mccMay 27, 2025

Airlines are like "instead of all those agents, we'll make a sort of assembly line manned by customers. Check in with one machine, drop your baggage off with another."

Then literally anything happens with the computer network requiring an elevated number of customers to need manual intervention, and suddenly you have an enormous immobile line while every single customer lines up before the two (2) remaining agents.

Corporations don't care about "efficiency" they just wanna fire people

Show threadmccMay 27, 2025
I really believe this. We were told capitalist entities will act to minimize costs and maximize profit. But what corporations actually seek to do, for whatever reason, is minimize *labor* cost. They prefer to bear any other kind of cost. They will minimize labor costs even if it increases overall costs and/or hurts profits
Show threadAsta [AMP]May 27, 2025
@mcc my personal pet theory as to the "why" of this is because fees paid for "technological" solutions go to their friends and friends' companies and stocks, whereas wages are just "lost".

I have no evidence to back this up, but it does feel like they explicitly are attempting to block class mobility and that's certainly one way to do it.
Show threadcthos 🐱May 27, 2025
@aud @mcc Corporate finance gets real wonky when you start digging into it. Capital expenditure vs Operational Expenditure. Those have to be reported different ways on earnings reports and wages typically fall under the latter (though there are some exceptions).
Show threadcthos 🐱May 27, 2025
@aud @mcc There's also something tax-related on CapEx (because it relates to an investment into the business, theoretically). But I'm not an accountant and I can't rattle off the differences.
Show threadSerenusMay 27, 2025
@cthos The main thing, and apologies if you know this, is that capex gets treated as an asset initially and then expensed over the expected life of whatever you bought (since the assumption’s that you’ll be benefiting for years), versus opex gets realized as an expense immediately. That means $1M of spend on tech is only going to reduce your net income by a fraction of that $1M in the year you spend it (and every year after), but $1M of spend on labour hits your bottom line immediately.
Show threadcthos 🐱

@Serenus Yeah, amortization is the term? And you can treat spending on say, contractor labor, in that capex category which smooths out your P/L and nets you an "Asset" on the balance sheet. So if you were to say, prioritize capex spending, you're more likely to hire contractors.

That said, like LLMs have to be an Opex spend so I dunno how much if any this factors into @aud's suspicions.

May 27, 2025 at 10:15pmWeb
Show threadSerenusMay 27, 2025

@cthos Contractor versus internal labour isn’t the dividing line so much as it is what that labour’s going towards? Again very much generalizing, but it boils down to whether the labour’s going towards something that’ll install or increase the useful life of a capital asset.

That said, AI related spend may or may not be considered capex. A sub to chatgpt is going to be opex, but if you’re building some sort of integration or platform that you’ll be using long term that’ll likely go to capex?

Show threadcthos 🐱May 27, 2025

@Serenus In my experience basically every internal AI project winds up being a ChatGPT wrapper, so that sounds like a fun thing to have to track on the balance sheet.

But I didn't think you could necessarily point someone's salary as an expense against a capital project, or perhaps it was that accounting for a salary makes for an accounting headache that's more trouble than it's worth?

Show threadcthos 🐱May 27, 2025
@Serenus Oh and yes, I used a bit of a shortcut in the upstream post to say if you're doing a capex project with a fixed deliverable, you can throw contractors at it and pretty easily say "everything they're charging goes here", because you're contracting them specifically for that project.
Show threadSerenusMay 27, 2025

@cthos You wouldn’t necessarily book the salary directly against the project, but rather track time spent on the project and then book the cost of that time against the project (or at least that’s what I’ve seen done). It’s a headache, but if you’re doing capital heavy work it becomes necessary to get the tracking system in place.

And yeah, I have no idea how that in particular would be treated. My gut feeling is that at least some of it would be capex, but I can’t say I know for sure?

Show threadcthos 🐱May 27, 2025
@Serenus I have a hunch that for the GenAI companies in particular we're going to find out they were doing some very "interesting" accounting (like the one that went under the other day!)