|
Source: (consider it)
|
Thread: What if profits were limited?
|
Lucia
Looking for light
# 15201
|
Posted
I've been musing on the subject of inequality, poverty and those kinds of things and I was wondering what effect it would have on us 'ordinary' citizens if the profits that companies made were limited in some way. What if the amount of dividend shareholders could receive was capped and anything beyond that had to be either ploughed back into the company in investment or better pay or conditions for their workers, or invested in the local community which supports the enterprise.
In someways it sounds like a utopia of some kind but I also wonder what the knock on effects would be. I presume things like pension funds and insurance work in some way on the premise that they can invest the money that you pay into them and turn sufficient profits to both cover their liabilities and in turn also make a profit for their shareholders. So if investments no longer worked the way they do now, how would things like pensions and insurance work?
Posts: 1075 | From: Nigh golden stone and spires | Registered: Oct 2009
| IP: Logged
|
|
no prophet's flag is set so...
Proceed to see sea
# 15560
|
Posted
It's called, I think, taxation. It was at one time that taxation of large amounts of income, were taxed upwards of 70% in the 1970s, even up to the 90% level in the late 1940s in some jurisdictions.
The highest brackets are well less than this. The money is left with the individuals or companies. Implications? Well, here's an example. I went to a play and a concert recently. The first 10 minutes of each were speeches extolling the sponsors, then the sponsors got to talk. Did the sponsors have a say in the art presented? If a company with bad corporate practices and despoiling the environment enters the public space by sponsoring, does the art have capacity to raise the problems the company creates? Can the poets actually say anything any more that isn't approved by the sponsors? I think not.
Prior to the "tax reform", arts groups in Canada would apply to federal and provincial funding agencies, which were funded by taxes, and the funds would be juried, and not decided by a company's wish. -- I think profits not being taxes properly means that free speech via the arts is limited.
We also have in Canada, the foreign affairs are not converted from aid to trade. Does anyone really think that trade isn't about inordinate corporate influence provided by their excess profits, and ability thus to influence government?
--------------------
Out of this nettle, danger, we pluck this flower, safety.
\_(ツ)_/
Posts: 11498 | From: Treaty 6 territory in the nonexistant Province of Buffalo, Canada ↄ⃝' | Registered: Mar 2010
| IP: Logged
|
|
Trin
Shipmate
# 12100
|
Posted
Supply and demand is a fascinating subject. Type it in to youtube and watch some lectures on it if you are interested. Supply and demand is what makes the world go around.
By capping profit you are disincentivising shareholders from doing any more than "x" amount of business. This reduces supply in the market.
When demand starts to exceeds supply, richer customers will be prepared to pay more money. Prices rise. The system either breaks, or finds a new equilbrium, if your rules will allow.
Your imagined utopia in which large corperations are rendered pointless and replaced with small - midsize businesses will again result in higher prices as the economies of mass production are no longer a viable way to do business.
Anything you do to break the balance supply and demand and the prices of goods that naturally result will cause either an excess of goods with no one who wants to buy them or an excess of demand with goods no one can afford.
quote:
Originally posted by Lucia:
...how would things like pensions and insurance work?
That's a little bit like saying "if we poisoned all the lakes, how would the fish work?"
Pensions and insurance as we know them are a product of the environment they exist in, rather than part of the system itself. It may be that under your rules there would still be an operable business model that would supply such services, but there's no guarantee.
(Posted with all the authority of about 18 month's worth of accountancy training.)
Posts: 442 | From: UK | Registered: Nov 2006
| IP: Logged
|
|
L'organist
Shipmate
# 17338
|
Posted
Lucia:
You don't seem to understand that shareholders are people who are putting their own savings - perhaps a nest egg accumulated over some years through rigorous economy - at risk in the hopes of getting a return (dividend). Furthermore, by buying shares they are providing capital for the company concerned at a (usually) far cheaper rate than the company could get if it was forced to borrow on the open market.
And why does the company need this money? Well, its called "Cashflow": you need to buy the raw materials and pay the workers to make the goods from them before you can sell them. And even when you have "sold" your output, until the money from the buyers gets into the company bank account there is no money, let alone profit.
Now, if you think it fair that all companies - from small one-man band concerns to the largest - should be, in effect, forced to operate in a position of permanent overdraft, fine: but I think you'll find that the banks with whom all these companies hold accounts won't accept a permanent state of overdraft.
