4 ms·

No, I don’t think the two are the same. Like I said, dividends are usually the “salary” an employer takes at the end of the year. It could be $1, it could be $1

No, I don’t think the two are the same. Like I said, dividends are usually the “salary” an employer takes at the end of the year. It could be $1, it could be $100,000, but it all depends upon how the business did. This is exactly how everyone is constantly complaining that a business should be operating - pay all the employees, then the owner/CEO/etc. takes part of what is left over.

toomuchtodo 7y ago
Depends on scale. American Airlines in the US used 80 percent of their profits for several years for share buybacks ($12.5 billion from 2010-2019). Not R&D, not salary increases for workers. Does that deserve a bailout that preserves existing ownership? That’s the target. That sort of behavior should be nuked from orbit. I’d agree it’d be different if your business is small (less than $10M/year in turnover); you’d look at the books with a less critical eye.
- chrismeller 7y ago
  That’s the point. You are assuming that every applicant is AA size... the reality is that 99% of businesses are not, and you’re killing those business, their employees, their owners, and their families.
  - deleted 7y ago
    [deleted]
  - bigfudge 7y ago
    I don't think anyone has clarified the actual rules in play here. Why should the taxpayer bail out firms which go on to pay dividends within 5 years? Why shouldn't the state simply take stock as a guarantee for loans in these companies?
- 0xffff2 7y ago
  Why? Where exactly is the tipping point where dividends/buybacks become unacceptable? Unless you want to completely outlaw dividends and share buybacks (in which case you might as well do away with public companies), you're inherently putting the government in the position of defining completely arbitrary rules about how profitable a company is allowed to be.
  - toomuchtodo 7y ago
    Yes, that is the role of government, deciding who does and does not get a bailout based on criteria developed by policy makers, using taxpayer funds. Bailouts are not entitlements.
    - ed312 7y ago
      A key point missing is defining that criteria in advance. If your market economy rewards buybacks heavily and you didn't know it was a moral hazard, why should your company (and its employees & shareholders) suffer? I can see banning future buybacks until the gov't loan is repaid though.
      - toomuchtodo 7y ago
        Bailouts might be necessary, but they absolutely should not be expected. And if the are needed, we should take a piece of your equity for our troubles. If you don't agree to that, which is your right as a business, make do without.
sergiosgc 7y ago
Dividends are how an company owner gets the profits from his investment. A salary is how a worker gets paid. In small companies, these may be the same person, but the nature of the financial flow does not change. When a company requires more cash, in times of need, it can issue debt or raise capital. Capital is usually paid last, in the pecking order. If government is lending to companies, it is reasonable to require them to avoid depleting its cash reserves paying capital.

toomuchtodo 7y ago

Depends on scale. American Airlines in the US used 80 percent of their profits for several years for share buybacks ($12.5 billion from 2010-2019). Not R&D, not salary increases for workers. Does that deserve a bailout that preserves existing ownership? That’s the target. That sort of behavior should be nuked from orbit. I’d agree it’d be different if your business is small (less than $10M/year in turnover); you’d look at the books with a less critical eye.

chrismeller 7y ago
That’s the point. You are assuming that every applicant is AA size... the reality is that 99% of businesses are not, and you’re killing those business, their employees, their owners, and their families.
- deleted 7y ago
  [deleted]
- bigfudge 7y ago
  I don't think anyone has clarified the actual rules in play here. Why should the taxpayer bail out firms which go on to pay dividends within 5 years? Why shouldn't the state simply take stock as a guarantee for loans in these companies?
0xffff2 7y ago
Why? Where exactly is the tipping point where dividends/buybacks become unacceptable? Unless you want to completely outlaw dividends and share buybacks (in which case you might as well do away with public companies), you're inherently putting the government in the position of defining completely arbitrary rules about how profitable a company is allowed to be.
- toomuchtodo 7y ago
  Yes, that is the role of government, deciding who does and does not get a bailout based on criteria developed by policy makers, using taxpayer funds. Bailouts are not entitlements.
  - ed312 7y ago
    A key point missing is defining that criteria in advance. If your market economy rewards buybacks heavily and you didn't know it was a moral hazard, why should your company (and its employees & shareholders) suffer? I can see banning future buybacks until the gov't loan is repaid though.
    - toomuchtodo 7y ago
      Bailouts might be necessary, but they absolutely should not be expected. And if the are needed, we should take a piece of your equity for our troubles. If you don't agree to that, which is your right as a business, make do without.

sergiosgc 7y ago

Dividends are how an company owner gets the profits from his investment. A salary is how a worker gets paid. In small companies, these may be the same person, but the nature of the financial flow does not change. When a company requires more cash, in times of need, it can issue debt or raise capital. Capital is usually paid last, in the pecking order. If government is lending to companies, it is reasonable to require them to avoid depleting its cash reserves paying capital.