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Rick
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oh and further could you please tell me when 1992-2007 that Walmart, Starbucks, Tim Horton's, Macdonald's or any large retailer or service sector giant had its stock prices take a year over year loss.... and if it happened how long dividends were cut for? I heard they are real risky stocks?
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Patrick: The difference between wages and dividends is semantic. If raising wages increases marginal cost so does paying dividends.... Why can't a union own shares to account for raises as the company grows, and if they did how would that be any different to a wage increase? Would you then suggest that paying dividends is bad for the economy?
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You'll have to explain it to me in lamens terms I guess how Stock holders who collect divedends are any different than workers collecting salary when as far as accountants of a company are concerned they are both liabilities. I understand you perfectly well and I am saying than wage distribution has an effect on aggregate demand which is exactly the point. (and just for the record you didn't use a mathematical model, you inferred a relationship from one without proving it. When that happens its called congecture and its not the basis for academic discourse.... but, should you ever want to go to the blackboard I can make time.... ) I guess that's why people are tempted to use english when discussing things-- then people who would otherwise *think* they understand what they were saying would instead be able to *show* they don't ;) Also you say that an increase in aggregate demand puts upward pressure on wages... Really? North American statistics over the last 20 years refute that point directly for middle income workers... though prices rose real wages remained stagnant and alot of instances actually fell. That postulate is not true by definition.. I agree that if there is across the board increases in union wage or minimum wage then there will eventually be inflationary pressures and that will lead to negative affects on production and input costs unless prices raise and thus the spiral starts. But if a company is raising profits individually and increasing its market share there is no affect to wage increases.... they are called bonuses....
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Do our tax policies support innovation? If we have a low capital tax rate that doesn't actually translate in to lower taxes for businesses that operate in our country since they pay the difference when they repatriate profits. Coupled with A government that is promoting a reduction its current account in favour of foreign direct investment Doesn't that in itself provide a disincentive for the money in the system (this flow foreign direct investment) to support innovation since new business as well as businesses that reinvest their earnings in technology to produce innovation will pay lower dividends and are inherently more risky? If I'm money and my job is to maximize my growth while minimizing risk, wouldn't I search the secondary market for companies that are reducing expenditures and increasing profits since those companies are increasing stock prices and paying larger dividends rather than take a chance on a company that may or may not be successful in developing "something" that will increase profits and dividends in the long run? I don't know if that's true, but I would like some criticism on it though if it is worth the time.... But if it is true wouldn't it be then up to the government to put policies in place that provide incentive to investing in longer term projects, or reduce the dividends paid directly..... What if their were a hard cap on profits (dividends) after which, unless there is a specified portion that goes to "innovative" projects, there is a tax. The tax wouldn't go to general government revenue, but to specified research funds (defined by business sector for instance) that are run out of Universities who make all findings and useful innovations public without patent; thus providing a mild disincentive to investing in non innovative businesses. The information produced by the universities could then be analyzed and provide necessary market information to investors and reduce the risk associated in investing in technology blindly; thus provide incentive for foreign investment to be used to stimulate innovation.... which is supposed to be the point anyway. And we may get the added bonus of providing decent research jobs that encourage students to do scientific research without the understanding that their diploma gets them a ticket to wait in the unemployment line and our Universities might become useful....?
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Mar 28, 2010