<<There is no legal requirement that public companies "constantly increase
profits." >>
I think I know where the poster is coming from.
Similar to the UK, there is this a constant (albeit not legal) requirement
to "beat last year's profit".
It's almost deemed as some sort of tragedy if the current year's profits a
lower than last year's.
This gives the company an impossible notion of always increasing profits or
"fail".
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At 23 06 05, 04:16 PM, Gavin Young - Renewable Electricity Solutions
wrote:
Publically traded for-profit
corporations are generally dominated by
excessive greed, in part because of the short term focus of many of
their
shareholders and because they are legally required to try to
constantly
increase profits.
I disagree with both statements here. Sure there are some public
companies that are greedy, but the vast majority work hard to provide
value while making reasonable profits. The average public company
in the USA makes only about 7% after-tax profit, which can hardly be
called greedy.
There is no legal requirement that public companies "constantly
increase profits."
Non-profit corporations are
legally prevented from manufacturing goods (such
as environmentally friendly renewable energy products) and they have
the
shortcoming of being allowed to pay huge salaries to those running
the
organization (Goodwill Industries comes to mind).
In your discussion you skip over a very large portion of the US economy:
privately-held, for-profit companies. In numbers of firms, they represent
probably 90% of all active companies in the USA. I don't know what they
represent in terms of total GDP, but I'd be surprised if it was under 30%
to 40%.
What we need are for individuals
to voluntarily create entities that have the
purpose of manufacturing environmentally friendly products that are very
low
maintanence and that made to last years, without excessive salaries to
those
running the organization. We also need legislation that recognizes this
type
of entity. Such a hybrid entity (a for-semiprofit corporation) could
create
serious competion for the for-profit corporations because the hybrid
entity
would better meet the needs of consumers, while doing a better job
of
conserving the world's resources. Our current capitalist system has too
many
excesses, however state run entities also have
problems.
There is no need for any such new entity. You, or any one else, can go
start such a company tomorrow -- there is absolutely NO barrier to you
doing so. Structure it as a sole-proprietorship, or a partnership, or an
LLC, or an S-corp, or even a C-corp. None of these requires large
salaries to the owners, none are prohibited from manufacturing.
Oh, there is the little problem that the "environmentally friendly
products" you suggest may not be anything anyone wants to buy, at
least at what you would have to charge. But that is entirely unrelated to
the legal structure of the company.
Even the non-profit issue is moot: companies that don't make money don't
pay corporate income taxes -- they are taxed on their profits, not on
their sales.
Jim Elwell
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