exspes@gdr.bath.ac.uk (P E Smee) (11/16/89)
In article <1353@bnr-rsc.UUCP> schow%BNR.CA.bitnet@relay.cs.net (Stanley T.H. Chow) writes: >As a Canadian, I certainly see lots of evidence. Just check out >Fortune & Forbs (the magazines). Americans *are* getting rich by >shuffling money. Japenese get rich by making things. [Lots more (which I believe) about how the Americans had the lead, threw it away, and let the Japanese move in, deleted.] We see similar effects in the UK (which owned most of the world a century or so ago...). The salient effect, I think, is that the ability to make money by shuffling money actually inhibits the research necessary for making things. If a company invests any sizeable percentage of its gross profits into long-term research, it reduces their immediate net profit. This, for various arcane reasons to do with the stock market, makes them vulnerable to leveraged takeovers and subsequent asset stripping. (To oversimplify a bit, the problem is that stock prices tend to move so they are related to earnings. If you have low earnings and high capital value, your stock will tend to be priced at an artificially low level. So, you can buy the stock, take control, sell off the capital, and make money.) Thus (except for very big companies) making sizeable investments in the future is likely to cause a company not to have one. Only research which has immediate payoff is safe. Maybe the answer is to go back to the original concept of 'stock shares'. In the East India Tea Company days, for example, you couldn't sell stock you held to someone else -- and shares were relatively short-term. A company would sell shares in a specific endeavour -- e.g. shares in a trip of the clipper Fred to Burma to trade in spices -- and when that venture was completed, the profits would be distributed back to the shareholders by the mechanism of the company buying back the shares. This provided the useful effect of 'stock market as a way for companies to raise money for their activities' without the damaging effect of 'stock market as a way to make money by shuffling money'. Or, maybe some other answer is needed. (And maybe, if anyone wants to argue this, it ought to move to misc.misc or somewhere else. I've started it there, just take comp.misc out of the header.) -- Paul Smee | JANET: Smee@uk.ac.bristol Computer Centre | BITNET: Smee%uk.ac.bristol@ukacrl.bitnet University of Bristol | Internet: Smee%uk.ac.bristol@nsfnet-relay.ac.uk (Phone: +44 272 303132) | UUCP: ...!uunet!ukc!gdr.bath.ac.uk!exspes