Well, maybe it's the bold <g> but after ignoring this for a very long time I sympathise with your conclusion, TP. More or less. I however disagree with the case.
Agreed, an equity stake does allow a theoretically infinite dividend/growth gain. But DCF should equate that to the gain from putting the same into a money market account, bearing in mind the risk (i.e, the company may go bust, or otherwise cease growing/paying dividends). That's the point of the stock exchange, as people value that future earnings stream against other possibilities.
Being a worker does not provide an infinite return stream, even in theory. In exchange for your asset which is far more limited and valuable (your working life) you get basically fixed returns, and no right to the increased value you may have contributed beyond this. Unless you make board level, of course, or get lucky with stock options.
So, there's an unequal contribution; risk capital (which need not be the only capital you possess, and by definition you can spare) against time capital (which you have once, only once, and can never grow). The two get dissimilar and unequal rewards.
The reason I disagree with your conclusion is that I believe life's like that.
There's more labour than capital, and more people (including me) willing to trade it for a fixed amount even if I lose. And not many altruistic employers willing to give workers an automatic stake in the business.
I do know one shining example that DOES work this way, johnlewispartnership.co.uk, and they never lack for would-be employees. I also shop there by choice, because I thoroughly approve of their stance (as well as their high quality).
But overall the market has decided. If labour were truly more highly valued than capital, it would be different; but any attempt to force the market will ultimately fail. |
