Half a croissant, on a plate, with a sign in front of it saying '50c'
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Socioeconomic Accessibility Index

Gauging how much profit-seeking corporate decisions screw the little guy
  [vote for,

So I've had this idea for awhile about how to compensate oneself for being screwed over by corporations. Essentially, it applies to situations like where you go to McDonalds and they've started having those stupid half-napkins that don't work as well, or when your health insurance refuses to pay for some medication you need, and you're either incurring a loss or something (degradation of user experience) for which a monetary equivalent can be given, and all because the company wants to "cut costs to boost their bottom line" and increase profits.

In such situations then, if the company is a public one (i.e. "large faceless corporation"), they have stock, and presumably if whatever they're doing to screw you is actually increasing profits, then that increase will show up in a rising stock price. So there should be some amount of stock you can buy such that the amount you are typically screwed by a company in X amount of time is offset by an increase in the value of your stock in the same amount of time.

Example: You need to get allergy medicine once a year (during allergy season), and your insurance company is now refusing to pay for it, costing you, say, $30/year. Through some method, you are able to figure out that them doing this to all the subscribers will increase the profits of the company such that their stock will rise $0.01/share over the next year (if their finances are straight, this should actually be a relatively do-able thing to calculate). So, this means that if you buy 3000 shares of stock, the amount the stock will rise is $30 (excluding taxes, etc, which in this case might not matter, since medical costs can be tax-deductible). So if the stock is $50/share, then "all" you have to do is buy $150,000 worth of stock and you won't mind the insurance company screwing you on not paying your health benefits.

A lot of this assumes a theoretical way of <i>getting</i> this information accurately, but if you assume we can, this opens up an interesting way of analyzing the "capitalistic socioeconomic unfairness of corporate profit-seeking actions." While reading the example above, you probably said, "Oh, sure, if I happen to have $150,000 of disposable income lying around," which is exactly it. Depending on how much the company's "screwing you" costs you, and depending on how much it benefits the company's share price, the amount of money you need to have in order to buy a sufficient number of shares to break even on your being screwed will change. So, if a company's actions screw you a lot, or only makes a little profit, it requires a larger lump sum to "break even" by owning their stock. If it screws you only a little, or it increases their profit by a lot, then you don't need to spend as much on the stock. Consequently, we can say that certain corporate actions are "recoverable through ownership" only to those above a certain wealth level (i.e. those who have enough disposable income to own all this stock), and thereby grade its "socioeconomic fairness."

ywong, Sep 01 2003

Wagon Wheels - A conspiracy? http://www.nicecupo...evious.php3?item=18
Not much to do with the idea, I'm afraid. [Cedar Park, Oct 04 2004]


       Is it just because I had smaller hands as a kid or have Wagon Wheels shrunk, like a lot.   

       Small hands.   

       Or is it? [link]
Cedar Park, Sep 01 2003

       In-House Financial Advisor: “Buy lotsa ‘Your Inc. publicly traded stock’”.
Employee: ”Why? They screw us to fortify their bottom line”.
In-House Financial Advisor: “Egzzzactly!”
Shz, Sep 01 2003

       Aftermarket parts for cars rank way up there on the screw factor. For A/C compressors, (which tend to vary substantially from unit to unit in the amount of frictional losses they produce, they would keep the best-performing compressors for OEM installation, and hang onto the 'seconds' to sell in the aftermarket at 10x the cost. The problem is the shear volume of parts out there for past models that need to be stocked or manufactured, which creates a tremendous amount of overhead. It takes some pretty sophisticated tooling to create some of those parts, and when the factory has been cleared out to create room for the next model run, those tools are either scrapped out or they go to another factory that specializes in small runs of a large variety of parts, at a higher cost of production. But the profits from it are ridiculous. Some even carry the bulk of the company's' bottom line; they get beat up so badly on prices to supply to the OEM's that they essentially make no profit, so they make it up in the aftermarket.
RayfordSteele, Sep 01 2003


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