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this post was submitted on 26 Nov 2023
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Asklemmy
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Huggies went up in price, but their cost of manufacturing actually went down.
It's got nothing to do with profit margins, it's just pure greed. Also, the law requires that publicly traded companies be greedy.
The law doesn't actually state you need screw over your customers and maximize profit. It says that executives have a fiduciary duty, which means they must act in the best interest of the shareholder, not themselves.
That does not mean they have to suck out every single dollar of profit. Executives have some leeway in this and can very easily explain that napkins lead to happier customers and longer term retention which means long term profits.
It's purely a short-term, wall street driven, behavior also driven by executive pay being also based in stock so they're incentivized to drive up the price over the next quarter so they can cash out.
Yeah sure, but then you could also say the same about a private business. The CEO works for the business owner, whether the owner is private or public stockholders.
But the reality is that publicly traded companies end up being far more greedy and profit driven than private businesses. In particular, the greedy private businesses tend to taget an IPO, while the more conscientious ones remain private.