Profit - that is, what is left once all costs, dividends and taxes have been paid - is the commercial equivalent of your and my savings nest egg. The company will either use it for R&D (as we might use savings for home improvement and/or major maintenance) or will set it aside to accumulate. You or some other body making an arbitrary decision about what is "fair" in this instance would, in effect, be telling a company that they aren't allowed to save for a rainy day.
Back in the 1960s and 70s when corporation tax in the UK was at crippling levels British companies were hampered from investing in R&D or even from ploughing money back into the company through renewal of plant.
One of the reasons for the industrial failures of the 1980s was that British industry was uncompetitive: plant was old and inefficient so goods cost more; product was old-fashioned because lack of R&D meant UK manufacturing hadn't kept pace with the rest of the world; falling sales because of these two quickly meant a self-perpetuating cycle of decline.
If you want to bring about the conditions for that to happen all over again proceed with your quaint notion and watch what little manufacturing we have go to the wall.
--------------------
Rara temporum felicitate ubi sentire quae velis et quae sentias dicere licet
Posts: 4950 | From: somewhere in England... | Registered: Sep 2012
| IP: Logged
|
|
Anyuta
Shipmate
# 14692
|
Posted
I don't think going after profits is the answer. I would imagine (and I'm no economist) that returning to a system where corporations were controlled, limited in terms of their duration, size and business they were able to engage in. they were chartered for a fixed period of time, for a fixed, specific function. corporations were limited from holding stock in other corporations. and corporations were not allowed to make political contributions of any sort.
and corporations were not "people".
I think we've allowed "too big to fail" to our detriment. If a company can make a large profit, fine for them, it's an incentive. however, I also think that there should be a decreasing incentive the more profit there is.. and yes, that means production and growth will decrease after a certain point, but I don't see that this necessarily a bad thing. right now there are a great many things produced for which the "need" is generated by advertising, not the actual need for that item. and most items are not essentials, or even close to it. the government can put controls on monopolies, and otherwise competition should keep the value of products reasonable. a company does not make huge profits because they are producing more, and decreeing the amount of profit does not automatically decrease production.
somehow in the days of 90% tax rates companies still managed to thrive. the doomsday predictions are by no means a certainty. what IS a certainty in my mind is that multinational corporations will soon (if not already) control the world in an unhealthy way.
I believe corporations serve at the will of the people (government) and not the other way around.
meanwhile, small businesses can still exist and flourish, because most of them are NOT corporations (or if they are,they don't have to be). so rather than a few corporations getting richer and richer the business will be spread around.
For all the talk of our great "founding fathers" we hear from the Right, it' funny that their views on corporations are rarely brought up.
Posts: 764 | From: USA | Registered: Mar 2009
| IP: Logged
|
|
Lucia
Looking for light
# 15201
|
Posted
I'm not particularly advocating what I described, it just seemed that there is something broken about the way our economies work and I was kind of doing a 'what if' thought experiment and wondered what the results would be. I'm no economist either.
However I am living in a country which is suffering from fairly dire economic problems. But I'm not sure that emulating what they see in western countries is really going to help them. I wonder what economic system could balance the need to incentivise people to work, the practical needs for cash flow to run a buisness, with making sure that it is not just a few people at the top who rake in all the financial benefits leaving the rest of the population as badly off as ever.
Posts: 1075 | From: Nigh golden stone and spires | Registered: Oct 2009
| IP: Logged
|
|
Crœsos
Shipmate
# 238
|
Posted
An interesting idea might be to limit both executive compensation and dividends disbursed to some multiple or fraction of the average salary of their non-management workers (with appropriate safeguards to prevent low-wage work being subcontracted off the balance sheet). Nothing to prevent large profit-taking, but a legal requirement to pass down a certain amount to the workers.
It's interesting the way most large companies don't seem to realize that workers and customers are the same people.
--------------------
Humani nil a me alienum puto
Posts: 10706 | From: Sardis, Lydia | Registered: May 2001
| IP: Logged
|
|
Gee D
Shipmate
# 13815
|
Posted
What you need to remember also is that while few people invest directly on the stock exchanges of the world. the pension funds to which they contribute are major investors. So to limit dividends would mean a substantial reduction in the retirement incomes of many.
