> [Smith] argues insurance just isn’t very profitable. [...] One obvious problem with Smith’s analysis is that accounting profits are a dumb way to understand surplus spending.
Also, corporate profit numbers are what you have after subtracting expenses that might include things like tricks to drive competitors out of business. Perhaps someone with accounting credentials can speak to how much gobbling up smaller companies can be counted as an expense.
In other words, a low profit margin doesn't mean the company can't be hoovering up money, especially if shareholders are OK with the spending because anticipate being rewarded by higher stock prices.
> [Smith] argues insurance just isn’t very profitable. [...] One obvious problem with Smith’s analysis is that accounting profits are a dumb way to understand surplus spending.
Also, corporate profit numbers are what you have after subtracting expenses that might include things like tricks to drive competitors out of business. Perhaps someone with accounting credentials can speak to how much gobbling up smaller companies can be counted as an expense.
In other words, a low profit margin doesn't mean the company can't be hoovering up money, especially if shareholders are OK with the spending because anticipate being rewarded by higher stock prices.