This is massively debatable and at the very least contextually dependent. The company in question may not be efficient at producing growth, jobs, and higher wages. Returning money to shareholders to reinvest in whatever they see fit may well be more "economically efficient", especially since greater jobs and economic opportunity tend to be driven by start ups. There is no categorical evidence either way, and certainly in cases where companies have over-invested and seen little reward from that over investment (a decent example here would be NeXT's automated factory, which never operated at capacity and was a black hole for capital investment) it would be highly unlikely to be true.
If you're offering an instructive opinion (and it is an opinion, certainly not a statement of fact) on what companies should do with their money then I'd label that as advice.
An investor could spend their dividends to fill their swimming pool with champaign. We don't have to analyze what someone does with the money because the essential principle remains the same. If a company makes a profit from their products, the most efficient use of those profits is for them to be reinvested it in the profitable business to make more profits. The principle is not debatable or contextually dependent. You will find it in the encyclopedia under "capitalism." Examples of companies making poor investment decisions does not disprove the principle.
So what happens when a company throws off more cash then they can reinvest in their business? That is the real question being discussed here. The relevant issue is the growing amounts of cash being stockpiled by corporations. Again, as a statement of basic principles, companies are becoming steadily less willing to reinvest their profits in growth. This trend of disinvestment in growth has actually resulted in... less economic growth. I don't know that anyone is seriously arguing that this economic event isn't happening.
A company could invest in a swimming pool full of champagne and call that plant too, what's your point? And if a company has reached market saturation in its industry, or is operating in a declining industry, then what effect will investment likely have? A diminishing return at best.
There are more sources of investment than companies, there are also individuals, and there is government. And there is no definitive, absolute rule or "principle" about which type of investment is better. It depends on the case. Examples of companies making poor investment decision does not prove or disprove anything, any nice than examples of individual or government investment failure, but it gives it context as uncertain territory.
This has nothing to do with the definition of capitalism. Capitalism does not define corporations as the only efficient economic actors. Take your encyclopedia and look up "entrepreneur" or "fiscal multiplier". And understand that context is everything, always.
A company could invest in a swimming pool full of champagne and call that plant too, what's your point? And if a company has reached market saturation in its industry, or is operating in a declining industry, then what effect will investment likely have? A diminishing return at best.
There are more sources of investment than companies, there are also individuals, and there is government. And there is no definitive, absolute rule or "principle" about which type of investment is better. It depends on the case. Examples of companies making poor investment decision does not prove or disprove anything, any nice than examples of individual or government investment failure, but it gives it context as uncertain territory.
This has nothing to do with the definition of capitalism. Capitalism does not define corporations as the only efficient economic actors. Take your encyclopedia and look up "entrepreneur" or "fiscal multiplier". And understand that context is everything, always.
My point was fully explained, and I did not say that corporations were the only efficient economic actors. Please read what I said more carefully if you are interested in discussing. Thank you.
??? Bar a bit of hyperbole on my part ("only" when I should have said "most"), that's pretty much exactly what you said.
Quote:
Originally Posted by Dr Millmoss
If a company makes a profit from their products, the most efficient use of those profits is for them to be reinvested it in the profitable business to make more profits. The principle is not debatable or contextually dependent. You will find it in the encyclopedia under "capitalism."
So, according to you, in the encyclopedia definition of "capitalism", I will find a description of how the most efficient use of a company's profit is to reinvest it. 1. Unless you have a very poorly written encyclopedia, that is almost certainly false; I won't, unless you've written it in the margin. 2. That directly implies that it is less "efficient" for those profits to be returned to shareholders for further individual investment, consumption, or whatever else the shareholder might do with the money. Which may be the case, but is not necessarily the case, depending on both the company and the individuals in question. The "profitable business" is not necessarily a growing or growable business, and economics is not a hard science.
If you're going to devolve to the TS-style "you're not reading" BS then I agree, we're done, since you seem to have no grasp on context, nuance, circumstance, and I haven't even touched on externalities yet.
??? Bar a bit of hyperbole on my part ("only" when I should have said "most"), that's pretty much exactly what you said.