--------------------
Not every Anglican in Sydney is Sydney Anglican
Posts: 7028 | From: Warrawee NSW Australia | Registered: Jun 2008
| IP: Logged
|
|
orfeo
Ship's Musical Counterpoint
# 13878
|
Posted
I've always felt that the fundamental problem is that we require companies not just to try to make a profit, but to maximise it.
Because we then have an awful lot of other laws that are basically saying "gosh, no, we didn't intend you do that horrible unconscionable thing in your quest for profits".
--------------------
Technology has brought us all closer together. Turns out a lot of the people you meet as a result are complete idiots.
Posts: 18173 | From: Under | Registered: Jul 2008
| IP: Logged
|
|
lilBuddha
Shipmate
# 14333
|
Posted
quote:
Originally posted by orfeo:
I've always felt that the fundamental problem is that we require companies not just to try to make a profit, but to maximise it.
And to increase the percentage of profit continuously. We've been lucky, in the long term, I'm not seeing it plausible that this will continue.
--------------------
I put on my rockin' shoes in the morning
Hallellou, hallellou
Posts: 17627 | From: the round earth's imagined corners | Registered: Dec 2008
| IP: Logged
|
|
Marvin the Martian
Interplanetary
# 4360
|
Posted
quote:
Originally posted by Anyuta:
right now there are a great many things produced for which the "need" is generated by advertising, not the actual need for that item. and most items are not essentials, or even close to it.
Maybe not for the people buying them, but for the people selling them those items are paying the bills and putting food on the table.
--------------------
Hail Gallaxhar
Posts: 30100 | From: Adrift on a sea of surreality | Registered: Apr 2003
| IP: Logged
|
|
Ricardus
Shipmate
# 8757
|
Posted
Surely most large companies make extensive losses or, at least, barely scrape more than a few pence together in profit?
That's what their tax returns say anyway ... ![[Angel]](graemlins/angel.gif)
--------------------
Then the dog ran before, and coming as if he had brought the news, shewed his joy by his fawning and wagging his tail. -- Tobit 11:9 (Douai-Rheims)
Posts: 7247 | From: Liverpool, UK | Registered: Nov 2004
| IP: Logged
|
|
L'organist
Shipmate
# 17338
|
Posted
posted by GeeD quote:
What you need to remember also is that while few people invest directly on the stock exchanges of the world. the pension funds to which they contribute are major investors. So to limit dividends would mean a substantial reduction in the retirement incomes of many.
Which, in the UK at least, is where a lot of the problems for industry start.
UK institutional investors - managers investing for unit trusts and pension funds - are sheep-like creatures dedicated to making a fast buck and with little, if any, investment strategy other than maximising yield.
Compared to their counterparts in, say, Germany, they are incredibly short-termist with their holdings: the UK financial industry sees 1-2 years as short-term, in Germany 5-8 years is considered short-term. Consequently Boards in the UK spend far too much time worrying about keeping the dividends high for institutional investors, rather than putting more into R&D and plant replacement.
To argue that fund managers have a duty to chase the highest dividend doesn't wash, since most, sometimes all, gains are wiped out by dealing costs. As for the poor pensioner at the end of the line, they are paying some of the highest admin charges for funds under management (outside the USA) in the world.
Some of this instability could be offset if the trades unions with large numbers of members in specific sectors invested in the firms where their members work, but they don't: union either don't do their own investing or they specifically shun investment in their own sector.
Maximising profits is not a bad thing - but maximising dividends at the expense of company financial health and long-term strategic flexibility is debilitating and drives companies to the wall.
If you think this isn't so, then explain the growing pattern of public companies being bought-back by their founding entrepreneurs...
Yes, pensioners need income - but the biggest hit taken by pension funds in this regard was caused by Gordon Brown raiding dividend payments into pension funds: not only did this wipe billions from pension funds, it also exacerbated the problem of short-termism and profit-chasing.
--------------------
Rara temporum felicitate ubi sentire quae velis et quae sentias dicere licet
Posts: 4950 | From: somewhere in England... | Registered: Sep 2012
| IP: Logged
|
|
Alan Cresswell
Mad Scientist 先生
# 31
|
Posted
quote:
Originally posted by L'organist:
To argue that fund managers have a duty to chase the highest dividend doesn't wash, since most, sometimes all, gains are wiped out by dealing costs.
