Corporate Profits - Are corporations really greedy?

Is corporate greed an inevitable force or a misunderstood economic growth component? In this final session of our four-part series, we unpack the essence of a corporation's role in driving innovation and societal progress. We dissect the symbiotic relationship between profit-making and community investment, challenging the common narrative that equates corporate success with avarice. Our conversation covers the role of R&D, local economic enhancement, and the support systems that underpin modern-day families, all thanks to the engine of corporate contribution.

Should you really be made at corporations for being profitable? Your investment accounts over the last several years have benefited from these profits. So, what is really going on? 

We take to expose the government's ability to raise revenue through taxation when you buy something, you are taxed. When you sell something, you are taxed. Any time money changes hands, you are taxed! Federal and State governments have an inate ability to make tremendous amounts of money through taxation which in the end cripples your ability to make money. So it begs the question, who is more greedy....corporations or government?! Stay tuned. We'll answer this and more! 

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Transcript

Speaker 1: 0:08

Welcome to Ditch the Suitz podcast, where we share insights nobody in the financial services industry wants you to know about. We're here to help you get the most from your money and life, so buckle up and welcome to Ditch the Suitz. Well, hey folks, welcome back to Ditch the Suitz. Steve Campbell and Travis Moss here with our last episode in the series where we've been talking about all things corporate profits and the so-called greedy corporations. We've been laying the groundwork really leading up to the culmination of this last episode to bring it home to help answer the questions Are corporations really greedy, travis? You've done a masterful job.

Speaker 1: 0:41

In the last episode we had a whole bunch of numbers and figures and I was thinking might be a lot to digest if you're just driving around the car. I want to re-encourage you that you can always go to YouTube and watch. Travis and I have in this conversation. Drop comments below. Let us know what you're taking away from this episode. You can head over to our YouTube channel at NQR Media. That's NQR Media. But again, thanks for being our guest. We hope that this information has been helpful. So, as we bring this home asking the big question are corporations really greedy Travis? Where do we want to start?

Speaker 2: 1:13

We want to start with the purpose of a corporation in the first place. A corporation is a business and a business's priority is to make money. If you don't want to make money as a business, then you have to be the sole owner of the business and you have to take the risk yourself. If you want other people to invest and you want great companies and you want companies that invent things that change the world and make the world a better place, then they have to make money. They just absolutely 100% have to have profit and it has to be a healthy profit. They're not the government. They can't tax you when they don't make enough money. If they have a bad year, they can't print money. They're not a nonprofit. They can't go ask for donations. So a corporation's job is to make money and it makes money through innovation. Right, corporation. Most of the inventions that we have, most of the things that make our life good today, are because of corporations. You take the corporations away or you take the incentive for the corporations away. You don't have iPhones, you don't have internet, you don't have cars, you don't have electricity. You don't have the things that you have and you could say well, you know, even if other people invented that stuff, it's the corporations that try to monetize it. They want to figure out how to make money on the ideas. If you can't make money on an idea, it's just an idea Right, and it will probably die in the pile of ideas for everybody else. There's plenty of people and plenty of cultures and plenty of places around the world that don't believe in your idea and therefore they don't need to live the life the way that you live it. It's the corporations that bring those ideas into reality Because somebody's willing to say I think I can change the world with this idea, and they put themselves in their capital at risk. Yeah, and I think we make investments the capital part. We make investments into things.

Speaker 2: 3:13

Corporations make massive investments and R&D, research and development and community development and a lot of times, if a big corporation goes in, there's a lot of trucking. They may even develop the roads and the infrastructure, the utilities around you. Massive amounts of investment. Where does investment go? People are like yeah, you know those greedy corporations, you know they're just building new plants. Well, when they build a new plant, what do they do? They hire construction workers. Your local unions are all getting hired to do work. They're buying supplies from places. They're now on your grid, using electricity, being a big payer for your local utility, which helps them scale and become more efficient. I mean there's all kinds of benefits to the investments that corporations make.

Speaker 2: 4:05

And then you have employees. You know they make investments in employees. The good corporations do anyway. And what happens when a corporation invests in an employee? Somebody has a better life, you know. You could say well, you know corporations. They're not loyal to employees anymore. Well, you know that's a two-way street.

