zlacker

The theory is nice but does this actually happen?

My mental model is that money in the pocket of companies is "low entropy money" and money returned to shareholders is "high entropy money".

It's the same amount, but much less effective.

>>admsmz+(OP)
I am not quite sure what you mean, can you elaborate? In my mental model, money in the pockets of shareholders is much more effective than money in the pockets of big corporates.

>>konsch+O1
In my mind, big corporates tend to be large corporations of wealth controlled by few people. And shareholders on average are the same. And therefore neither ought to be considered likely to be particularly effective.

>>admsmz+(OP)
> The theory is nice but does this actually happen?

All the time, that's what dividends are. Not something that happens much in growth tech stocks but real common in the rest of the economy.

>>nicobu+Le
Best would be if the company increased salaries, then their employees could invest themselves in stuff that actually benefit them, boosting the real economy.

>>geyser+Zj
higher salaries would be captured by landlords.

>>txnf+Fp
Only because there is under-supply of housing at the moment. If we built more houses then landlords wouldn't be able to charge higher rent just because people had more money.

To be clear, I think that we need to address both of these issues: general wealth distribution and lack of affordable housing.

>>nicobu+Le
Most big corporations are owned by institutional investors which represent the 401ks and pension plans of your average citizen.

>>konsch+O1
Define "effective." A company spends its money on people and other inputs to productivity. To my mind that's a lot more "effective" than giving it to the investor class that "spends" it on other investments (by buying it from other people in the investment class).

Most of the money returned to shareholders isn't going to be pumped back into the economy as money spent on goods and services. It just goes into the casino we call stock and bond markets where it provides some liquidity for some investment into companies, but most of it is just spinning around creating no value.

>>txnf+Fp
A majority of the population's landlord is the bank that holds their mortgage, and they don't just raise your mortgage payment because your income increases.

>>duped+sn1
In an economy, people’s work is transformed into output in the form of goods and services, which are then consumed by people.

It matters whether people’s work is effective or not, because it it’s ineffective, you have fewer goods and services that can be consumed.

The factor that connects work to output is called productivity.

It matters how the goods get distributed, yes. But as communism has shown, it also matters a whole lot how many goods and services are being produced.