I have no direct dealings with fund managers, no relevant experience and may be completely wrong ... but, do fund managers seek to gain profit from dividends, rather than resale at a higher price? Dividend payments and share price are, of course, related (shares likely to pay more in dividends would, I assume, be worth more). But, dividends aren't the only controlling factor, value of the company must also play a considerable part.
Here's my totally uneducated way of thinking how these things work, which may be completely wrong. If a company has assets (equipment, IP, property etc) that total £1M and floats on the stock exchange selling 1M shares at £1 each all those assets are now owned by the shareholders, and the company has £1M cash to play with (but doesn't own the cash - if a shareholder wants to sell their stock back the comapny would then be short that much cash). If that company only invests profits to maintain the value of the assets and pays the rest as dividends the value of the company remains at £1M and the value of each share therefore also remains at £1 (the price of the shares, however, will fluctuate as people buy or sell depending on expectations of dividends etc). Of course, if the lack of investment means a competitor starts making better or cheaper products then profits will fall, and the value of the company collapse.
If, however, the company invests profits into new equipment, research and development etc then the value of the company will increase, the value of the shares will also increase and to the extent that price tracks value a shareholder will be able to sell their shares at a profit.
Of course, most companies doing well will invest and pay dividends. But, it remains the case that an investment broker will not just be looking at dividend payments in determining the most profitable course of action in regard to buying and selling shares.
--------------------
Don't cling to a mistake just because you spent a lot of time making it.
Posts: 32413 | From: East Kilbride (Scotland) or 福島 | Registered: May 2001
| IP: Logged
|
|
no prophet's flag is set so...
Proceed to see sea
# 15560
|
Posted
You can't reasonably limit profit or income without destroying the will to work and innovate. But you can tax it. Thus, retirement fund earns for the individual investors, and the individual investors need to pay something on the profits made. More profit, more taxation.
Except for the progressive dismantling of the welfare state which had appropriate progressive taxation within it until the 1970s and 80s (though already being attacked and eroded before then).
We've discussed this before on the ship. I pay about 36% marginal tax rate on the proportion of my personal income that is at the highest bracket I choose to be in. Because I'm self employed, I can avoid the next higher bracket by not paying myself more than this amount. I can then leave money in one of my companies where the official tax rate is 20%, already a 16% saving, but because I can claim all sorts of things against company income, the real rate is something less than 13%. Now if I was a multinational, I could reduce my tax to something close to 0%. And keep all the profits. Like has been discussed extensively in 2013 on the i-net. About a particular computer company, and several others from other industries.
--------------------
Out of this nettle, danger, we pluck this flower, safety.
\_(ツ)_/
Posts: 11498 | From: Treaty 6 territory in the nonexistant Province of Buffalo, Canada ↄ⃝' | Registered: Mar 2010
| IP: Logged
|
|
orfeo
Ship's Musical Counterpoint
# 13878
|
Posted
quote:
Originally posted by no prophet:
You can't reasonably limit profit or income without destroying the will to work and innovate.
Eh? People seem to reasonably limit MY profit and income all the time!
--------------------
Technology has brought us all closer together. Turns out a lot of the people you meet as a result are complete idiots.
Posts: 18173 | From: Under | Registered: Jul 2008
| IP: Logged
|
|
HCH
Shipmate
# 14313
|
Posted
Rather than limiting profits or income, perhaps one might think of a cap on personal wealth. Perhaps if you have made 2 billion dollars, you should then be expected to compete in other ways. I'd probably also put a cap on inherited wealth, say 100 million dollars or so.
Neither suggestion would affect many people.
Posts: 1540 | From: Illinois, USA | Registered: Nov 2008
| IP: Logged
|
|
Gee D
Shipmate
# 13815
|
Posted
L'Organist, what you say may well be correct for the UK. The rules here for both tax and superannuation investment lead to different results.
--------------------
Not every Anglican in Sydney is Sydney Anglican
Posts: 7028 | From: Warrawee NSW Australia | Registered: Jun 2008
| IP: Logged
|
|
no prophet's flag is set so...
Proceed to see sea
# 15560
|
Posted
quote:
Originally posted by orfeo:
quote:
Originally posted by no prophet:
You can't reasonably limit profit or income without destroying the will to work and innovate.
Eh? People seem to reasonably limit MY profit and income all the time!
If you're an employee its different than being an employer.