So, according to you, in the encyclopedia definition of "capitalism", I will find a description of how the most efficient use of a company's profit is to reinvest it. 1. Unless you have a very poorly written encyclopedia, that is almost certainly false; I won't, unless you've written it in the margin. 2. That directly implies that it is less "efficient" for those profits to be returned to shareholders for further individual investment, consumption, or whatever else the shareholder might do with the money. Which may be the case, but is not necessarily the case, depending on both the company and the individuals in question. The "profitable business" is not necessarily a growing or growable business, and economics is not a hard science.
If you're going to devolve to the TS-style "you're not reading" BS then I agree, we're done, since you seem to have no grasp on context, nuance, circumstance, and I haven't even touched on externalities yet.
You are manufacturing responses based on what you think I ought to be saying, rather than what I am saying, and ignoring everything else. So that's a problem. Insults aren't arguments, so that's a problem too.
I don't agree, but since you seem to have stopped saying anything, I'd say we're at an impasse. You, with absolutist principles (with acknowledged potentiality for not being wholly true that apparently isn't relevant), or me, with a flexible approach based on multiple avenues for investment and no specific judgement either way. Sorry, but I prefer my way. And I don't see that I insulted you any more than you patronised me.
Nope. You are not responding to the opinions I have already expressed, so I have stopped expressing any further opinions. The reason should be obvious.
What opinion have you expressed that I have not responded to? You think that companies should re-invest more of their accumulated capital as a rule. I broadly agree, certainly in preference to money hoarding, but I think that returning capital to shareholders may also be worthwhile because shareholders are consumers, and pension funds, and endowed charities, and other institutions that are also likely (not universally, that's what context is for) to use money that is returned to them to buy stuff, and invest in stuff, and do stuff with the money. In some, almost wholly unpredictable circumstances, it may be better in a holistic socio-economic sense to let the shareholders spend that money rather than the corporation, especially if the corporation doesn't exist in a growing market segment, or had hit some other ceiling of investment. We both agree that companies (and individuals) keeping cash hoards is undesirable in a macro sense during an economic downturn.
For some reason you think that objectionable enough to argue about it for half a page and claim that I dun read propper.
Comments
This is massively debatable and at the very least contextually dependent. The company in question may not be efficient at producing growth, jobs, and higher wages. Returning money to shareholders to reinvest in whatever they see fit may well be more "economically efficient", especially since greater jobs and economic opportunity tend to be driven by start ups. There is no categorical evidence either way, and certainly in cases where companies have over-invested and seen little reward from that over investment (a decent example here would be NeXT's automated factory, which never operated at capacity and was a black hole for capital investment) it would be highly unlikely to be true.
If you're offering an instructive opinion (and it is an opinion, certainly not a statement of fact) on what companies should do with their money then I'd label that as advice.
An investor could spend their dividends to fill their swimming pool with champaign. We don't have to analyze what someone does with the money because the essential principle remains the same. If a company makes a profit from their products, the most efficient use of those profits is for them to be reinvested it in the profitable business to make more profits. The principle is not debatable or contextually dependent. You will find it in the encyclopedia under "capitalism." Examples of companies making poor investment decisions does not disprove the principle.
So what happens when a company throws off more cash then they can reinvest in their business? That is the real question being discussed here. The relevant issue is the growing amounts of cash being stockpiled by corporations. Again, as a statement of basic principles, companies are becoming steadily less willing to reinvest their profits in growth. This trend of disinvestment in growth has actually resulted in... less economic growth. I don't know that anyone is seriously arguing that this economic event isn't happening.
A company could invest in a swimming pool full of champagne and call that plant too, what's your point? And if a company has reached market saturation in its industry, or is operating in a declining industry, then what effect will investment likely have? A diminishing return at best.
There are more sources of investment than companies, there are also individuals, and there is government. And there is no definitive, absolute rule or "principle" about which type of investment is better. It depends on the case. Examples of companies making poor investment decision does not prove or disprove anything, any nice than examples of individual or government investment failure, but it gives it context as uncertain territory.
This has nothing to do with the definition of capitalism. Capitalism does not define corporations as the only efficient economic actors. Take your encyclopedia and look up "entrepreneur" or "fiscal multiplier". And understand that context is everything, always.
