Time to REALLY Cut Spending

Off Topic Politics and World Issues
41

Getting money from a dividend is more like interest on a loan. You loaned the company money by buying shares. The money they took in from selling shares goes towards growing the business. They pay you back a percentage of what you loaned out, plus give you capital appreciation if the stock grows.

Your narrow scope of “work performed” doesnt even work, no pun intended, in the most primitive society.

Loaning money is a transaction, an agreed upon exchange between two parties for mutual benefit. Otherwise the exchange would not be made. The same is true of a “worker”. He is exchanging his labor for the benefit of a wage. You cant compare two entities which serve to grow a business from different ends. However, the worker may not exist without the capital from the loan (ie shares issued) in the first place.

Read a fucking book.

42

[quote]CappedAndPlanIt wrote:

[quote]thunderbolt23 wrote:

[quote]CappedAndPlanIt wrote:

And how is that money generated?[/quote]

Through the ordinary operations of business, selling whatever goods and/or services it provides through the market. After taking revenues and paying off costs, the amount left over can be distributed, usually as dividends.

I’ll play along, but not for long. If you have a point, make it.

[/quote]

The money paid as dividends comes from the work other people do. That’s the only thing that generates money - people doing work.

Getting money from a dividend doesn’t mean you did any work for the company. The actual generation (work) was probably done by someone else. Granted, the money you paid to buy the stock may have helped the business, but the point, near as I can tell, is to eventually get more in total dividends than you paid for the stock, right?

I dont see how thats not a “free lunch”.

I see a big difference between taxing the worker on his earnings and taxing the profits a person makes off of the work of others.[/quote]

That business, to make any money whatsoever, needed to raise capital at some point and the owners decided to sell their equity to get enough money to grow the business and earn a profit. Should the new owners of that business not receive a return for putting the money up which is responsible for the growth of that business? And should the owners not be allowed to sell their ownership interests to other willing parties if they’d like?

Dude, you’re going full socialism here and it’s pretty obvious.

Besides, there are many other ways to earn money which is not included in “salaries and wages.” Some of it is called “passive income” and includes some activities that aren’t even passive, such as rental income from real estate, some forms of advertising, etc. Also, if I start a business, don’t pay myself any salary or wages but keep whatever profit I make, that also would not be considered salaries and wages but I’ll be damned if you claim I didn’t earn it.

These statistics are so skewed it’s ridonk.

43

[quote]CappedAndPlanIt wrote:
but the point, near as I can tell, is to eventually get more in total dividends than you paid for the stock, right?
[/quote]

Sometimes, yes. Sometimes, no.

That’s why the stock market returns are generally greater than other types, it involves the most risk.

Another important point is that all of these transactions are taking place between willing buyers and sellers. I’ll give you a piece of my company for X dollars. You will now reap the benefits of owning X% of my company.

FTR, I do think you’ve got a good head on your shoulders, but can’t help but feel you’ve been misguided for a very long time.

44

[quote]CappedAndPlanIt wrote:

Getting money from a dividend doesn’t mean you did any work for the company.[/quote]

No one has suggested anything to the contrary.

Ultimately, that would be nice, but that rarely happens. Not very familiar with dividends, are you?

You invested the money in a stock. What you completely miss is the downside risk. There;s no guarantee a company will begin paying dividends. Companies that do and then go in the tank hate to cut dividends, but cannibalizing revenue to keep dividends is horrible and it typically is reflected in the price of the stock going down. Thus, in addition to losing dividends, you lose the principal value of your investment.

If you stand to lose all of this, it ain’t a “free lunch”. Your money is at risk, and the reward for it being so is the return.

Well, that’s great, but you aren’t figuring that a worker’s wages exist because someone is willing to give him a job and supply him with income for his work. The income doesn’t come directly from the market (it can, but in that instance, that person isn’t really working for a wage anymore). A worker has earnings because someone else is risking their capital to run a business. The worker gets the benefit of not having to go hang his own shingle out and put a roof over his workspace.

There’s nothing ill-gotten from an employer or shareholder making dividends off the “work of others” - because the relationship is mutually beneficial.

Your “labor theory of value” finds its moorings in Karl Marx. Sorry, that ship has sunk.