--------------------
Out of this nettle, danger, we pluck this flower, safety.
\_(ツ)_/
Posts: 11498 | From: Treaty 6 territory in the nonexistant Province of Buffalo, Canada ↄ⃝' | Registered: Mar 2010
| IP: Logged
|
|
Crœsos
Shipmate
# 238
|
Posted
quote:
Originally posted by no prophet:
quote:
Originally posted by orfeo:
quote:
Originally posted by no prophet:
You can't reasonably limit profit or income without destroying the will to work and innovate.
Eh? People seem to reasonably limit MY profit and income all the time!
If you're an employee its different than being an employer.
For some reason the only way to motivate rich people is to pay them more, but the only way to motivate poor people is to pay them less. Funny that.
--------------------
Humani nil a me alienum puto
Posts: 10706 | From: Sardis, Lydia | Registered: May 2001
| IP: Logged
|
|
orfeo
Ship's Musical Counterpoint
# 13878
|
Posted
quote:
Originally posted by no prophet:
quote:
Originally posted by orfeo:
quote:
Originally posted by no prophet:
You can't reasonably limit profit or income without destroying the will to work and innovate.
Eh? People seem to reasonably limit MY profit and income all the time!
If you're an employee its different than being an employer.
Yes. In that I actually HAVE a will to work and a brain with which to innovate.
Corporations don't, which is what makes it all the more bizarre to suggest that companies can have their will to work and to innovate 'destroyed'. They're legal fictions. They don't actually have wills and desires.
All you're really doing is confirming the notion that corporations are sociopaths with no other motivation or reason for existing than money. Real-life people are motivated by other things. I certainly know that people waving more money at me DOESN'T make me work harder. Peope have tried. I already have enough money, what I actually need are more hours in the day and some kind of fulfilling social life.
[ 23. January 2014, 04:33: Message edited by: orfeo ]
--------------------
Technology has brought us all closer together. Turns out a lot of the people you meet as a result are complete idiots.
Posts: 18173 | From: Under | Registered: Jul 2008
| IP: Logged
|
|
L'organist
Shipmate
# 17338
|
Posted
Alan Cresswell:
1. It used to be that fund managers for pension funds were less focused on dividend income than long-term prospects because the earnings, being untaxed, left greater scope for absorbing 'bad' years - and the lower number of pensioners and lack of contribution 'holidays' also helped.
However, a perfect storm of contribution 'holidays' (when a company could argue that the capitalisation of its pension fund was sufficient for no employer contributions to be made that year - only therefore applying to stand-alone company schemes), scheme member longevity AND tax on investment income was catastrophic. And this perfect storm was predictable - indeed, it was predicted by virtually everyone other than the people who thought it up and introduced it - Messrs G Brown, A Darling and E Balls, supported by a paper from a young researcher called E Miliband.
2. Your delightful theory of valuing a company omits one crucial thing - the wage bill. And by that I don't only mean the salaries paid, plus other expenses like employer NI contributions, employer pension contributions, non-product related expenses such as heat and light for offices, etc. Additional legislation from the 1990s has resulted in much higher employee costs for companies - again, predictable by everyone except those who brought in the new rules.
3. Pension funds don't make money to distribute to members from sales of shares, they get those funds from dividends. Suddenly reducing the value of those dividends left fund managers much less room for manoeuvre and accelerated an already marked dash for profits among UK based fund managers.
As for the modern trotting out that you only get 'talent' if you pay megabucks: this is balls. A company that allows a grotesque differential to be built up between its management and workforce is storing up trouble as well as treating the people who produce its wealth shamefully.
A solution would be for more people to become shareholders and start to use AGMs to question boards.
--------------------
Rara temporum felicitate ubi sentire quae velis et quae sentias dicere licet
Posts: 4950 | From: somewhere in England... | Registered: Sep 2012
| IP: Logged
|
|
Alan Cresswell
Mad Scientist 先生
# 31
|
Posted
quote:
Originally posted by L'organist:
2. Your delightful theory of valuing a company omits one crucial thing - the wage bill.
I would say that for probably the majority of companies their biggest asset is the staff. So, that was part of my determination of value, though I agree it's probably not readily quantifiable (then again, how easy is it to quantify the value of anything?).
Investment in staff is one of the big things that maintains a company's competative edge and profitability. Paying wages that keep staff, training and career development, good working environment etc.
