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No, the problem is not really "inflation." (lemmy.whynotdrs.org)

submitted 11 months ago by [email protected] to c/[email protected]

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[–] Aux 10 points 11 months ago

There are many reasons.

For example, there's a legal reason - if the management of a public company doesn't do everything in its power to grow the business, such management is facing criminal charges.

There's a financial reason - if the profit margin is below inflation, then the company is losing money and will go bankrupt over time.

Tax structure is also a reason. The company is not allowed to hoard money, excessive income is heavily penalised by taxes. So the company is forced to reinvest and grow.

There are other reasons as well. Most of them exist to protect the population from financial crime of all sorts. One way or another.

But obscene profits don't mean shit, only profit margin does. If your profit is $1b, but your margin is just 1%, then your business is dying as it doesn't even cover inflation. You're losing money in real terms, even with a spare $1b in your bank account.