Removing any other expense will be detrimental to the business, that is, make it work less well. Nothing will happen to the business if the owners don't get any dividends.
>Removing any other expense will be detrimental to the business, that is, make it work less well. Nothing will happen to the business if the owners don't get any dividends.
I'd say two things.
1. A listed business wouldn't exist in the first place (or in its present form) if owners hadn't been enticed to put up capital in the hope of getting dividends.
2. The purpose of a listed business is to pay the owners, not to produce goods or services - producing goods or services is just a means through which to pay the owners.
Further, you are just plain wrong about both of your points. At least as general statements.
1. Of course there are some businesses that are created to be able to pay the owners of the capital dividends (or more common, to be able to sell the business later to someone who hopes to be able to collect dividends). But a lot of businesses are created to for people to just being able to do their job. Say a gardener who wants to work with tending gardens. Their main purpose of the business is not to collect dividends, and they may never do.
2. That a business sole purpose only is to pay the owners is a quite recent (popularised in the eighties) neoliberal idea and far from any universal truth. The purposes of any single business can be whatever the business owner wants, which range from the obvious, become rich, to serving the community with some particular goods or service, providing employment and security to the local workforce or creating opportunity for people work with some craft they love.
The stakeholders in a business are far from only the people that invested capital in it. They also include the local community, the employees and the family, and of course the customers.
Most of the people criticising my points are glossing over the key word of my post, which is listed. Not every business is listed, and those can be run for all sorts of reasons, but a listed business is a stock first and a business second. The stock is meant to enhance the owners' wealth (whether by going up, paying dividends, or both), and the business is just the means to that end. At least in theory, when that happens in a well regulated society, it turns out that the best way to make the owners richer is to give people what they want, and to allocate capital in the most efficient and productive way. Obviously reality may differ.
The ultimate goal and purpose of any economic system is to serve whole society - those people own anything because we as a society recognize that we are not able at present moment to build better system without their rent seeking behaviour. But this does not mean that they have some god given right to unlimited dividends from work of others. It all seems backwards (as in tail wagging the dog).
And don't get me wrong - I know that their behaviour is just part of human nature, that our culture tries somehow to tame and this behaviour is no different from monarchs and aristocrats of old days, but it does not mean that this is the ultimate system and there is no metaphorical guillotine waiting for them all somewhere in the future.
> The ultimate goal and purpose of any economic system is to serve whole society [...]
Sure. But that's not in contradiction to individual parts of the system having individual (and different) purposes.
Btw, not all companies have to make a profit. That's just a pretty common goal. (And if you want your business to stay afloat in the long run, you have to at least break even.)
> But this does not mean that they have some god given right to unlimited dividends from work of others.
Duh, obviously you only get dividends from businesses you own.
>> Sure. But that's not in contradiction to individual parts of the system having individual (and different) purposes.
But those purposes are only allowed because they serve greater purpose. On their own they are meaningless.
>>Btw, not all companies have to make a profit. That's just a pretty common goal. (And if you want your business to stay afloat in the long run, you have to at least break even.)
Maybe if You mean non profits like charitable fundations that holds water, but those are mostly not real businesses.
I do not think is feasible to break event for normal companies. Its like with birthrate - if You naive You could believe that with birthrate equal to 2 (one children for each parent) to preserve status quo. But in real life minimal rate is around 2.1 to prevent population collapse. The same is with profits - You need some to account for future risks.
>> Duh, obviously you only get dividends from businesses you own.
It's only obvious if You ignore platform effects (amazon anyone?) and monopolies, but that's besides the point. The point is that owners collectively as a class are able to extract too much from the system. And by owners I do not mean the hatted guy from monopoly, or rather not only him, but also german pensioner with ever increasing life expectancy crashing his hundred thousand euro camper around Europe. Even here in Poland I personally know people that are retired for decades and their work life was mostly sitting around doing nothing (my own grandma was retired for almost 50 year and before that was a housewife and got pension from my grandpa work). Meanwhile most of younger generation will probably never be able to afford to buy own house (unless someone old dies and leaves them inheritance).
> But those purposes are only allowed because they serve greater purpose. On their own they are meaningless.
This gets it backwards. In most places, we haven't arranged society as "everything is banned except for this list of allowed activities," more as "everything is allowed except for this list of banned activities."
We're not necessarily good at divining utility of actions when deciding what should be banned, either.
That any individual activity serves some greater good is a happy accident, there's no natural law that individuals will take actions that are net positive when you zoom out.
I was trying to build value framework, not legal one - it does not matters what is allowed or banned if we cannot assess its value in context of sth (I used society in this case).
The free for all strategy (libertarianizm?) may be a great diacovery strategy but it does very little for building and preservin things that works (that were discovered by it). I sincerlly believe that real freedom ends with strongest psyhopaths stomping down on week that are on their way to fullfill their desires.
So even if its all happy accident on the lowest level there is a meta game of rules far above it that prevents our world from collapsing (at least for now)
> 2. The purpose of a listed business is to pay the owners, not to produce goods or services - producing goods or services is just a means through which to pay the owners.
This is true only in the simplest of world views. Let's take this idea to the real world. Let's say all food producer would say today to stop and instead start producing toilet wipes(or insert anything here) or whatever because the can make more money that way. Now suddenly we won't have any food producers tomorrow and billions will starve. Clearly food productions companies only purpose wasn't to make money for owners, it was also shockingly to keep people from starving.
over time yes. But that assumes not every producer leaves the market in a short time frame. The bounce back effect would be devastating. In fact food production is already a pretty non-profitable endeavor and yet the companies don't stop doing it.
That the two things that the comment I answered too claimed are wrong:
1. Not paying dividends is communistic. Few people would accuse Jeff Bezos of being a communist.
2. Bad things will happen if no dividends are paid. No, nothing bad has happened to Amazon because they didn't pay dividends. Another example is Apple that didn't pay any dividends between 1995 and 2012.
Obviously, the commenter meant any returns to shareholders, whether that be dividends or stock buybacks or anything else.
Second, the commenter was obviously also talking about the economy in general. Individual companies being run in peculiar ways won't bring down the economy.
As an analogy: some companies give away some products for free. But it wouldn't be a good idea for companies in general to give everything away for free.
Of course, you can still disagree with the points that the commenter made about no returns to shareholders leading to communism (and whether that's bad or not). But please show some charity in interpretation, if you want to have a productive discussion.
You are the one that taking liberties with interpretation. The exact quote thaumasiotes argued against was "Nothing will happen to the business if the owners don't get any dividends." My italics. So, they was clearly not talking about the economy in general.
And if you go back in the thread, it was not a general argument about society. If thaumasiotes wanted to do it about that, that would be the straw man, because no one argued for prohibiting companies for paying dividends, and no one argued that society would be fine if no company ever were allowed to pay dividends.
Finally, if I show some lack of patience with thaumasiotes, it is because they are shouting "Communism!" instead of actually presenting any coherent argument. And that in discussions about economy is the reminiscence of Godwin's law.
