Retirement rates are up and new workers in the work force are down. (Look at a demographic pyramid for more details)
Instead of “saving for retirement” by giving money to investors to invest in growth opportunities, now retirees are taking money out of the system to live on. Suddenly the pressure Is no longer on growth for companies, it’s on generating revenue that can be passed on to share holders, ether by stock buy backs or dividends. And there are not nearly enough new young workers coming to the work force and putting away savings in investments to make up the difference.
Capital is getting rarer now, if companies want it, they need to prove they can generate revenue, no more blitz scaling, no more “we’ll figure out how to monetize later”. Suddenly the free services need to make money, enshittification is the inevitable result.
Just to be clear, generally stock buy backs are not to increase revenue or dividends, but to increase the stock price by creating a false scarcity. Potential dividend increases from corporate stock ownership are a shell game as the corporation received the dividend and it is simply added to the cash on hand and book value.
Nearly all growth in stocks is capital based. Every corporation wants to increase revenue and profits because that forms the basis for valuation. Yes, there are young companies who are “forward looking” and trading on factors based on revenue and not net income, but most of the market is based on a net income multiplier (which varies by industry).
As much pressure as the boomers (and soon GenXers) will place on revenue, it will never be enough to support the lifestyle to which they have become accustomed. Rather, they will be selling capital to fund their retirements. This will lead to long term stagnation of stock prices (in the best scenario) or a collapse of market value as retirees try to sell their stock for the next 9 month round-the-world cruise. This is a negative feedback loop, too, as the more people sell, the lower the value of their stock, requiring they sell even more shares to get to a fixed value in cash. I think of this as just one more Fuck You (added to the collapse of public health and public retirement subsidies) the boomers will be handing Millennials and GenZ. Actually, I thought you might catch a break with housing, as the value of housing as they all move into retirement homes would drop with the glut of units coming to market. Alas, corporations have found they can buy those units and rent them back at exorbitant rates, so they’ll be tag teaming the boomers in fucking over the youth of today.
What I meant by stock buy backs as a way of generating revanue was more that it’s a way to take revanue and pass it on the shareholder without using dividends, which are what the corporate tax is on. The way I worded it was really poor.
I don’t think the current generation of retirees are screwing over younger generations maliciously, they just haven’t critically examined the whole economic system and don’t seem to get that the current system is incredibly unsustainable, they just want the money they were promised. They are so insulated from the decision making process that they don’t understand the reality of what they’re demanding.
I’d say it’s not even really their place to be “examining the whole economic system.” Each individual is just a regular Joe who put in their time at a job over their life and would now like to reap the rewards of their effort in retirement. It bothers me when people insult other people simply for being caught up in a systemic issue that’s beyond their control.
The solutions for systemic problems need to be systemic as well. If we as a society don’t want to see housing move over to an exclusively rent-based system then we’ll need to address it through things like zoning changes and other legal reforms. When people oppose those things by voting against them, then we can start to apportion blame around.
Retirement rates are up and new workers in the work force are down. (Look at a demographic pyramid for more details)
Instead of “saving for retirement” by giving money to investors to invest in growth opportunities, now retirees are taking money out of the system to live on. Suddenly the pressure Is no longer on growth for companies, it’s on generating revenue that can be passed on to share holders, ether by stock buy backs or dividends. And there are not nearly enough new young workers coming to the work force and putting away savings in investments to make up the difference.
Capital is getting rarer now, if companies want it, they need to prove they can generate revenue, no more blitz scaling, no more “we’ll figure out how to monetize later”. Suddenly the free services need to make money, enshittification is the inevitable result.
Just to be clear, generally stock buy backs are not to increase revenue or dividends, but to increase the stock price by creating a false scarcity. Potential dividend increases from corporate stock ownership are a shell game as the corporation received the dividend and it is simply added to the cash on hand and book value.
Nearly all growth in stocks is capital based. Every corporation wants to increase revenue and profits because that forms the basis for valuation. Yes, there are young companies who are “forward looking” and trading on factors based on revenue and not net income, but most of the market is based on a net income multiplier (which varies by industry).
As much pressure as the boomers (and soon GenXers) will place on revenue, it will never be enough to support the lifestyle to which they have become accustomed. Rather, they will be selling capital to fund their retirements. This will lead to long term stagnation of stock prices (in the best scenario) or a collapse of market value as retirees try to sell their stock for the next 9 month round-the-world cruise. This is a negative feedback loop, too, as the more people sell, the lower the value of their stock, requiring they sell even more shares to get to a fixed value in cash. I think of this as just one more Fuck You (added to the collapse of public health and public retirement subsidies) the boomers will be handing Millennials and GenZ. Actually, I thought you might catch a break with housing, as the value of housing as they all move into retirement homes would drop with the glut of units coming to market. Alas, corporations have found they can buy those units and rent them back at exorbitant rates, so they’ll be tag teaming the boomers in fucking over the youth of today.
What I meant by stock buy backs as a way of generating revanue was more that it’s a way to take revanue and pass it on the shareholder without using dividends, which are what the corporate tax is on. The way I worded it was really poor.
I don’t think the current generation of retirees are screwing over younger generations maliciously, they just haven’t critically examined the whole economic system and don’t seem to get that the current system is incredibly unsustainable, they just want the money they were promised. They are so insulated from the decision making process that they don’t understand the reality of what they’re demanding.
I’d say it’s not even really their place to be “examining the whole economic system.” Each individual is just a regular Joe who put in their time at a job over their life and would now like to reap the rewards of their effort in retirement. It bothers me when people insult other people simply for being caught up in a systemic issue that’s beyond their control.
The solutions for systemic problems need to be systemic as well. If we as a society don’t want to see housing move over to an exclusively rent-based system then we’ll need to address it through things like zoning changes and other legal reforms. When people oppose those things by voting against them, then we can start to apportion blame around.