Dumbest WSJ article I've read in a long time

slowbird said:

In reply to 93gsxturbo :

The point is, they put earnings for shareholders and salaries for CEOs far above paying their employees a living wage, giving them decent benefits, or giving them the appropriate amounts of break and lunch periods for their given workload. See also: the way Amazon treats their warehouse workers.

(except for the CEO part) That is essentially the definition of a publicly held company.  One reason why I love working for a privately held one.

This thread reminds me of one I was thinking of starting:  How do I calculate how much money I have saved by NEVER buying a new car.  I think its a LOT.

93gsxturbo said:

STM317 said:

businesses adopting the idea that their primary duty was to maximize earnings for shareholders

This statement always chaps my ass - of course that's the goal of business!  If you want in on some of the action, become a shareholder.  Otherwise feel free to sit on the sidelines and complain about being left behind.  

Thanks for the concern. I am a shareholder. And although my 401(k) and IRA represent a relatively small scale with limited influence compared to the institutional share holders I was referring to, I will continue to invest as that's the best option currently available to me to better the life of my family. That doesn't mean that it's always been this way, or that it should necessarily continue moving forward. Believe it or not, there was a time in this country when many companies focused on fulfilling the needs of consumers, having a positive impact on society, and creating (but not necessarily maximizing) profit for their shareholders was often a byproduct of that focus. And investors were content to receive healthy profits from mature companies over long periods of time rather than penalizing companies for doing anything but maximizing profits every single quarter. These days a company's stock can drop if they simply don't meet analyst expectations, even while posting strong profits on healthy revenue.

This began to change in the 1970s, as businesses began to adopt Friedman's idea that it should be profits over everything. As a result, CEO pay began to rise. Take a guess when the buying power of the Average American peaked, and outsourcing really gained momentum. Coincidence?

Recently, even major CEOs have suggested that prioritizing shareholder value over everything is not healthy or sustainable.

So, never hear the names:  Getty, Rockefeller, Carnegie.....?

Businesses have always been as brutal as possible (legal).

Relating to the topic at hand.  Why are people buying things that cannot afford?  Business wants them to.  They create, and pay a lot for, carefully manipulative media to push that.  Some aware / smart people can see through it (many on this board), but most don't.

Another question:  At what point is it not OK to take advantage of stupid (or unaware, or manipulated) people?

In reply to aircooled :

That's why unions started forming, and laws to protect the worker started to be enacted. Then some unions took it too far, and public opinion on unions dropped, and now we don't see as many unions, but maybe it's time for them to make a comeback.

Of course, I'm not saying this is the only factor. People do spend too much on stuff they want but don't actually need, me included. But when I priced out my first new car purchase, despite having an ok (not great but ok) job, I could barely afford a Ford Focus and not much else. I don't know anyone in my friend group or my family that could afford a new car nowadays.

aircooled said:

So, never hear the names:  Getty, Rockefeller, Carnegie.....?

Businesses have always been as brutal as possible (legal).

 

Ironically, for the first itme in about a hundred years, the income inequality is now similar to the robber baron's heydays.

And Rockefeller and Carnegie each gave massive amounts of their wealth away for the public good.

STM317 said:

aircooled said:

So, never hear the names:  Getty, Rockefeller, Carnegie.....?

Businesses have always been as brutal as possible (legal).

 

Ironically, the income inequality is now similar to the robber baron's heydays.

And Rockefeller and Carnegie each gave massive amounts of their wealth away for the public good.

Rise of the unions v2.0 is coming.... 

I read that article as well. Hard to really say what the answer is. For those of us with generally solid financial situations, it seems illogical.  But I've been in those situations with a ton of pointless debt. When it seems like your life is going nowhere, that "high" you can get from buying stuff can be intoxicating. So don't discount how many folks out there make "depression purchases". 

Something like 70% of the US economy is driven by consumer spending.  If the average consumer were to suddenly get a brain-wave of logic and started only buying what they could afford, our economy would pretty much collapse and likely take the rest of the world with it.

No idea what to say to this.  I work with people who make insane financial decisions all the time.  Most of the time I just smile and nod, and try to add helpful comments.  

But, I've also made some really stupid decisions over the last 20 years.  I bought a LOT of cars, just no new ones.  I probably used to spend a few thousand dollars every few months on some other heap.  And didn't sell many of them.  One thing I've noticed, since getting married, having kids, and buying fewer crapheaps, my finances have gotten a lot better.  And that's on top of me buying my first ever new car last year.

I will say this about said new car though: In 1990, my parents bought a brand new Oldsmobile Cutlass Ciera.  That was the family car (dad had a half-ton pickup he commuted in and used for chores and towing his fishing boat).  I ran the numbers and found that adjusted for inflation, they paid about as much for that Oldsmobile as I did for my brand new Mazda 3.  Now, compare the two cars- approximately the same power, close to the same weight, and dimensionally within an inch or so in terms of length, width, and height.  And since the Olds was a classic 3 box design whereas the 3 is a modern hatch, the 3 likely has more interior/ cargo room.  

So, I basically bought my mother's Oldsmobile.  

