Is profit different from unfair tax?

[Berzerker]

Yep, and I'd like to see that proportion 100%

How will a business expand if all the profit goes back to stockholders?

[Jules]

Originally posted by Berzerker


How will a business expand if all the profit goes back to stockholders?

Loans, issue new stock or bonds

[MichaeltheGreat]

Originally posted by Kidicious

Production is the same. I didn't say anything about less total compensation so you figure it out.

If you divide up the same task over a larger number of workers, with more shifts due to shorter work weeks, you have a loss of production. Most jobs involve some non-productive individual transition time at beginning and end of shift - say coal miners who clock in at the mine head, then ride down the elevators and walk out to the current production areas. Or machinery operators who have to shut down at end of shift, secure the whatever it is so it doesn't fall on the next guy, then secure their safety gear before they clock out. Meanwhile, the next guy clocks in, puts on his safety gear, goes over some paperwork, does a safety inspection on his machine (left by the last guy some time before), and then starts being productive. Most construction jobs are the same, if you're not digging a ditch with a shovel - plumbing, piping, electrical, concrete work - there's a beginning of shift and end of shift transition.

Intellectual work such as engineering, software design, etc. not only has those issues, but additional time needed for communication, division of assignments, dealing with all the workers involved in a particular subset of your project - those things all go up in proportion to the number of people involved, so there is in fact a decline in productivity.

There are some exceptions, of course, but not the majority of jobs, and almost no jobs involving highly specialized skills.

The less total compensation comes from two things - one you said, and one interjected by brutal economic reality. You've said that communism only works globally, so if you're going to do that, you have to put my wages on a relatively similar scale as the Burkina Fasoan goatherd. You can drop mine, or raise his, but with more "wages" chasing an initially similar level of goods, you induce either inflation or create a huge demand for black market items if you alternatively freeze prices but don't have enough products to supply demands.

The other side, if you drop the absurdity of equalizing global wages (oh you counterrevolutionary bourgeoise exploiter you) is that you can either cut wages for the existing bodies in proportion to their reduced workweeks, or you can give them the same pay for less work, and either pass on the higher costs (which defeats the whole purpose, because now you price items up while keeping wages the same and now everyone is in a hole), or you subsidize your labor cost increases and charge a distorted price for your produced item. And that subsidy has to come from somewhere. After you run out of bourgeoise pigs to line up against the wall and steal their property as part of your revolutionary justice, you're left with no other source to subsidize your distorted prices. And guess what happens then?

The fact that capitalism doesn't provide jobs for everyone is erosive to living standards, but you don't see that.

No economic/philosophic system "provides jobs." Communism sure doesn't. You still have some form of business enterprises which produce things, and the only difference is how owners and managers are associated with those enterprises, and the motivations of the owners and managers.

Well we aren't talking about individuals individually. We are talking about them as a group. We are talking about a system. Yes! capitalism is an economic system, like it or not.

I'm talking about individuals individually, because that is ultimately what a market is.

Convenient for you to let the govt off the hook like that, but it's not going to cut it.

It's not letting the government "off the hook." You're assuming government has this all-intrusive role of running people's lives and determining what constitute their well-being. I'm assuming that government governs best which stays out of range.

I only have control over myself and the decisions that I make. I have no control over others and no knowledge of the decisions that they will make. I only know that most of them will make bad decisions because they don't know anymore than I do. That's chaos. There is no order. If I have plenty of resources it doesn't really matter, but if I'm poor and I make a bad decision I'm screwed.

Ja, order ist gut.

Your argument is specious - you don't need instant or complete knowledge of others' decisions because those decisions don't result in instantaneous effects in the market. I can go look up data on wages for different types of IT professionals in different areas of the country, and know that that data is not going to sharply change next week or next month. And I can pay attention to industry articles and publication, particularly on the end user side, and get a fair idea of whether a particular new and shiny technology seems to be sticking in the marketplace. You can make intelligent judgments. And most "bad decisions" are recoverable unless you decide to knock off a liquor store and a cop pulls in 30 seconds behind you.