45

[quote]LankyMofo wrote:

Dude, you’re going full socialism here and it’s pretty obvious.

[/quote]

No. I’m going full “Pay workers more and they wont have to rely on the government for assistance”

But let me get this straight - I go and do work, the work I do generates profit for a company, and you get a check based on the profit my work generated. Then you get to complain when that check gets taxed and those taxes are spent to help me - and claim that I’m the one getting the “free lunch”.

I understand how the system works. I also see how more and more people getting income based on things other than work means there is less to pay workers with (and more incentive to pay larger dividends). With 80% of the population having 15% of the wealth among them, its little surprise that everyone is in debt and looking for government assistance. I dont think “greed, irresponsibility, and entitlement” are the problems.

46

[quote]CappedAndPlanIt wrote:

But let me get this straight - I go and do work, the work I do generates profit for a company, and you get a check based on the profit my work generated. Then you get to complain when that check gets taxed and those taxes are spent to help me - and claim that I’m the one getting the “free lunch”.[/quote]

You pay nothing into the public fisc from your earnings, and yet you get something from the public fisc in terms of a transfer payment that someone else pays for. Yeah, that’s a free lunch.

Clearly not.

Once again, you treat economics as a zero sum game. That is incorrect.

And companies don’t want to really pay huge dividends, so you have another myth involved - companies usually would rather keep the money and plow it back into investments for better productivity - they have to pay dividends to keep grumpy investors happy when their money is at risk.

EDIT: added underlines, left out first time.

47

[quote]LankyMofo wrote:

FTR, I do think you’ve got a good head on your shoulders, but can’t help but feel you’ve been misguided for a very long time. [/quote]

Thank you.

48

[quote]CappedAndPlanIt wrote:

[quote]LankyMofo wrote:

Dude, you’re going full socialism here and it’s pretty obvious.

[/quote]

No. I’m going full “Pay workers more and they wont have to rely on the government for assistance”[/quote]

Yes they will, because companies will simply charge more for their product/services. Then I guess you’ll want to put price caps on how much they can charge? Do you know where this leads (central economy planner, anyone?)

Ok, so if you do all the work and my company generates a loss, are YOU going to help me repay what I owe the bank?

[quote]I understand how the system works. I also see how more and more people getting income based on things other than work means there is less to pay workers with (and more incentive to pay larger dividends). With 80% of the population having 15% of the wealth among them, its little surprise that everyone is in debt and looking for government assistance. I dont think “greed, irresponsibility, and entitlement” are the problems.
[/quote]

Why would a company rather pay dividends than more money for employee salaries? The money they pay for employee salaries is tax deductible, the money paid in dividends is not (it’s actually taxed twice).

49

[quote]thunderbolt23 wrote:

You pay nothing into the public fisc from your earnings, and yet you get something from the public fisc in terms of a transfer payment that someone else pays for. Yeah, that’s a free lunch.

[/quote]

And how did that person get that money for the “transfer payment that someone else pays for”? Was it from profits based on the work I performed?

How should I treat economics then?

50

Capped - do you think it’s a coincidence that the more social/entitlement programs that get put into place, the more the public relies on them? Do you think that has anything to do with the disappearing middle class?

51

[quote]

How should I treat economics then?[/quote]

As a game where 2 or more entity’s can (and do) mutually benefit from the same transaction.

52

[quote]LankyMofo wrote:
Capped - do you think it’s a coincidence that the more social/entitlement programs that get put into place, the more the public relies on them? Do you think that has anything to do with the disappearing middle class?[/quote]

no

53

[quote]pittbulll wrote:

[quote]LankyMofo wrote:
Capped - do you think it’s a coincidence that the more social/entitlement programs that get put into place, the more the public relies on them? Do you think that has anything to do with the disappearing middle class?[/quote]

no[/quote]

I asked 2 questions, genius.

54

[quote]LankyMofo wrote:

Yes they will, because companies will simply charge more for their product/services. Then I guess you’ll want to put price caps on how much they can charge? Do you know where this leads (central economy planner, anyone?)
[/quote]

You’re right. Which is why I dont advocate such laws. However, just because laws cant fix it doesnt mean there isnt a problem.

