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I understand your concerns. > Instead of retaining a flat 50% for "growth" 50% retained earnings are not just for growth but also managing through economic cy
by akg_67 3y ago
I understand your concerns.
> Instead of retaining a flat 50% for "growth"
50% retained earnings are not just for growth but also managing through economic cycles and smoothing the operational expenses and compensate for occasional losses. There need to be some sort of reserve funds when things are not going as well as expected.
In your model, what will happen if in a quarter there was a loss, are you going to ask employees to contribute cash to make up for loss? Both profit and loss sharing and quarter to quarter swings might not work in the long term at organization level; cutting cost one quarter, adding cost next quarter; employees will leave as soon as they smell losses and need for cash outlay from their own personal pockets.
> For sure the 25% to shareholders is off the table anywhere I'm going to work. That's the one thing that makes or breaks the whole worker-owned thing.
My example is from private company perspective, where shareholders are just family members who started the company and work within the company. Somebody started a company, put his own capital and took the risk of failure. He needs to be compensated. In my example, both capital and labor are rewarded equally, unlike current capitalism where all the loots go to capital providers and labor is left fighting for nibbles.
- iExploder 3y agoI would argue 25% in perpetuity is not fair. Invested sum * interest based on risk, should be paid out to initial investors and then they should become "ordinary" employees of the company. What you described is a discount version of ordinary capitalist company.
- BillyTheMage 3y agoAh I suppose I misunderstood. A rainy-day fund is always a good idea to have. I thought you meant a fund that is constantly increasing or being spent to grow the company arbitrarily. You're right that if there's a spell of no work for my firm, we have to dip into our own pockets, because we don't keep a rainy-day fund or any "company money", but that's just because there's so few of us and we were already freelancers before getting together. Even when it first started as a "capitalist venture" there was no company money, just work and get paid. This is a good idea that I'm going to be running by the other guys. I've never seen anyone leave the group due to a dry spell, and that's because if there's no work then there's no work. Being in the group only increases the number of jobs each worker has access to, because each of us are like advertising agents for the rest. If we're on our own, there's only one person spreading the word. We could go work for one of the capitalist firms in town, but they have a similar amount of work to do, and it comes with all the downsides of not being in a co-op. I urge you to not use my hillbilly construction crew as an idea of what a large professional firm would look like under worker-ownership. We're just some dudes who like to hit things with hammers.