The stock market is again in the spotlight with the GameStop stock rollercoaster and the ongoing clash between small investors from the r/wallstreetbets online community and Wall Street. And the more info we have, the more confused it makes us.
Does the stock market correctly represent the real value of some company? Do corporations that are socially responsible and respect their workers have a higher stock market value? Not really.
Dan Price, the CEO of Gravity Payments, started a Twitter thread in which he shows that there’s no relation between the stock market and reality and that the whole system is based on the rich exploiting the poor.
Sam Dogen from the Financial Samurai blog explained that the whole financial system has created an extreme contrast between the privileged and those of us who happen to be average. "CEOs have no magical powers. Yes, they have the operational experience to run big companies. However, they are often just spokespeople and ambassadors of the firm. One person cannot make that big a difference in a large organization. If Tim Cook from Apple steps down, the company will be fine. Another overpaid CEO will take his place," Sam clarified that CEOs, while essential, aren't almighty...
"The reason why CEOs can get paid so much is due to the direct correlation of the size of the company. When a company is worth hundreds of billions of dollars, it's easier to pay a CEO tens of millions of dollars a year, which comprised mostly of stock options," Sam explains. "At the end of the day, the CEO and the Board of Directors' goal is to provide as much value and returns as possible for its shareholders. And if that means firing thousands of employees, then that is what they will do. It is a sad reality of extreme capitalism."
Sam stated that the employment situation doesn't look promising. "Now, a company can more easily hire a hungry person from a developing country who is willing to earn much less. The work from home trend is here to stay. The other trend we should see is more people becoming freelancers instead of full-time employees. The ability to work from home has created more solopreneurs who see more business opportunity taking on multiple clients at once."
Dan caught the public’s attention when he decided to cut his own pay by a million so that all of his workers could earn at least $70,000 per year.
With this viral Twitter thread, which got 18.1k likes, Dan shows many examples of how highly valued companies that regularly screw over their workers (many of whom lost their jobs) end up paying enormous sums to their CEOs.
While Dan is right when he says that unemployment is a massive problem in the US, the situation isn’t as bad now as it was in the first months of the pandemic.
Of course, it’s far from being good. Many people are struggling to make ends meet. And companies like these are making the situation even worse.