[MichaeltheGreat]

Originally posted by Jules

Loans, issue new stock or bonds

Which is stupid, because all of those dilute the short term profits of the stockholders, while saddling the business with additional debt, or continuously devaluing stock - neither of which is in the long term interests of any party.

[MichaeltheGreat]

Originally posted by Ramo
Yep, and I'd like to see that proportion 100% instead of the much, much smaller number it typically is, and just as importantly, I'd like to see the workers with some genuine control over how the business operates.

Most workers are self-absorbed morons with little or no concept of the overall business picture, and most really don't give a **** to know, as long as they get paid and you go through the motions of treating them decently.
That's why most "employee owned" companies hire real management to run things.

Corporations are typically extremely authoritarian, hierarchial institutions. Democracy in the economy and all that shtick...

Some of us know how to run things. And democracy becomes a combination of circle-jerk and bureaucratic paralysis.

[Berzerker]

Loans, issue new stock or bonds

MtG answered that one better than I could have (that's why he's great and I'm merely ).

But if you issue a new stock, wouldn't that be considered profit and sent right back to the other holders? It should since it seems issuing stock is like printing more money, it results in inflation thereby devaluing existing stock. Maybe I'm wrong on that... As for loans, so instead of using profits to expand, a business should go into debt? Maybe Ramo didn't really mean 100% of the profit should go to the workers but that some of the profit would be used for expansion...

[Jules]

For some reason I was under the impression that very little investment is actually financed through retained earnings. I'm trying to find a statistic on that somewhere.

[Skanky Burns]

Originally posted by Berzerker
Maybe Ramo didn't really mean 100% of the profit should go to the workers but that some of the profit would be used for expansion...

I think he meant employee ownership of the company would be 100%.

[Velociryx]

So then...if the owners, who own 100% of the company, agree to NOT take all the profits out and use it to finance expansion (say, use a portion of retained earnings as collateral for a loan), that would be.....

-=Vel=-

[Dauphin]

Originally posted by Jules
For some reason I was under the impression that very little investment is actually financed through retained earnings. I'm trying to find a statistic on that somewhere.

It isn't usually, simply because debt is cheaper to service than equity. Provided you're not in financial distress debt is often preferable.

[Dauphin]

Originally posted by Berzerker
But if you issue a new stock, wouldn't that be considered profit and sent right back to the other holders?

If you issue stock you match a new asset with a new liability. Nothing touches the P&L as far as accounting is directly concerned.

It should since it seems issuing stock is like printing more money, it results in inflation thereby devaluing existing stock. Maybe I'm wrong on that...

If a company issues new stock it is usually because it is set to take on new and large projects that will bring in profits. Shareholders or potential investors will thus value company shares more highly and the price per share will go up.

Failing that if the shares are issue at worth, dollar for dollar, there is no inflation. Say a $100 dollar net asset company with 100 issued shares sold 100 more shares at $1 each. Rather than having 1 share representing 1% of a $100 dollar company the new shareholders would have .5% of a $200 company. Both ways their net worth is steady, just their voting rights have declined. Normally net worth will actually increase for the reason stated in the above paragraph.

[Jules]

Here's why I've always thought that. From looking at national income tables produced by the BEA. For example, here's corporate profits from 2002. Notice that undistributed profits make up only a small fraction of after-tax profits.

[Dauphin]

You need to (at least) compare that figure to the amount of new net debt taken out, not the overall profits. It tells you little about the debt-equity ratio otherwise.

[JohnT]

As a dishwasher I left precisely when my shift ended and EVERY dish there became someone else's responsibility. I think that is true of many higher paid jobs in that the person is not interchangeable .. . no other individual picks up the workload at the end of some arbitrary shift change.

Precisely. As President of two companies, I can tell you that I don't leave the job just because I leave the office... I'm always working, thinking about the job. Once you get to a certain level of authority, it isn't something you can just turn off when your "shift" is over.

[JohnT]

Edited out as 'twas nothing but a rehash of the above 5 posts.