--------------------
Don't cling to a mistake just because you spent a lot of time making it.
Posts: 32413 | From: East Kilbride (Scotland) or 福島 | Registered: May 2001
| IP: Logged
|
|
Doublethink.
Ship's Foolwise Unperson
# 1984
|
Posted
What is wrong with the the John Lewis partnership, mutual and co-operative models of doing business ?
It seem to me that part of the problem, is the concept of share holders who have no stake in a business *except* for the profit it makes.
--------------------
All political thinking for years past has been vitiated in the same way. People can foresee the future only when it coincides with their own wishes, and the most grossly obvious facts can be ignored when they are unwelcome. George Orwell
Posts: 19219 | From: Erehwon | Registered: Aug 2005
| IP: Logged
|
|
Ricardus
Shipmate
# 8757
|
Posted
quote:
Originally posted by Doublethink:
What is wrong with the the John Lewis partnership, mutual and co-operative models of doing business ?
It seem to me that part of the problem, is the concept of share holders who have no stake in a business *except* for the profit it makes.
Plus the fact that a lot of shares are owned by funds which are owned by other funds belonging to further funds, such that even though the ultimate beneficial owners may not approve of the company's actions, there are too many degrees of separation for them to exert any influence.
--------------------
Then the dog ran before, and coming as if he had brought the news, shewed his joy by his fawning and wagging his tail. -- Tobit 11:9 (Douai-Rheims)
Posts: 7247 | From: Liverpool, UK | Registered: Nov 2004
| IP: Logged
|
|
L'organist
Shipmate
# 17338
|
Posted
The John Lewis Partnership model works because it is exclusively a marketing/selling operation, which makes the accounting pretty simple: buy goods for X, sell for Y, difference between X and Y equals gross profit, minus overheads equals net profit.
Once you get into the business of making stuff, things get a lot more complicated...
--------------------
Rara temporum felicitate ubi sentire quae velis et quae sentias dicere licet
Posts: 4950 | From: somewhere in England... | Registered: Sep 2012
| IP: Logged
|
|
Raptor Eye
Shipmate
# 16649
|
Posted
quote:
Originally posted by orfeo:
Yes. In that I actually HAVE a will to work and a brain with which to innovate.
Corporations don't, which is what makes it all the more bizarre to suggest that companies can have their will to work and to innovate 'destroyed'. They're legal fictions. They don't actually have wills and desires.
All you're really doing is confirming the notion that corporations are sociopaths with no other motivation or reason for existing than money. Real-life people are motivated by other things. I certainly know that people waving more money at me DOESN'T make me work harder. Peope have tried. I already have enough money, what I actually need are more hours in the day and some kind of fulfilling social life.
Thank you, I was hoping to read somewhere that money doesn't have to be the prime motivator.
Is it too much to hope that, like the Quakers who started up successful businesses in the past, some people might think it a good idea to go into business for the sake of the people: those who would be employed and those who would benefit from the goods or services provided? Of course it must break even, and profits would be needed for more investment and as a buffer against a downturn, but the bottom line doesn't have to be the motivator, and I don't think it's the best motivator.
--------------------
Be still, and know that I am God! Psalm 46.10
Posts: 4359 | From: The United Kingdom | Registered: Sep 2011
| IP: Logged
|
|
Alan Cresswell
Mad Scientist 先生
# 31
|
Posted
quote:
Originally posted by L'organist:
The John Lewis Partnership model works because it is exclusively a marketing/selling operation, which makes the accounting pretty simple: buy goods for X, sell for Y, difference between X and Y equals gross profit, minus overheads equals net profit.
Once you get into the business of making stuff, things get a lot more complicated...
Why are things more complicated? You buy raw materials for X, assemble them into a product you sell for Y: difference between X and Y equals gross profit, minus overheads equals net profit.
Where things, IMO, get complicated is when what's bought and sold are things which have no physical existence. The sort of weird financial transactions that were reported as taking place a few years back, with trading of debts and stuff.
--------------------
Don't cling to a mistake just because you spent a lot of time making it.
Posts: 32413 | From: East Kilbride (Scotland) or 福島 | Registered: May 2001
| IP: Logged
|
|
Gee D
Shipmate
# 13815
|
Posted
if only it were so simple. There's the question of stock on hand at the beginning and end of the accounting period. Then, the depreciation of fixed assets at both the rate allowed by the tax authorities and what knowledge of the actual value is.. From there move to provision for long service leave, holiday pay, sick leave, maternity leave and 50 other staffing questions. And you move on from there.
