| Joined: | Mon Apr 2nd, 2012 |
| Location: | Carthew, Cornwall, United Kingdom |
| Posts: | 6874 |
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It is about providing maximum profit for director bonuses and shareholders.
Ultimately it is all caused by the Wall Street shuffle.
The stock markets are 'managed' by analysts who predict what a company will do in future quarters. These data are then used by pension fund managers to purchase 'best performing' stocks that provide maximum yield for the pension fund money that is invested. If a stock performs well then it yields well but expectations also increase until a plateau is reached.
This is exactly what is happening now. Companies are not using profits to invest sufficiently well in improved machinery and infrastructure as they need to provide more for investors.
Personally I think that distributable profit (bonuses, shareholder dividends) should be not more than 5% per annum (approx) of a company's capitalisation. So if a company has a stock value of £â‚¬$100M then its profits should not be more than £â‚¬$5M. If this was to occur this either indicates a product/service that is sold at excess profit e.g. Telecoms services and so should be subject to either Government price control or a windfall tax. This is typical of the banks, pharmaceutical, telecoms and other industrial giants.
However there are cases when that the company is a new technology startup in which case it should be allowed this excess profit as an offset against R&D cost or to generate more jobs in that company.
I know this flies in the face of greedy capitalist thoughts but since greedy capitalism is really the 1% feeding off the 99% I dont have a problem with this ethos.
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Still learning after all these years!
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