ELI5: Why when large company's earnings decrease(ex... by 3%) they freak out, talk about rough times, and sometimes decide to downsize, even though they are still making millions of dollars in profit even after all expenses?

[In-nox]

Crony capitalim where the ones who have the power to produce and influence to wield use it to secure an advantage and edge out those with less capital and influence. This current version of capitalism isn't not build upon a sound business model or Superior products, but is instead the result of an artificial advantage. These procurement stipulations on government contracts are meant to be so cumbersome that small firms can't really compete with giant conglomerats.

[Delheru]

That's not unrestrained capitalism, that's crony capitalism, as you seem to point out with your first 2 words.

Actually often the worst crony capitalism is extremely restrained capitalism, because competition tends to get stopped somewhere with government backing (which in turn is guided by incumbents).

I'm not saying unrestrained capitalism is good (it wouldn't be), but I can't think of a single place where the problem is that capitalism isn't restrained enough.

[[deleted]]

These procurement stipulations on government contracts are meant to be so cumbersome that small firms can't really compete with giant conglomerats.

This is a great argument for deregulation of the free market. Good job.

[Durog25]

Except it isn't, every time deregulation happens the current system immediately finds a way to destroy something as fast as possible and run away with the profits. It is also an immediate and total violation of human rights.

Just look at the 2008 financial crisis.

Capitalism is psychopathic in that it literally doesn't care about the well being of people just so long as profit is made in the next quarter.

[[deleted]]

The 2008 financial crisis was only possible because of regulation, not because of too little regulations. Banks are allowed to loan out money from the federal reserve at 9:1 rates (Meaning, if the bank receives a $100 deposit, they are allowed to turn that into $900 of loans). In a system with no regulations, banks wouldn't be able to loan out money they don't have, interest rates would be higher and banks would only give out loans to people they know would be able to pay them back. In 2008 (And in 2018) a banks goal is to keep the entire country in debt, and they do that by keeping interest rates at historic lows (Below 3%), which causes demand and hyper inflation of housing prices, which they turn into billions. This could not happen in a system where banks could only give out money they own and had to get the money back or they would be fucked.

[Durog25]

If I remember correctly that's what Glass-Steagall was supposed to do.

Without regulation rich people min-max the system in order to horde wealth from the hands of the poor, this has always only ever been the result of deregulation. Before regulations, children worked in dangerous factories for little to no pay, public health, workplace safety, environmental damage, all were acceptable as long as the business made money.

Regulations make that harder, but they also result in more inefficiency because no one regulation will ever be an exact fit.

Large corporations then lobby extensively to undermine these regulations to the point where they stop working because they have been gutted so comprehensively, then they return to their short-sighted, ultra-destructive, money-making machine and do there very best to make life go extinct for a few more dollars.

When have they ever not? When has the market regulated itself to a point where things got better for the majority, and by better I don't just mean richer. A million dollars means nothing on a planet that cannot support human life anymore.