And Alan Cresswell - I've been self employed for decades, but I'd hate the thought of being considered an asset of value to an employer, rather like the transfer machinery that served Morris Motors for decades; I'd cringe at the idea of human resources management rather than a personnel section. But then, I'm the grumpy old man of my avatar.
--------------------
Not every Anglican in Sydney is Sydney Anglican
Posts: 7028 | From: Warrawee NSW Australia | Registered: Jun 2008
| IP: Logged
|
|
orfeo
Ship's Musical Counterpoint
# 13878
|
Posted
quote:
Originally posted by Raptor Eye:
Is it too much to hope that, like the Quakers who started up successful businesses in the past, some people might think it a good idea to go into business for the sake of the people: those who would be employed and those who would benefit from the goods or services provided? Of course it must break even, and profits would be needed for more investment and as a buffer against a downturn, but the bottom line doesn't have to be the motivator, and I don't think it's the best motivator.
Exactly! Making money is an outcome of a successful business, yes, but people ought to be going into business to do something.
In a similar vein, I get terribly tired of folks (politicians, but also others) who decry various things on the grounds that it will hurt 'the economy'. Such conversations never seem to identify what the economy is actually for.
It's all part and parcel of the marked tendency to forget that money is a tool for doing things, not an end in itself. All money is is a bunch of figures indicating a potential. If you don't know what you're going to DO with the money, then it's actually pretty useless stuff.
The whole area of derivatives - of making money by speculating about making money - is ludicrous in my opinion. It rewards people for not doing anything tangible whatsoever.
And shareholding has become much the same thing. Once upon a time, a company was about people pooling resources together to achieve something they wanted to achieve, but couldn't manage on their own. These days most shareholders don't actually care in the slightest about what any of the companies they invest in are actually doing, only about the dividend cheque. The only time they care about what the company does is if some questionable practice, like sourcing goods from a horrible factory in Bangladesh, causes negative PR.
[ 24. January 2014, 08:02: Message edited by: orfeo ]
--------------------
Technology has brought us all closer together. Turns out a lot of the people you meet as a result are complete idiots.
Posts: 18173 | From: Under | Registered: Jul 2008
| IP: Logged
|
|
Lucia
Looking for light
# 15201
|
Posted
Thank you Orfeo, that is helpful.
Business should be an integral part of a functioning society. Where the purpose of doing business is to provide some kind of product, goods/services to people who want it. Yes to make profit to sustain and further the business and to give appropriate reward to those who have invested time, money and effort into the enterprise, including the employees. But also to play its part in contributing to the community, the health of which allows it to function. The community which its customers, employees and investors all have a stake in and benefit from the well being of a functioning society.
I guess this is one of the problems with big multi-national companies. If those receiving the profits are far away geographically from the society affected by their actions then they have little incentive to look beyond the bottom line of maximized profits.
So the question is how can companies be encouraged, either by carrot or stick, or both, to act in more altruistic and ethical ways for the benefit of all. While avoiding restrictions which will make them unable to function successfully. You don't want a situation where the ethically acting companies are the ones that fail because their business model is not sustainable. Somehow we need to make it advantageous to them to act in this way.
Posts: 1075 | From: Nigh golden stone and spires | Registered: Oct 2009
| IP: Logged
|
|
chris stiles
Shipmate
# 12641
|
Posted
quote:
Originally posted by L'organist:
indeed, it was predicted by virtually everyone other than the people who thought it up and introduced it - Messrs G Brown, A Darling and E Balls, supported by a paper from a young researcher called E Miliband.
For which a certain M Thatcher also bears equal blame - for it was under her government that the concept of contribution 'Holidays' were introduced.
Posts: 4035 | From: Berkshire | Registered: May 2007
| IP: Logged
|
|
Alan Cresswell
Mad Scientist 先生
# 31
|
Posted
quote:
Originally posted by Gee D:
And Alan Cresswell ... I'd hate the thought of being considered an asset of value to an employer, rather like the transfer machinery that served Morris Motors for decades; I'd cringe at the idea of human resources management rather than a personnel section.
I'd agree that "human resources" is a horrid name for the personnel section (it's what we have here, not that I've any say over what they call themselves).
