In 1990 the top three carmakers in Detroit had a market capitalisation of $36 billion and 1.2m employees.
In 2014 the top three firms in Silicon Valley, with a market capitalisation of over $1 trillion, had only 137,000 employees.
In 2014 the top three firms in Silicon Valley, with a market capitalisation of over $1 trillion, had only 137,000 employees.
360 billion* divided by 1.2 million = 300000 "per employee". Typical salary to 40,000ish-100,00ish range for laborers/engineers. The disparity in those numbers isn't so bad at all.
Conversely, 1 trillion divided by 137000 = 7,299,270 "per employee". Typical salary of engineers in those firms is closer to 100,000 to 200,000, and that's just for the golden child software engineers. And without accounting for massive cost of living differences between 1990 Detroit and modern day SV.
Which wouldn't be so bad if there were some engineers earning close to or more than the "per employee" numbers, but I've never heard of anyone making even close to 7 figures as an engineer at a big firm...
* I think you meant 360 bn, not 36 bn, right?
A lot of people only down vote when they disagree to some content or questions and leave the questions and discussions somewhere else.
"None of this helps the image of big business. Paying tax seems to be unavoidable for individuals but optional for firms. Rules are unbending for citizens, and up for negotiation when it comes to companies. Nor do profits translate into jobs as once they did. In 1990 the top three carmakers in Detroit had a market capitalisation of $36 billion and 1.2m employees. In 2014 the top three firms in Silicon Valley, with a market capitalisation of over $1 trillion, had only 137,000 employees."
Chrysler.
So many jobs now, over work and expect over 40 hours. With no additional compensation. A majority of my contracts are flat rate. I had one role that paid half of my rate for over time.
https://www.google.com/finance?q=NASDAQ%3AAMZN&fstype=ii&ei=...
If I'm wrong and they are still plowing money back into everything and are still throwing off numbers like this (compared to the past) ~ that's simply amazing.
even after thinking through that defense - a 191 P/E is above my understanding. I think their technology and software revenues are seen a hyper growth
http://www.marketwatch.com/story/amazon-will-account-for-mor...
https://www.internetretailer.com/2016/01/29/online-sales-wil...
Which is why the problems associated are much more about the macro-economy than they are about silicon valley. The middle class is being gutted before our very eyes while the elite gobble up more and more of the "created value" through the power of technology.
There’s the matter of supply and demand. Nothing comes out of nowhere. When you create a thing, you demand some resources, and then the next person has to pay more for the same resource. Even for a creative output from yourself, you need food and shelter. (And what a controversy shelter has become, in the San Francisco Bay Area.) In the ideal case, the resources you consume enable you to create more wealth than you cost to the rest of society, and thus society benefits. (Not the now homeless person in San Francisco, though.)
Technology is sort of weird in that consumption actually decreases costs, in some situations. The semiconductor companies are paying exponentially increasing costs for state of the art fabs, and they need to keep the fabs selling at peak capacity to make a profit. Also, software is merely knowledge, with very low reproduction costs, so a small production of software can be consumed on a vast scale across the planet, and facilitate the production of more software, enriching people’s lives. This does not make it easy to reward the creators fairly.
It is sometimes. The profits "earned" by Wall Street are nearly always zero sum, for instance. They are not making other people richer.
edit: it depends really too what we mean by wealth. If we define wealth as being employed, good lord wealth is zero sum. The amount of jobs the modern tech sector has created has been pitiful, with poorer compensation than many unskilled fields. If it means by possessing things, its a mixed blessing.Plenty of free or low cost content, though large staple goods like houses or cars are climbing up there.
Also, Martin Ford mentions something called the lights in the tunnel problem. Imagine a tunnel full of lights that represent the wealth of people. In the modern world, a handful of lights shine intensely bright, while increasingly more are dark, dim, or low-intensity. But the tunnel is dark, because a handful of lights can't generate enough light to make it illuminated. He used it in context of automation, but this is modern wealth creation, and eventually it will reach the point where the ones controlling the wealth have done so by dimming so many people that the tunnel goes dark.
Take into account the increase in wealth of all the customers (as they get more for their money).
On the one hand, we had a few decades of unprecedented sharing of prosperity. Those times have ended.
On the other hand, the unions have become their own sclerotic system of oppression. The greater pity, they do not see it that way.
Especially once all this “deregulation” has finished. Actually, it was not deregulation, but divestiture of public services to the plutocrats. Barely any regulations have been removed.
Now we have basic services supposedly available on a free market, but in practice there are so many requirements that it’s all crony capitalism. And one of the major powers fighting for its share of the bureaucracy and waste is the unions. That’s one reason why it costs so much and takes so long to do anything in an industry controlled by unions.
Unions are nice, but tricky to do right, and currently there are a lot of bad examples.
Whether it’s teacher unions that make sure teachers can’t get promoted for their quality, or construction unions that make sure housing can’t be built without protracted negotiations and significant expense, or transportation unions that make sure automated subways always have an operator, multiple operators in New York, or dockworker unions that oppose new technology on the (correct) assumption that they would lose jobs. Union opposition to technology was one reason why the Port of San Francisco no longer is a major shipping port; rather than some losing their jobs, everybody lost their jobs.
It’s nice if labor can partner with capital. In practice, it’s often more like a squabble for scarce resources. Sometimes you have to accept that a role is no longer necessary, but that idea doesn’t fit the union ideology.
How anyone can argue that working-class people have too much economic power today is just bizarre to me. The decrease in the share of the productivity gains to the working class and the rise in inequality tracks almost exactly with the decrease in unionization.
http://www.epi.org/blog/union-decline-rising-inequality-char...
There is an ideological component. I suspect that unions have a blind spot regarding just how important labor is. Of course there is no value to humans unless humans get their fair share of benefits out of the process. The problem comes when labor for labor’s sake becomes the goal.
Then unions tend to reject labor-saving technologies, which would work if they had a captive market. That might contribute to why unions still have such a large share of government and geographically constrained markets. But a lot of the time, the union temporarily improves the worker’s conditions, and then the capitalist moves the job overseas, or a competitor who is already overseas rises out of obscurity, or the citizens flee to the suburbs; and the next generation has a harder time finding an entry-level position to escape from poverty.
Unions also tend to discount intellectual contribution. In the United States, teachers are constantly under attack regarding their professionalism. Well, maybe we could treat them as professionals more easily if their unions allowed us to treat them as professionals. But no, they are labor, and a long-serving crank has more status than an inspirational young teacher. (Inspirational old teachers also have more status, but inspirational young teachers rarely stick around that long.)
I’m not in principle opposed to unions. I just think in notable cases they have been harmful.
Ford has four times the debt that it has equity. Enterprise value (debt plus equity) is a better measure.
The other thing that gets lost is jobs in the supply chain.
This may not change the end conclusion, but the existing methodology is flawed.