Robbie said:

One new way of looking at the economic classes as defined by some economists is as follows:

Lower class: net worth $0, get paid Friday have spent everything by Thursday night before next paycheck

Middle class: net worth NEGATIVE, have personal loans and home loans and car loans and little savings

Upper class: net worth positive, make money from money they already own

By that perspective, middle class is DEFINED by their desire to spend more than they have. So is it a surprise that middle class spends more than they have on cars too? Nope, no surprise.

This would explain why money comes out of my paycheck when the "1%" get taxed, despite earning less than $25,000 yearly. They must know I'm not wasting it all...

STM317 said:

And Rockefeller and Carnegie each gave massive amounts of their wealth away for the public good.

We're starting to see some of that again that our present generation of rich people have figured out that there's only so much they can spend on themselves. Bill Gates and Warren Buffet, for example, have been bankrolling an effort to stamp out polio.

Also, what's defined as a middle class lifestyle tends to be a moving target. Whoever coined the phrase "keeping up with the Joneses" was aware that the Joneses weren't sitting still either. In the 1950s, a family might have one car, a 1000 square foot home, some kitchen appliances, one TV, and a radio, and generally cooked their own meals. Houses get bigger, people start wanting to own multiple cars, computers, go out to restaraunts more often, now it's just about expected that you'll have an Android phone for everyone in the family. In 2050, the expectation might be having an actual android for everyone in the family.

MadScientistMatt said:

STM317 said:

And Rockefeller and Carnegie each gave massive amounts of their wealth away for the public good.

Also, what's defined as a middle class lifestyle tends to be a moving target. Whoever coined the phrase "keeping up with the Joneses" was aware that the Joneses weren't sitting still either. In the 1950s, a family might have one car, a 1000 square foot home, some kitchen appliances, one TV, and a radio, and generally cooked their own meals. Houses get bigger, people start wanting to own multiple cars, computers, go out to restaraunts more often, now it's just about expected that you'll have an Android phone for everyone in the family. In 2050, the expectation might be having an actual android for everyone in the family.

For a while now, I have maintained the opinion that you can still raise a small family on one current income, just like you could in the 1950s, if you are willing to live like a family in the 1950s.

Somehow, no one is.

volvoclearinghouse said:

So, I basically bought my mother's Oldsmobile.  

Except that your car is nicer in probably every way, has more features, performs better, gives better fuel economy, is safer, and will last longer.

“You deserve” and “zero interest rates “ has stuck a  giant d**k up the a** of this country.

There gonna be a big climax at some point.

If  the concept of  “money” ,  the fruit of your labours , is not worth anything, then nothing is. 

Pete

This article frustrates me to no end. Oooh, he's caught in the circle of debt!-Of a NEW CAR that he CO-OWNED at TWENTY when he still had $9,000 of prior debts. My generation has a hard enough time getting the needed attention on our monetary issues as it is, but anyone will be able to spoke vast holes in this story without fail.

In reply to 93gsxturbo :

The problem isn't the "getting earnings for shareholders" bit- it's maximizing them seemingly at any cost within the short term, or doing them to shore up something like a failing stock price. The latter is why my best friend left Union Pacific at ~24- they had a large round of layoffs and he was ordered to do them as fast as possible to try and keep them from causing trouble.

Back to that Oldsmobile example, at another time here on GRM we pretty much proved that when adjusted for inflation, the price of a new Miata has never increased in their 30 year run.

And while it's a bad idea here, I can totally understand why this guy bought a new car because I was in a similar scenario. When you're in school full time, work part time for nickels and have dozens of things going on, the LAST thing you want is a car you can't trust. I have no doubt he made this bad choice under stress of having to get to work and caught up on homework- like when I got my Subaru because I was working 270 miles away and had 3 days to secure a new reliable car, so I bought new.

Duke said:

MadScientistMatt said:

STM317 said:

And Rockefeller and Carnegie each gave massive amounts of their wealth away for the public good.

Also, what's defined as a middle class lifestyle tends to be a moving target. Whoever coined the phrase "keeping up with the Joneses" was aware that the Joneses weren't sitting still either. In the 1950s, a family might have one car, a 1000 square foot home, some kitchen appliances, one TV, and a radio, and generally cooked their own meals. Houses get bigger, people start wanting to own multiple cars, computers, go out to restaraunts more often, now it's just about expected that you'll have an Android phone for everyone in the family. In 2050, the expectation might be having an actual android for everyone in the family.

For a while now, I have maintained the opinion that you can still raise a small family on one current income, just like you could in the 1950s, if you were willing to live like a family in the 1950s.

Somehow, no one is.

 

Agreed. My girlfriend and I had this conversation recently. She finishes and graduates with her Bachelors in May. Once I get some debt paid off, we could easily live on my salary alone. But I have no desire to do that. 

Saturday we stopped by the record store, spent way too much, then went out for lunch. Sunday went out for dinner again before going to see Nick Offerman's new show, and tomorrow we are going to see Bert Kriescher. 