This is a fair point. Would your stockholders be expected to help you repay what you owe the bank?

[quote]

Why would a company rather pay dividends than more money for employee salaries? The money they pay for employee salaries is tax deductible, the money paid in dividends is not (it’s actually taxed twice).[/quote]

Another good point.

55

[quote]CappedAndPlanIt wrote:

[quote]LankyMofo wrote:

Yes they will, because companies will simply charge more for their product/services. Then I guess you’ll want to put price caps on how much they can charge? Do you know where this leads (central economy planner, anyone?)
[/quote]

You’re right. Which is why I dont advocate such laws. However, just because laws cant fix it doesnt mean there isnt a problem.[/quote]

There will always be problems. There is absolutely no perfect system, all we have is a number of options and each will produce trade offs. For every “solution” we make trade offs. I believe the free market system is the best one available considering all options and trade offs we would have to make.

[quote]

This is a fair point. Would your stockholders be expected to help you repay what you owe the bank?/quote]

Their entire investment is at risk, so yes. The company goes belly up, the shareholders are legally the last people with rights to any leftover assets that may or may not even be there. However, generally speaking, they are not on the hook for more than their original investment.

[quote]

[quote]

Why would a company rather pay dividends than more money for employee salaries? The money they pay for employee salaries is tax deductible, the money paid in dividends is not (it’s actually taxed twice).[/quote]

Another good point.[/quote]

56

[quote]LankyMofo wrote:
Capped - do you think it’s a coincidence that the more social/entitlement programs that get put into place, the more the public relies on them?
[/quote]

Not at all. But I dont think cutting those programs is going to magically make the public have more money to provide for themselves.

I think its a bad system where the work of the poor/working class is used to fund the rich, and the government taxes the rich to give services to the poor/working class. I think a better system would be for the working class to be paid more (yes, meaning that the rich voluntarily get less) and be able to provide for themselves.

Greed exists from all sides - I just disagree with the focus on the lower-income side of things.

[quote]

Do you think that has anything to do with the disappearing middle class?[/quote]

Of course. But so does the fact that wealth continues to flow upward.

57

Ahh, fucked up the quotes there, my bad.

58

[quote]CappedAndPlanIt wrote:

[quote]LankyMofo wrote:
Capped - do you think it’s a coincidence that the more social/entitlement programs that get put into place, the more the public relies on them?
[/quote]

Not at all. But I dont think cutting those programs is going to magically make the public have more money to provide for themselves. [/quote]

Then we have 1 area of agreement, however, I’d go a little further and say that phasing these programs out will, over time, correct the imbalances these programs have created. A clean cut would have disastrous results for the people who have depended heavily on these programs for such a long time.[quote]

I think its a bad system where the work of the poor/working class is used to fund the rich, and the government taxes the rich to give services to the poor/working class. I think a better system would be for the working class to be paid more (yes, meaning that the rich voluntarily get less) and be able to provide for themselves.

Greed exists from all sides - I just disagree with the focus on the lower-income side of things.[/quote]

The upside to employers paying employees what you deem to be less than a fair wage is that those same employees wages have more buying power because price levels are lower (due to lower wage levels). It’s just another trade off.

[quote]

59

[quote]LankyMofo wrote:

[quote]pittbulll wrote:

[quote]LankyMofo wrote:
Capped - do you think it’s a coincidence that the more social/entitlement programs that get put into place, the more the public relies on them? Do you think that has anything to do with the disappearing middle class?[/quote]

no[/quote]

I asked 2 questions, genius. [/quote]

no and no :slight_smile:

60

[quote]CappedAndPlanIt wrote:

And how did that person get that money for the “transfer payment that someone else pays for”? Was it from profits based on the work I performed?[/quote]

Some, sure. And the work other people performed. The guy in the mailroom, and the senior accountant. And the CEO. And it is derived from other investments - the new software, the new account the sales and marketing guy got last week, and the depreciation the company got to take on its taxes from the aging equipment.

Uh, not as a zero sum game? There is no fixed “pie” where because I have a large slice, it means your slice is smaller. Doesn’t work that way in an economy that isn’t as land-based as it used to be.