The aim and purpose of a business is to produce money for the owners, the shareholders, to enjoy. There is no other reason for the existence of the beast. The point of our economic system being that we can and have observed that trusting in that universal, human greed, leads to a richer society.
The proof of this is obvious enough. No socialist country has grown economically to great wealth. All economies which are currently wealthy beyond the dreams of historical experience are and have been for at least some decades roughly capitalist and roughly free market. No country that is not roughly capitalist and roughly free market is rich. And those places which have recently become more so are getting richer, those that have become markedly less so have been becoming less.
Simple empiricism tells us that capitalist free marketry works, assuming that raising the living standards of the average peeps is your goal. Non-capitalist non-free marketry fails if this is your goal.
Super. How do we harness that greed? Shareholder supremacy:
[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””] Family behind OCS, the privately owned outsourcing giant, bag £1m dividend despite falling profits The point and purpose of the existence of OCS is to send money to the family that own it. This is the non-benevolence which butters our parsnips. The family behind an outsourcing specialist that cleans hospitals, manages government properties and guards factories, banked dividends worth more than £1m last year despite a drop in profits Privately owned outsourcer OCS Group made pre-tax profits of £13m in 2018, down from £49m the previous year. [/perfectpullquote]Eh? What? What’s that *despite* doing there? Company made profits, owners took 8% of those profits to feed their faces. The existence of the company being to feed the faces of the owners. What’s despite about this?
The answer being of course that the newspapers are written by the teenage scribblers who wouldn’t know an economic concept if it came up and bit them on the Milton.
They can keep taking £1m “divi” year after year if they so which, as long as the profits available to divvy up doesn’t fall below £1m themselves.
I’ve just been reviewing the history of one of our local shipbuilders that sold £20 shares for £18 each on establishment (some sold at auction for £15!), and paid out £2 a year, year on year. Until, 25 years later, on the retirement of the chairman, it was discovered they were £6000 in debt and went belly up.