Quote:
Originally Posted by Fbone
I believe these executive decisions are made to please the shareholders. They demand fast growth and big profits so their stock prices rise for quick gains.
|
That's a major problem. Shareholders rarely behave like co-owners of a company that want a healthy company, steady dividends, and long-term gains; all too often, they're speculators who want a quick rise in stock prices so they can unload the stock for more than they paid for it and then move on to the next boom-and-bust profit. Equally short-term CEOs with gem-encrusted platinum parachutes, people whose "compensation" (when did it stop being pay?) is tied to the stock's short-term price, not the company's long-term health, have no reason not to do what they can to boost that short-term price (making the speculators happy) at the cost of sinking the company. Consider, as a random example, Circuit City, whose CEO fired all his good sales people because they were earning "too much" (while handing out millions to his fellow executives) and then wondered why their minimum-wage replacements couldn't sell electronics. His short-term savings in wages killed the company in the long term.
Personally, I think having the profits from speculating in stock being essentially tax-free encourages this sort of behavior. If we do want to tax only income from wages, not income from stock speculation, at the very least that tax-free status should require long-term ownership of the stock, not a year or two (or, worse yet, an hour or two). As long as company executives, boards of directors, and temporary stockholders think "long term" is the next fiscal quarter, we're going to keep on having this mess, to the detriment of productivity, competitiveness, and, well, having a Circuit City in your town.