Speaker 2: 4:27

Corporations, their goal is to make money, not necessarily to give somebody a career. Now some corporations will say you know, I want to give you a career because that's part of our value proposition to attracting employees. Right, but that's a different issue. They ultimately, when a corporation pays somebody, is putting money back into the community. And if they employ 2,000 people in your community, that's 2,000 families that they're feeding. Whether or not they're feeding them well doesn't matter. They're feeding 2,000 families. So let's start there and understand that in order for them to feed them better, they have to make more money. Now we talked about corruption, right? So there's certainly there can be corporations that abuse employees or abuse those communities, but those should be dealt with individually and those shouldn't be categorically lumped in with everybody else, right? In fact, most of those organizations that do that, there's a short life for them anyway, you know. They're normally on the backside of their life cycle. But we shouldn't vilify everybody or every corporation, because there's some corporations that take advantage of people.

Speaker 1: 5:36

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Speaker 1: 6:19

Well, I'm glad that you raised that point, because that's exactly what I was thinking about is just removing this idea of not using a broad brush to say things like.

Speaker 1: 6:27

All companies, all corporations, are greedy because of record profits, and I forget and if I go back to why this conversation around current events is that I was trying to tie the correlation to when you go to the grocery store as a consumer, your prices are so high because there are greedy corporations that are only concerned about their profits, which are driving the cost of your goods up, that you have to spend as a consumer, and what we've been trying to show you is man, there's a whole lot of baked into that between taxes what really causes inflation, and I think what you're trying to do is show that there is a lot of personal benefit to you as a person when there are healthy, fiscally responsible corporations, and you've kind of alluded to some of that, and so, whether you want to continue to talk more about how we personally fulfill that or just continue the dialogue, I think this is helpful for all of us to think about.

Speaker 1: 7:16

Yeah, we all do. Advances, technology advances in our lives get easier and we're able to have communities that thrive, because businesses are thriving in the communities that we live in.

Speaker 2: 7:28

Well, I mean local infrastructure. Most of that comes from either government or corporation or nonprofits that are doing government and corporation partnerships. And when you think about most of the big things that happen in communities, it's because of corporate dollars, you know, or you know, aside from the government stuff, it's going to be because of corporations. We're from Bington, new York, where the revitalization of the downtown came from the state university coming in and cleaning up blocks and blocks and blocks of business businesses that were dilapidated or not businesses, but buildings that were dilapidated where there used to be businesses. They cleaned it up. And then businesses saw that and said, hey, it's cleaned up, now we can go back downtown because it's good. You know, we have the students to use and there to have as customers and whatnot. And all of a sudden the businesses came back down and revitalized the entire downtown. That's businesses. That wasn't. That. Was somebody taking the risk, somebody saying there's an opportunity here, we can go in there, we can take advantage of this, but we'll risk our money and our reputation and our and a lot of times you know other things like relationships and stuff to go down there and build a business that will actually bring, whether it was their intent or not, but it will revitalize the community. So you need businesses for that. You can't just rely on the state alone to do that. It's a partnership Jobs stability.

Speaker 2: 9:03

You know if you don't have a fiscally healthy company you're not going to have jobs ability. We've talked about that at nauseam. But products and services to buy you want to buy stuff. You know inflation is about not having too many dollars chasing too few of goods. So what happens? When there's too many dollars chasing too few of goods, you're like they need to make more. I can't get enough microchips for my vehicle. They need to make more microchips.

Speaker 2: 9:26

If you're not a fiscally healthy company, if you don't have profits, you're not going to be able to expand production. If you can't expand production, guess what? The price is going to keep going up because I can't produce enough to get the price back down. So you know we kind of like we don't understand how all these things go together. You got to have profitable companies for inventions that change the world. If I don't have any money to invest on taking a chance, I'm not going to take a chance. I need to have not just money, I need to have extra money. Think about your household. If your emergency fund is $50,000, you don't spend your emergency fund to go on vacation. You need the $50,000 emergency fund and you need the 10 grand for vacation. You need both, not one or the other.

