I don't even get how this works

HSBC announces record profits, and the need to dump 30,000 jobs due to rising costs.

That equates to 10 percent of HSBC’s 296,000 workforce. The bank’s 110,000 staff in Europe and North America will bear the brunt of the job cuts.

“It’s a big number, but it makes sense because HSBC’s costs are fairly high,” Daniel Tabbush, analyst at CLSA in Bangkok, said of the staff cuts. “Hopefully these cuts help make an impact in helping lower the bank’s cost-to-income ratio.”

See, where I come from, “profits” are what happen after you cover all your business expenses. If you’re making profit, it means everything to keep the business running is going gravy and you have extra cash. Admittedly I’ve only ever dealt with small business owners and not multinational corporations, but isn’t that what we all understand to mean “profit”? As in, if your business is profiting, there’s no need to dismantle the work force to cut costs?

But again, the “job creators” really do look solely at the bottom line. If 30,000 workers can yield a $5mil profit, but 20,000 can yield a $5.5mil profit, why keep the extras? Not like those few thousand workers need incomes or anything.

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20 responses to “I don't even get how this works

  1. http://upload.wikimedia.org/wikipedia/commons/a/a7/Anti-capitalism_color.jpg Thats the model of corporate capitalism. Grow Grow Grow, grab that market share. 296,000 families are worried about their livelihoods so the CEO of a bank can post record profits and earn himself and his associates big fat bonus checks. Do you think they even stop to consider the cost in human terms? It doesn’t even cross their minds.

  2. Ultimatley a bank works for the people who put their money in to invest or save. By making more money, the people who have accounts with HSBC see greater returns. This is the job of the board. If they are able to cut jobs and still operate, then you have to ask? were these jobs necessary? For example: if you ran a bakery and it only took 2 people to make the orders, but you’re paying 5 people, wouldn’t you ask why you were paying those extra 3? And if you had people above you, wouldn’t you be worried that they might be pissed that your wasting their money by keeping those people on? You’d lose your job. And who’s job is more important to you, yours or theirs? Honestly though, are you more likely put your money in a bank that grew your money fast or one that grew it slowly if not at all? The answer is obvious. Did anyone here care about the people losing their jobs due to profit motives when they bought their Nike’s, Apple’s, Honda’s, just about anything from Wal-Mart? …Didn’t think so.

  3. Ultimatley a bank works for the people who put their money in to invest or save. By making more money, the people who have accounts with HSBC see greater returns. This is the job of the board. If they are able to cut jobs and still operate, then you have to ask? were these jobs necessary? For example: if you ran a bakery and it only took 2 people to make the orders, but you’re paying 5 people, wouldn’t you ask why you were paying those extra 3? And if you had people above you, wouldn’t you be worried that they might be pissed that your wasting their money by keeping those people on? You’d lose your job. And who’s job is more important to you, yours or theirs? Honestly though, are you more likely put your money in a bank that grew your money fast or one that grew it slowly if not at all? The answer is obvious. Did anyone here care about the people losing their jobs due to profit motives when they bought their Nike’s, Apple’s, Honda’s, just about anything from Wal-Mart? …Didn’t think so.

  4. I love market logic. Efficiency, bottom-line. When you get your pink slip, I’m sure you’ll comfort yourself with the knowledge that things are running smoother on their end. You can tell your wife not to worry, because someone, somewhere is getting a cheaper product. Honestly, I can’t argue with market logic. It makes sense if you detach yourself enough. Survival of the fittest and the richest. But something in me is repulsed by the commodification of labor and people.

  5. I love market logic. Efficiency, bottom-line. When you get your pink slip, I’m sure you’ll comfort yourself with the knowledge that things are running smoother on their end. You can tell your wife not to worry, because someone, somewhere is getting a cheaper product. Honestly, I can’t argue with market logic. It makes sense if you detach yourself enough. Survival of the fittest and the richest. But something in me is repulsed by the commodification of labor and people.

  6. Hold on while I check a high school economics book… Nope: “Workers need incomes” does not seem to be a principle of economics. Though there does seem to be an inordinate amount of space devoted to “maximization of profit.” I don’t suppose it’s ever occurred to you that there’s a powerful liberal trial lawyer lobby whose members would viciously pursue any company that squandered equity by placing the interests of “workers who need incomes” before the property rights of shareholders? See? You don’t even need to leave your own party to find a compelling rebuttal to your argument.

  7. @RedWire Yes, it’s evil for companies to pursue efficiency while people like RedWire make all their own purchasing decisions based on purely philanthropic motives, huh? The truth is that as long as consumers care about efficiency in the products they buy, then the businesses who hope to serve them (and partner with them as investments) need to be equally concerned with efficiency.

  8. @RedWire I take it Social Security is your retirement plan?

  9. @RedWireThis topic is always interesting to me because it outlines our basic animal instinct being in a constant conflict with our own morality.

  10. @RedWire Exactly. And the other disease of unlimited growth is…cancer.

  11. @DORMILONA@RedWire Cancer. Yes, the other progressive malignancy.

  12. @DORMILONA@RedWire Cancer. Yes, the other progressive malignancy.

  13. @DORMILONA@RedWire Cancer. Yes, the other progressive malignancy.

  14. @DORMILONA@RedWire Cancer. Yes, the other progressive malignancy.

  15. @Zach Actually, I’d prefer social security didn’t exist. Having old people around that aren’t producing income isn’t an efficient use of our resources, public or private. If grandpa doesn’t wanna work, grandpa doesn’t eat. Sounds agreeable to me. But enough sarcasm, if you want my honest answer, my retirement will probably involve a plane ticket and a back pack. Not too expensive. Maybe I’ll find my way to some remote fishing village far away from anything civilized. Too idealistic?

  16. @Zach Why are companies maximizing profits? A. To maximize growth and returns. Why are they trying to maximize growth? A. To serve more customers and increase revenue. Why are they trying to increase revenues? A. Hopefully to post higher profits? Why are they trying to maximize profits? Rinse and Repeat. I’m quoting from an excellent book called Rework here “Have you ever noticed that while small businesses wish they were bigger, big businesses dream about being more agile and flexible? And remember, once you get big its really hard to shrink without firing people, damaging morale, and changing the entire way you do business”

  17. @Zach “Efficiency” always has a price. Ex. A coffee company could cut costs considerably by buying the cheapest coffee from the cheapest labor. And yet fair-trade coffee exists that pays workers moderately more respectable wages. How do they get away with this inefficiency? Probably by explaining to their customers that the extra dollar per bag of coffee makes a huge difference to someone halfway around the world. What do wal-mart and all the bottom dollar businesses have in common? They offer the American public perceived affluence. Look at all this material abundance!!(cheap crap) But that abundance is only possible by paying substandard wages to a labor market in a foreign country that doesn’t know any better, thats grateful for their $1.50 a day and their 14 hour shifts.

  18. @RedWire What if some coffee drinker would rather give his extra money to Barack Obama’s reelection campaign? In that case, wouldn’t it be better to buy the cheaper coffee, and then give the money to Obama so he can spend four more years making America better for people who aren’t working? Or are you saying we should pay more for fair trade coffee even as Paul Ryan pushes Grandma over the cliff?

  19. @Zach When you assume I’m pro obama and pro welfare, you just seem like a prejudiced dick. Despite being a democrat, obama does all the usual shady bullshit that presidents are bound to do. He makes sure the military industrial complex is fed, keeps American corporate interests happy, shovels the same shit under a different banner.

  20. @RedWire Yep, exactly the same. Which is why the economy keeps humming along just like with all the other presidents.

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