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?
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.