Speaker 1: 10:12

Hey guys, steve Campbell with Ditch the Suits Want to take one quick moment to make a big ask. If you haven't already, travis and I would love for you to subscribe to this podcast, but if you haven't, also we would love for you to leave a five-star rating and review. Your rating and review will let other podcasters know that the show is worth their time. So let's get right back to the episode, and thanks for listening to Ditch the Suits podcast and I think you've been doing a really nice job. I'm sold right. When you've got healthy, fiscally responsible corporations, we all benefit. So I guess then that begs. The question is then where's the blind spot, where's the downside that maybe we're missing in this entire dialogue? That is, you know, maybe if it's not the corporations and it's not the so-called greed that's being presented because you just laid out how we can all benefit from infrastructure and healthy communities then maybe what is the other side that could be leading or an indicator as to why you know some of these problems exist?

Speaker 2: 11:10

Well, there are complicated problems. Some of them are even complex. Some of them there's not an answer to it and some of it's like we don't understand how big the discussion is. You know, you have economists that come out all the time and they're wrong all the time. And the reason why they're wrong all the time is because this is a huge area of cause and effect and we think everybody acts a certain way because they should do what's rational. But rational is in the eye of the person. Who's saying what rational is right? Like you have a definition of what rational is based on your circumstance, your upbringing, your disposition that might be different from somebody else's, and so we don't realize how not simple this discussion is and we like simple answers. Who's got time to study this stuff? I mean, we do this every day, all day. I have these conversations with clients every day, all day, and yet I still spent extra hours digging into this stuff because I want to make sure that there's something behind it. It's not just like my ideas, you know. It's actually like there's the.

Speaker 2: 12:21

All these numbers came from someplace, but you know we talked about the federal government alone increase the amount of money that they are getting from people by 26.5%, that's $1.3 trillion more per year since 2019. States like New York have increased their tax collection significantly since 2019, pretty much in lockstep there and the reason is because taxes are a percentage right, so it makes sense. In fact, think about how the tax brackets work. The more people who are making more money means more people who are actually paying income taxes, because a large percentage of people don't pay income taxes. But if we can get them right over a threshold, all of a sudden they jump into major tax situations. And one thing that we could do someday, we could do a discussion on the welfare gap, and that's this idea that once you have a certain amount of money, you no longer qualify for welfare, but you lose tens of thousands of dollars of economic benefits. So there's this incentive from getting under. But what happens with more money and more people making more money is it changes a ton of government obligations In.

Speaker 2: 13:33

Excuse all the numbers, and you've got to understand how all these things. Well, you can't even understand how they all work. It's too complicated, but you've got to understand that things are going to, in general, go proportionately more GDP, more tax dollars. Every dollar that changes hands, that makes a profit is taxed. Sometimes it's taxed multiple times. You pay a consumption tax, that's a sales tax. Sometimes you pay a special use tax. A special use tax is like on alcohol or on gasoline.

Speaker 2: 14:12

People are upset with how expensive gasoline is. Has your state come out and said if it's one of the? I don't know if they all do this, but a lot of them charge gas tax. That's how they pave the road. Has your state come out and said you know what? We're not going to tax you on gas anymore. To help you get the price down, we'll give you a tax holiday. No, and it's like a percentage, I think, of the overall expense. It's not like, okay, we were making 10 cents a gallon, we're still making 10 cents a gallon. And think of this conundrum If you have more electric cars using less gas, how is the state going to replace the gas tax? You're still paying for electricity and all the other expenses. Now, there's going to be a cost that's not. The state's not making up in those gas taxes. They're talking about creating taxes for miles. Now, right, so you know.

Speaker 2: 15:00

You start to look at all the different ways that taxes are collected and you realize every dollar you spend you're paying taxes on. Sometimes you pay property tax, so get this. You got taxed when you made the money. You got taxed when you spent the money. Sometimes you pay an extra tax and then some of the stuff that you buy you actually have to pay taxes on for owning it. And then, if you buy enough stuff before you die, you may actually pay taxes again for having died with too much stuff. Or your heirs might pay taxes. In the state of Pennsylvania, for example, your heirs will pay taxes on the things that they inherit from you through an inheritance tax. That's you dying with stuff. Pennsylvania gets cut of it. Well, what other kind of taxes? Fees, registration charges. In New York years ago they came out with you had to get new license plates, so everybody had to get a new license plate. So it wasn't much money I don't remember what it was 40 bucks or whatever but everybody had to pay 40 bucks. What is that? That's a tax right.