Duke said:

MadScientistMatt said:

STM317 said:

And Rockefeller and Carnegie each gave massive amounts of their wealth away for the public good.

Also, what's defined as a middle class lifestyle tends to be a moving target. Whoever coined the phrase "keeping up with the Joneses" was aware that the Joneses weren't sitting still either. In the 1950s, a family might have one car, a 1000 square foot home, some kitchen appliances, one TV, and a radio, and generally cooked their own meals. Houses get bigger, people start wanting to own multiple cars, computers, go out to restaraunts more often, now it's just about expected that you'll have an Android phone for everyone in the family. In 2050, the expectation might be having an actual android for everyone in the family.

For a while now, I have maintained the opinion that you can still raise a small family on one current income, just like you could in the 1950s, if you were willing to live like a family in the 1950s.

Somehow, no one is.

 

My wife and I think every once in awhile about adding on or upsizing homes. Then we realize that when our house was built in 1927, it was probably one of the biggest in the neighborhood, and my dad grew up in a house that was only 300 sqft bigger. And he was 1 of 5 kids. 

Yeah, we can deal with it. 

GIRTHQUAKE said:

And while it's a bad idea here, I can totally understand why this guy bought a new car because I was in a similar scenario. When you're in school full time, work part time for nickels and have dozens of things going on, the LAST thing you want is a car you can't trust. I have no doubt he made this bad choice under stress of having to get to work and caught up on homework- like when I got my Subaru because I was working 270 miles away and had 3 days to secure a new reliable car, so I bought new.

A)  What happened to his two previous new cars, which were apparently both less than 6 years old, and that he had negative equity in?

B)  Given his situation, is a $27,000 Accord really The Answer when you could buy a nicely equipped new Cruze, Focus, Corolla, Mazda3, Optima, or Elantra for 2/3 of that amount?  And that's without even considering the whole tier or two of even lower-cost new cars that are below that price range...

In reply to Duke :

Accord is the better panty dropper.  Hate to be rude but that's the gist of that choice.  Don't care if he already had some at the time.

It's always about the status.  Always.

z31maniac said:

My girlfriend and I had this conversation recently. She finishes and graduates with her Bachelors in May. Once I get some debt paid off, we could easily live on my salary alone. But I have no desire to do that. 

I don't blame you.  I'm not saying that anyone should or should not do that.  I just hear constant complaining about how it is impossible to live these days on a single salary.  I disagree - it's just that people in the 1950s didn't have a choice about their standard of living because it was what it was.  The current costs are higher because the current standard of living is higher.  If you chose to accept that 1950s standard, you could still successfully live on a single salary.

We grew up in the '70s with double-digit inflation and double-digit unemployment.

We came of age in the 1990s with double-digit loan rates and the mainstreaming of expensive lifestyles.

Somehow we survived, thrived, and learned to live comfortably within our means.  We have not scrimped and saved every dollar.  We put 2 kids through daycare and college relatively economically.  Our debt load is small and everything we currently owe was entirely self-chosen for purchases made strategically.  We've saved for retirement most of our adult lives and expect to retire at or before 60.

A little common sense and self-control was all it took.  We're not exceptional or even particularly savvy about financial things.

nutherjrfan said:

In reply to Duke :

Accord is the better panty dropper.  Hate to be rude but that's the gist of that choice.  Don't care if he already had some at the time.

It's always about the status.  Always.

Tough titties.  Make the choice and take the consequences.  Don't point fingers at "predatory" sales practices or "today's" economy.

Duke said:

MadScientistMatt said:

STM317 said:

And Rockefeller and Carnegie each gave massive amounts of their wealth away for the public good.

Also, what's defined as a middle class lifestyle tends to be a moving target. Whoever coined the phrase "keeping up with the Joneses" was aware that the Joneses weren't sitting still either. In the 1950s, a family might have one car, a 1000 square foot home, some kitchen appliances, one TV, and a radio, and generally cooked their own meals. Houses get bigger, people start wanting to own multiple cars, computers, go out to restaraunts more often, now it's just about expected that you'll have an Android phone for everyone in the family. In 2050, the expectation might be having an actual android for everyone in the family.

For a while now, I have maintained the opinion that you can still raise a small family on one current income, just like you could in the 1950s, if you are willing to live like a family in the 1950s.

Somehow, no one is.

 

Umm....

We have for the past 3 years. My wife went back to work last month for personal fulfilment. Yes, we have 6 cars in the driveway. All paid fore, none newer than 7 years old and less than 120k. Only 2 with clean titles. 

We're only in debt for the house and a few medical bills now. I bust my balls to provide for my family. We dint do without anything we NEED  but a lot we WANT .

In reply to Dusterbd13-michael :

My hat is off to you, seriously. Judging from social media and what passes for news, you are the exception. 
 

Duke said:

volvoclearinghouse said:

So, I basically bought my mother's Oldsmobile.  

Except that your car is nicer in probably every way, has more features, performs better, gives better fuel economy, is safer, and will last longer.

 

Not really. It was a Mazda 3 so after about the 3rd year it started returning to the ground from which it came, and the Olds will run forever. Poorly, but forever.