U.S. balance now less than Apple cash
business.financialpost.com
business.financialpost.com
1. Invest the proceeds back into the company. 2. Pay profits out to the shareholders.
That is it.
These days, companies tend to do more of #1 and less of #2 -- they define "investing the proceeds back into the company" as increasing the salaries / benefits of the company's top executives.
Historically, the US government foresaw this problem of too much power in the hands of too few people, both in the government itself, and in the private sector.
When the Federal Income Tax was originally implemented it stated that all businesses would be liable for taxes, and only the wealthiest people (read == the "moguls", back in the day) would be responsible for paying taxes (http://news.ycombinator.com/item?id=2783480). Think about the underlying brilliance of this plan: income taxes are tiered, based on profit (the more you make, the more you pay). If a company was making excessive profit, it could do one of two things to "decrease" the tax burden: hire more people, or create a "market" for stocks that can reward the common Joe. The original income tax laws laid out would have allowed a company to pay someone $100K (in 2011 dollars) tax-free. However, that $100K, if kept as "profit" for the company would be subject to Corporate income tax.
(Q: Guess who voted NO on letting shareholders vote on executive compensation? (Jul 2009)) Hint - http://www.ontheissues.org/ ) (A: the speaker of the House).
When shareholders aren't allowed to regulate their "ownership" of a company (especially when it's just tiny percentage), they don't get a say on how those profits are used, and executive salaries continue to bloat. Those at the top whine, complain that they are the "job creators", and should not be subjected to such taxation. But this is exactly what is supposed to happen: their salaries would not be so high if the companies they controlled were not doing so well. If they're doing well, they should be either hiring more people (people with jobs would be less reliant on government assistance), OR gradually increasing the well-being of shareholders by paying out dividends to those who own only a tiny fraction of the company.
But, it's not working out like that. The checks and balances that the founding fathers put into place to prevent the notion of absolute power corrupting absolutely have become weighted down by the greed of a few.
And they had to change the Constitution to do it. It seems the founders are the ones with the actual foresight. They knew that government tends to expand its power and consume more and more of the people's resources, so they tried to keep it small and restricted.
Whether or not you can treat tax cuts as spending is debatable, but either way it was a revenue stream they threw down the toilet.
I don't recall ever seeing this concept of "excessive profit" in any of my econ text books.
Must just have been my lousy books. Care to define it?
http://money.cnn.com/galleries/2010/news/1004/gallery.top_ce...
Consider - Larry Ellison (the highest paid executive in 2010) took home $85M, or 0.24% of Oracle's revenue. (Note that his comp, in the form of stock options, would have been vastly lower if Oracle did poorly.)
As for corporate governance and paying shareholders, you are absolutely correct on this point. But you are wrong when you try to paint opposition to it as a partisan issue. It isn't. Guess which party is opposed to corporate raiders buying and liquidating unionized firms?
(Also, my net worth is positive, whereas theirs is negative to the tune of thirteen figures.)
How do you value the Federal assets? What's the going rate for a second hand air craft carrier?
Whatever an African dictator's willing to pay for it?
The problems caused by the lack of aircraft carriers in Europe were clearly demonstrated during the recent conflict in Libya. I wouldn't be surprised at all if one of the European countries would be interested in purchasing or leasing a carrier. The United States would obviously never sell such a ship to a random third world dictator but I don't see why wouldn't they sell it to one of their allies.
You might be surprised by the lengths that the United States (covertly) goes to to please third world dictators in its quest for global hegemony.
http://en.wikipedia.org/wiki/Julius_Caesar
Edit: That article has a few appropriate quotes, actually.
During his early career, Caesar had seen how chaotic and dysfunctional the Roman Republic had become. The republican machinery had broken down under the weight of imperialism, the central government had become powerless, the provinces had been transformed into independent principalities under the absolute control of their governors, and the army had replaced the constitution as the means of accomplishing political goals. With a weak central government, political corruption had spiraled out of control, and the status quo had been maintained by a corrupt aristocracy, which saw no need to change a system that had made its members rich.
http://en.wikipedia.org/wiki/Lucius_Cornelius_Sulla
They were called the Cornealian Laws.
http://en.wikipedia.org/wiki/Lucius_Cornelius_Sulla#Dictator...
http://en.wikipedia.org/wiki/Constitutional_Reforms_of_Luciu...
Caesar did similar things, but in the other direction, and less like the guy specified.
Although I don't think it's accurate to say Sulla took power more completely than Caesar did... Remember that Dictator was an actual office in the Republic, normally time limited, and that Sulla voluntarily resigned the post where Caesar took it all the way to Dictator for Life.