Speaker 1: 16:07

What an encouraging segment of this. Well, and I think that's okay, so you're starting to show we talked about these corporations they're actually benefiting you when they're not corrupt, right, when they're actually doing what they set out to do, which was to create products that can change the world services, increase profit margins, employ more people, increase benefits, give more incomes. Those are all good things, but now we're also talking about man. We're getting taxed everywhere, and in whether it's federal, whether it's state, there is tax revenue that's being raised all the time. So, to help a listener, how do they start to make sense of this, then, is to really maybe where the conversation should be directed.

Speaker 2: 16:50

Well, we need to think about why people are getting mad at corporations, right, or why people are vilifying corporations. I think it's easy to vilify a corporation, right, because they're these big giant things and they don't control policy or anything like that, right, and they're trying to sell you stuff, so they want to be your friends. I mean, most corporations have an image where they're trying to be your friend to get you to buy their stuff. They want you to see how they care so much about the world that you live in. But there's a sense that there's a limited amount of money and so it's like this hoarding thing. It's like these wealthy people are hoarding all the money. These corporations, which are essentially wealthy people, they're all hoarding the money. Yet tax revenues are up 26% since 2019, 26.5% Tax revenues literally come from corporate activity. It comes from stuff happening with the corporations. No corporate activity, no tax revenue. That's the deal. So, at the same time that we're benefiting and having, you know, more tax dollars to do more stuff with, or pay more bills or whatever the heck that they're doing with our tax dollars, we're then turning around saying those horrible corporations they're doing, they're doing us bad. The only reason you have the tax dollars is because of the corporations in the first place, moving the money through the economy. Add a profitable way If there's no profits, there's no income taxes. Right, there wouldn't be jobs, there wouldn't be people, you know, getting paid more if they couldn't make profits. Investment accounts this is what's. This is. This is fun. This is the good news.

Speaker 2: 18:35

The S&P 500, because we talked a lot about them in our, I think, our last episode. The S&P 500, the margins Remember, we're like 9.8, now they're 9.9 or something like that. The S&P 500 itself, though, is up 107% since the start of 2019, by the end of 2023. So if you put your money into the S&P 500, you would be up 107% since 2019. That's why you want corporate profits, because your 401k is going to let you retire someday. You don't have corporate profits, you don't get to retire. You don't have corporate profits. You may not even have a job to retire from. But 107% and the margins didn't change. They didn't go up. I mean, it's an immaterial amount that they went up, but there's extra economic activity, which is really what to drive you to.

Speaker 1: 19:36

Well, I think that's really cool too, because when you're talking about taxes, it's taking something away from you. You're getting less from your purchase power because you've got to pay taxes versus just that. Think about everything we've been through over the last few years and the fact that if you invest in the S&P 500, you've made 107% on your money. That's a huge balancing act and a huge difference from what we were just talking about with the downtrodden conversation around tax. When you buy tax, when you sell tax, when you One seems like a benefit and the other one just seems very detrimental. And so, again, I think, bringing this home, most people may not have ever really considered. Maybe they've been focusing the attention, because they've been told to, on maybe the wrong things or don't have the entire picture. So, as you bring this series home, trav, what are the last talking points we want to leave listeners with?

Speaker 2: 20:33

The stock market. I've heard people say that it's rigged, it's fixed, it's too dangerous, it's too risky. The S&P 500, which a lot of people would identify as a stock market, is up 107%, with an abysmal year in 2022. Absolutely, people still are not back to even from 2020 to. A lot of people still aren't. If you had a mutual phone portfolio, chances are you're not. And you had COVID, where the market dropped like 30%, 40% at one point. There You've got some pretty horrible years in there, or experiences. Really only one bad year in there. It's still up 107% From 2022 through 2023, that two-year period. The S&P 500 is minus 0.5% and it's still up 107% since 2019. Forget about it. That's just absolutely and that's the start of 2019 through 2023. So it gets you off of 2019 too, but that's pretty phenomenal. And so people are sitting there and we still get it all the time Stock markets at an all-time high. It's too risky, it's too dangerous. I need to get out, I need to protect myself. People have been investing for 50 years now. All of a sudden, they're like it's too high, it's too risky, it's too high. I heard the exact same things in 2008. And you say well, how do you know it's too high because it's never been this high. What's the price to value? I have no idea. What's that mean? Well, you want to look at a house and say it's too expensive. You say, well, what would it appraise at? Then you say, do I have enough money to buy it? If it's a good deal? But somewhere around 61, and this is according to Gallup. So Gallup does surveys. Somewhere around 61% of Americans own stocks as of 2023, sometime in 2023 when they did this survey. 61% of Americans. However, in their survey, they did not include people who don't have an investment account but do have a pension through an employer. Do you know what in pensions invest in? Tell us Stocks and bonds and other stuff. But you're going to pretty much every pension fund. You're going to find stocks in it. The stock market it also didn't.

