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Politics : View from the Center and Left
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To: TimF who wrote (11031)2/7/2006 12:30:30 AM
From: wonk  Read Replies (2) of 541777
 
….The investment capital continues to be at work whatever the initial investor does. Even when the investor dies the company can live on and continue to produce wealth.

Of course, but what has created the value which allows the Company to continue to produce wealth?

For example, I invest in a company selling widgets. Management hires two customer service reps (CSRs) to service accounts after sale. CSR 1 accounts have a churn rate of 3%. CSR 2 accounts have a churn rate of 2%. CSR 1 and 2 are paid the same. All other factors being equal, CSR 2 has created a “customer base asset” that is worth 50% more than CSR 1. CSR 2 demands a raise and is denied so CSR two leaves. Even though the “gift keeps on giving” to the investor, CSR 2 – though demonstrably better in their work got only the market value of their labor for the time they worked and only equal to the lowest common denominator.

The market is imperfect.

Now your comeback will be – that’s short sighted management and the investor will ultimately lose. Yes, true IF the investor holds. If the investor sells, he captures the gain, and has to remit nothing to the person who created the value. If management is enlightened then superior producing employees capture an equitable portion of the increase in value that their labor generates.

BUT

Almost never do they capture more.

ww

p.s … I don't think most aspects of private property should be a matter of public policy. It can and IMO should be public policy to prevent theft of property and to settle disputes when the real owner is unknown. Maybe to regulate in such a way as to reduce the possibility of fraud but other than that its not "the public's" business to have a policy about it.

Rhetorical Question: As a matter of public policy then, the People should not demand some compensation for the extremely valuable intangible asset inherent in the Government charter of LLCs and Corporations – that is the limitation of liability?
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