That’s the case with all dividends. In a vacuum, paying dividends (ala Coke) over sitting on huge sums of cash (ala Apple) increases stock price due to the FV of the stock. Investors always prefer to receive dividends over a slight increase in internal investments.
In the event of companies that make a habit of never giving dividends, it just becomes impossible to see the before/after.
TB’s points deserve emphasis…and RE-emphasis.
You and your Wall Street crystal ball will have to show me how to do it (joking). Stock prices are a valuation of the value of future dividends, so technically I agree, but the prospect of internal investments can be enough to increase stock price as well. I’m not going to play Mr. Wall Street though, there’s people who know this stuff much better than my 101 understanding. Company valuation through stock price is tricky, and stock prices are far from steady.
Absolutely. They can use the cash in a lot of different ways. Each company would have to evaluate what they want to do.
Well, I’m not sure how much more evidence I would have to present to convince you, so I guess we’ll just have to drop this line.
I don’t think that is correct. Lots of countries manage to have far more extensive social safety nets than us without imploding.
This was exactly the point of my post last night. I owed you a reply but this thread took off during the wee hours (west coaster here) and I’m still catching up; I figured it would be addressed.
http://thehill.com/policy/finance/302719-social-security-insolvent-by-2033
[quote] Medicare will reach insolvency by 2026 while Social Security’s two trust funds will become insolvent by 2033, the program’s trustees reported Friday.
Unless Congress acts, Social Security will no longer be able to pay full benefits to retirees after 2033 [/quote]
Entitlement reform is going to be required. I’m guessing they’ll wait until the last minute, but who knows.
Edit: I’m not sure why the quote function isn’t working there
I don’t. It isn’t revenue in the ordinary sense. Even calling it revenue is non-sensical, IMO, and families, particularly the working and middle class, could use that extra “revenue” in their pockets to fund stuff like “rent” and “food”.
The government wouldn’t need so much “revenue” if they didn’t spend so much money on regulation and entitlements:
Take your pick:
*This probably comes off snarky, I don’t mean it to, but it drives me nuts when people think we shouldn’t get to keep more of our earned income because of government overruns…
It can, but only in the sense that an internal investment will turn into higher expected returns in the future. While this is true, that capital is subject to the various forms of costs etcetcetc that something like “we have more cash from lower taxes and will immediately pass it along to you” doesn’t have to deal with.
Couple in the fact that current dividends allow for the immediate reinvestment of money that will EASILY (and dare I say nearly always) outclass any type of internal investment in a company leading to dividends maybe someday.
These are common misconceptions that are promulgated by individuals intent on deconstructing the social safety-net system. Here’s a more nuanced look at the financial state of these programs:
How about things like “grandma’s nursing home” and “gandpa’s diabetes care” and “dad’s dialysis” and “cousin Rainman’s nursing needs,” etc? You think the working and middle classes would be better off if you took all those away from them in order to put an extra couple of hundred bucks in their pocket? Because that’s the tradeoff we’re talking about here.
I know what you mean. It drives me nuts when people seem oblivious to just how much the lives of so many Americans are enhanced by government programs and regulations.
That word doesn’t mean what you think it means. The dole destroys motivation, self worth and ambition. It traps people in generational poverty and dependance. There are strings, they’re just hard to see.
Tell it to the nursing home pts, dialysis pts, developmentally challenged individuals who get to stay at home rather than be institutionalized, the elderly who don’t have to eat dog food in order to live, etc. You tell all of them how much better off they would be without ‘the dole,’ then get back to me.
As usual you’re making some seriously arrogant and insulting assumptions here.
Your links said the same as mine. The programs are currently paying out more than they are taking in and will run out of money. If you were trying to say these programs are fine, you can keep saying that for 10 years. Then reality strikes and something will need to be changed. What is the misconception?
How so?
Even the headlines indicate they will not “run out of money.”
The misconception is that the programs will be bankrupt, gone, fini. This is simply not the case.
Which scientific studies do you base those assumptions on? Based on my experience, working and living in impoverished areas it isn’t the dole that traps people but the willingness to choose to give up their freedom for a lack of responsibility. The “dole” doesn’t destroy motivation; some of the people who choose it already lack motivation, others have kids to feed.
Common sense tells me this. If you have to work to eat, it’s pretty motivating.
This whole argument is silly though. In regards to spending nobody is asking for zero safety net programs or abolishing the military entirely. But suggesting a 5% cutback… you might as well slit grannie’s throat now. Like there’s no waste in government or the military
Cutting waste and cutting spending are two different things. I would hope everyone wants to cut waste but what we would call waste some politicians call votes.
Then they are misleading. They will. The fund will run out and the outgoing payments will have to match incoming payments
They will be, as in they will not be able to pay what they are obligated to pay. It’s not saying it disappears.
If debts/obligations can only be paid back 70% and it’s all good I’m going to save a lot of money on my house loan.
‘Outgoing payments matching incoming payments’ =/= bankruptcy or the end of a program.
My whole point has been that the programs will not disappear, which is what many people (not necessarily you) will intimate in these discussions.
Maybe not JUST these programs - but they do make up a significant portion of spending. Do you at lease concede they would contribute to the inevitable default of government financial obligations?
pure conjecture and appeal to emotion. Why you resort to these types of arguments is beyond me.
Which scientific studies do you base those assumptions on? lol why on earth you would use that rhetoric on BG then turn around and make your own unbased, anecdotal assumptions is beyond me.
I, too, live in and work in an “impoverished” area (in quotes b/c it’s an ambiguous and relative term without a proper definition) and my observation is that it boils down to the individual. The “dole” does incentivize some people to relinquish productive motivation in lieu of a handout. I mean they do have to maintain a certain lifestyle to keep getting money. What’s the saying? A bird in hand? I think that applies.
You are right that other people already lack motivation - but at what point in their lives did they “lose” motivation and why? If they happen to be of generational poverty, and you think they learn it from their environment, then it stands that at some point, going back far enough, one of their ancestors must’ve been given a choice to forgo their motivation in lieu of something easier.
Your last example I agree with. I think we as a people, in our own communities, need to do a much better job of helping out people in tough situations. Government, for all their alleged attempts and motivations, whatever they truly are, is irrelevant, is not equipped to deal with individuals and individual circumstances. It has done a good job, though, of convincing people, communities, to relinquish responsibilities of helping people in their communities - and some of that can be attributed to some government program or another. Ignoring that, to me, ignores incentives and human nature.
Damn fine point.
I agree with you on this - however I think we have different ideas as to where the programs will come from. A lot of these programs would be better administered via free markets in lieu of government administration, in one form or another.