Speaker 2: 23:04

If anyone works for corporations, let's say you work for a corporation. If you work for the corporation, you have the benefit of a stock being profitable and the stock price rising. And the reason why is selling stock in a company the way that corporations raise money, when the primary ways is that they can sell stock in the market so they can get money. Why would they want money, expand their products, expand their manufacturing, pay their people better wages, right, like all of these things that you, as an employee, want the company needs, or the stocks do that for you. That's what's driving. That is the fact that people want to buy and sell shares of the company and then investing in general.

Speaker 2: 23:57

Today, this is not the same as it was 20 years ago, but today, investing well, maybe 30 years ago. Today, investing is widely accessible to everybody. If you got the internet, you can make investments. You get a telephone, you can make investments. If you got a smartphone, you can make investments, and you can do it with minimal to no commissions.

Speaker 2: 24:30

So this idea that it's not accessible. There can be a lack of education, so how do I do it? That certainly can be an issue. There can be a lack of technical capability that can be an issue. But it's not that they can't access it, it's not that they can't go get an index fund or buy an investment. Everybody has access to that.

Speaker 2: 24:51

Now, the people who don't are the ones who don't have enough money to pay the bills in the first place. But that's a completely different discussion for a different day, because, yes, there is poverty out there, but more than 61% of people are actually not in at the poverty level, where they can't afford to invest. The question is do they? We've had many, many, because we do 401ks and stuff like that.

Speaker 2: 25:17

Many, many, many people 30s, 40s don't believe in investing because they don't know what it is. They don't trust the stock market thing. They don't understand why you get a tax deduction for putting your money in an account. They just are unaware and not participating. So again, it comes down to education. If I make the stock market look scary, if I sell you investments that you lose, or if I sell you on the idea that you should buy these investments and you get wiped out, or if I sell you on this idea that the system is rigged or it's broken or it's only for rich people and you can't benefit, then you don't benefit. And then you do end up with the perspective that these greedy corporations they should. Just why are they trying to make so much more profit? Because you don't understand how it actually works.

Speaker 1: 26:02

Well, you and I have touched on it. We're not being insensitive. But even if, let's say, okay, you raised your fist and you said, these greedy corporations, they need to give this money to people that are impoverished. We've talked about personal discipline and the fact that that doesn't mean that, even if people got more money, that they're going to use it on the things they should, or invest or build for the future and buy companies, and so I think part of the challenge with all of this is maybe we're diverting our attention or not even enough information, and so I think you and I whether it's working with staff, whether it is challenging with clients is to challenge things that you hear, but also learn how to ask questions, and there's never been so much information that's out there. But if you don't know how to dig, or dig deep enough, you can be misled down a path that can create a whole series of information, and some of it's just ignorance you didn't know.

Speaker 1: 26:50

Our hope is that, as you listen to this show, we challenge maybe some of your thoughts coming into it. So, again, if you're going to get the most from your money in life, then you need to be able to objectively educate yourself along the way and say is this information that I'm receiving benefiting me, my family, my legacy? If so, how cool would it be if you and I had people reach out to us and say, man, I didn't first understand as we started this series, but now my eyes are open. Then I can understand how fiscally smart responsibilities can benefit me and I understand how tax revenue works and I understand how the stock market works and how I can make money. I mean, that's a win, right? So that's the whole thing we're trying to do.

Speaker 1: 27:25

So we hope that if you got questions, get in touch with Travis and I. We hope that every time you stop by Ditch the Suits, you gain a little bit more information to keep the ball moving in your life. But Travis and I are always excited to have a little bit of your time. So if you made it through this special four-part series talking about current events, we hope that it's giving you some context, make some decisions. And thanks for stopping by Ditch the Suits.