But, when it comes down to it any company (or self-employed individual) is only as good as the staff who work there. You can have the most modern equipment to make your widgets, but it might as well be scrap metal if no one can work it properly. Even where your staff don't need to be especially skilled, staff with the right attitude and desire to do their best will be of greater value to an employer than surly and lazy staff.
Recruitment, training and retention of good staff is probably the most important investment any company can make.
--------------------
Don't cling to a mistake just because you spent a lot of time making it.
Posts: 32413 | From: East Kilbride (Scotland) or 福島 | Registered: May 2001
| IP: Logged
|
|
L'organist
Shipmate
# 17338
|
Posted
chris stiles
Yes, contribution 'holidays' were an idea first brought in under a conservative government, but the worst damage to pension funds was brought about by the introduction of tax on pension fund dividends: it was that which meant that fund managers had to chase high yielding investments much more aggressively, which led to the chronic short-termism that blights the managed fund sector now.
Another knock-on effect has been the growing risk-averse strategy of almost all pension fund managers, which means that smaller companies or manufacturers outside the blue-chip magic circle don't get a look in.
--------------------
Rara temporum felicitate ubi sentire quae velis et quae sentias dicere licet
Posts: 4950 | From: somewhere in England... | Registered: Sep 2012
| IP: Logged
|
|
Marvin the Martian
Interplanetary
# 4360
|
Posted
quote:
Originally posted by orfeo:
quote:
Originally posted by Raptor Eye:
Is it too much to hope that, like the Quakers who started up successful businesses in the past, some people might think it a good idea to go into business for the sake of the people: those who would be employed and those who would benefit from the goods or services provided? Of course it must break even, and profits would be needed for more investment and as a buffer against a downturn, but the bottom line doesn't have to be the motivator, and I don't think it's the best motivator.
Exactly! Making money is an outcome of a successful business, yes, but people ought to be going into business to do something.
Most employees are only in their jobs - "in business", if you will - so they can earn money. Why would it be any different for the people who are employing them?
--------------------
Hail Gallaxhar
Posts: 30100 | From: Adrift on a sea of surreality | Registered: Apr 2003
| IP: Logged
|
|
chris stiles
Shipmate
# 12641
|
Posted
quote:
Originally posted by L'organist:
Yes, contribution 'holidays' were an idea first brought in under a conservative government, but the worst damage to pension funds was brought about by the introduction of tax on pension fund dividends:
Actually various studies done on the topic have shown that both policies bore roughly an equal amount of blame. Contribution holidays meant that by the mid 90s a significant percentage of all schemes were under capitalised - these were encouraged by the policy of tax on 'surpluses'.
Posts: 4035 | From: Berkshire | Registered: May 2007
| IP: Logged
|
|
orfeo
Ship's Musical Counterpoint
# 13878
|
Posted
quote:
Originally posted by Marvin the Martian:
quote:
Originally posted by orfeo:
quote:
Originally posted by Raptor Eye:
Is it too much to hope that, like the Quakers who started up successful businesses in the past, some people might think it a good idea to go into business for the sake of the people: those who would be employed and those who would benefit from the goods or services provided? Of course it must break even, and profits would be needed for more investment and as a buffer against a downturn, but the bottom line doesn't have to be the motivator, and I don't think it's the best motivator.
Exactly! Making money is an outcome of a successful business, yes, but people ought to be going into business to do something.
Most employees are only in their jobs - "in business", if you will - so they can earn money. Why would it be any different for the people who are employing them?
We could have a whole re-run of the 'love what you do, do what you love' thread, or I'll just refer you to there to say that I reject the premise / suggest that it's actually a problem if most people think in those terms.
And it's a problem for an employer, specifically. In the Department I previously worked for, when the results of workplace surveys were discussed, the results came with an overview of what their key number represented. It was engagement. It talked about the critical difference between employees who were engaged, partly engaged or completely disengaged. It talked about the negative consequences of having a lot of employees who were disengaged - who had no real interest in what they were doing and just turned up to receive a paycheck.
[ 24. January 2014, 21:37: Message edited by: orfeo ]
--------------------
Technology has brought us all closer together. Turns out a lot of the people you meet as a result are complete idiots.
Posts: 18173 | From: Under | Registered: Jul 2008
| IP: Logged
|
|
|
Printer-friendly view
