. The solution is trickier. But may science can come up with Zepbound for wealth.
May be, but does humanity want that – there would be a decrease in innovation as an almost direct cost.
On the other hand, Musk is supposed have Neuralink working to provide him with a way to expand his “band width” so he can “think(?)” faster than at 10 bits per second.
The Unbelievable Slowness of Thinking: The brain is sometimes called the most complex machine in the known universe. But the thoughts that it outputs putter along at a trifling 10 bits per second, the pace of a conversation. By Rachel Nuwer; December 17, 2024; Scientific American.
But then why bother, we can just wire up our vagus nerves and ‘Kennedy” ourselves into oblivion.
The Vagus Nerve’s Mysterious Role in Mental Health Untangled: The healing potential of the brain’s most interconnected nerve intrigues researchers. By Jena Pincott edited by Madhusree Mukerjee, December 17, 2024; Scientific American.