A company could invest in a swimming pool full of champagne and call that plant too, what's your point? And if a company has reached market saturation in its industry, or is operating in a declining industry, then what effect will investment likely have? A diminishing return at best.
There are more sources of investment than companies, there are also individuals, and there is government. And there is no definitive, absolute rule or "principle" about which type of investment is better. It depends on the case. Examples of companies making poor investment decision does not prove or disprove anything, any nice than examples of individual or government investment failure, but it gives it context as uncertain territory.
This has nothing to do with the definition of capitalism. Capitalism does not define corporations as the only efficient economic actors. Take your encyclopedia and look up "entrepreneur" or "fiscal multiplier". And understand that context is everything, always.
My point was fully explained, and I did not say that corporations were the only efficient economic actors. Please read what I said more carefully if you are interested in discussing. Thank you.
??? Bar a bit of hyperbole on my part ("only" when I should have said "most"), that's pretty much exactly what you said.
If a company makes a profit from their products, the most efficient use of those profits is for them to be reinvested it in the profitable business to make more profits. The principle is not debatable or contextually dependent. You will find it in the encyclopedia under "capitalism."
So, according to you, in the encyclopedia definition of "capitalism", I will find a description of how the most efficient use of a company's profit is to reinvest it. 1. Unless you have a very poorly written encyclopedia, that is almost certainly false; I won't, unless you've written it in the margin. 2. That directly implies that it is less "efficient" for those profits to be returned to shareholders for further individual investment, consumption, or whatever else the shareholder might do with the money. Which may be the case, but is not necessarily the case, depending on both the company and the individuals in question. The "profitable business" is not necessarily a growing or growable business, and economics is not a hard science.
If you're going to devolve to the TS-style "you're not reading" BS then I agree, we're done, since you seem to have no grasp on context, nuance, circumstance, and I haven't even touched on externalities yet.
??? Bar a bit of hyperbole on my part ("only" when I should have said "most"), that's pretty much exactly what you said.
So, according to you, in the encyclopedia definition of "capitalism", I will find a description of how the most efficient use of a company's profit is to reinvest it. 1. Unless you have a very poorly written encyclopedia, that is almost certainly false; I won't, unless you've written it in the margin. 2. That directly implies that it is less "efficient" for those profits to be returned to shareholders for further individual investment, consumption, or whatever else the shareholder might do with the money. Which may be the case, but is not necessarily the case, depending on both the company and the individuals in question. The "profitable business" is not necessarily a growing or growable business, and economics is not a hard science.
If you're going to devolve to the TS-style "you're not reading" BS then I agree, we're done, since you seem to have no grasp on context, nuance, circumstance, and I haven't even touched on externalities yet.
You are manufacturing responses based on what you think I ought to be saying, rather than what I am saying, and ignoring everything else. So that's a problem. Insults aren't arguments, so that's a problem too.
I don't agree, but since you seem to have stopped saying anything, I'd say we're at an impasse. You, with absolutist principles (with acknowledged potentiality for not being wholly true that apparently isn't relevant), or me, with a flexible approach based on multiple avenues for investment and no specific judgement either way. Sorry, but I prefer my way. And I don't see that I insulted you any more than you patronised me.
Toodles.
Nope. You are not responding to the opinions I have already expressed, so I have stopped expressing any further opinions. The reason should be obvious.
What opinion have you expressed that I have not responded to? You think that companies should re-invest more of their accumulated capital as a rule. I broadly agree, certainly in preference to money hoarding, but I think that returning capital to shareholders may also be worthwhile because shareholders are consumers, and pension funds, and endowed charities, and other institutions that are also likely (not universally, that's what context is for) to use money that is returned to them to buy stuff, and invest in stuff, and do stuff with the money. In some, almost wholly unpredictable circumstances, it may be better in a holistic socio-economic sense to let the shareholders spend that money rather than the corporation, especially if the corporation doesn't exist in a growing market segment, or had hit some other ceiling of investment. We both agree that companies (and individuals) keeping cash hoards is undesirable in a macro sense during an economic downturn.
For some reason you think that objectionable enough to argue about it for half a page and claim that I dun read propper.