[torpfactory]

I have a theory that one of the core problems is that American businesses just expect to make too much money. Everyone seems to be aiming for 30% gross margin or more, and then working to get monopoly power or regulatory capture in order to achieve that.

When I work with businesses in China they sort of expect cutthroat competition and I'm sure they're not seeing 30% margins. Low a behold stuff is a lot cheaper there, beyond what you'd expect given the labor price difference.

[PartiallyTyped]

> I have a theory that one of the core problems is that American businesses just expect to make too much money.

If you pay attention to certain board meetings, earnings calls, and so on, or if you had the opportunity to work for certain companies, you'll find people talking about the growth of growth, i.e. second order. It seems that the notion of sustainable growth is just gone. Corporations chasing lofty goals in absurdly short timeframes.

[galdosdi]

This excess greed in the shareholding class is really disturbing, because historically very similar behavior has preceded decadence, decline, and fall.

The roman empire's last decades and centuries were marked by huge growth in the latifundium (large plantations owned by a few rich politically connected men) which were powered by cheap slave labor in contrast to the earlier freeholding small farmers who famously formed the backbone of the Roman state by earning their farms in exchange for their ten years or military service, thus achieving the Roman Dream.

Ironically the latifundium, in their quest to maximize growth and profits for the few at all costs, were actually far less productive than the freeholders.

It is disturbing how close an analogy this forms to modern Wall St culture focused on "growth at all costs" and only thinking one quarter ahead at a time

[kjkjadksj]

Its modern investing. People are selling options covered by their shares. Little movements from headlines can turn into big double digit percent gains on a position in a day due to the way options are priced.

[webninja]

The stock of companies with low profit margins out performs the stock of companies with high profit margins. It’s not what you expect but it’s what you see unintuitively when you run the data. The proposed explanation is “Your margin is my opportunity.”

[alephnerd]

Antitrust is different in China.

State-Owned Enterprises and locally backed private conglomerates tend to help put downward price pressures on a lot of goods [0][1] plus there is a system of price ceilings depending on the commodity or product.

Local subsidies and tax breaks also help with minimizing the upfront cost allowing for smaller margins being sustainable over a longer term.

[0] - https://businesslawreview.uchicago.edu/print-archive/chinese...

[1] - https://global.oup.com/academic/product/chinese-antitrust-ex...

[chii]

For a lot of commodity manufacturing stuffs (think screws, etc), it's actually true that china has a lot of internal competition which drives down costs.

[EasyMark]

This is one reason 2/3 of my investments are in steady growth (I hope) realty. I don’t trust the markets more than 1/3 of my investments.