The failure to understand the recycling of capital to be better employed elsewhere in the economy is not the only stupidity when it comes to dividends.
Several years ago I found myself in conversation with a friend’s daughter, aged about 18, who had a Saturday job at M&S. She was fulminating about dividends being paid to shareholders when they didn’t in her view deserve anything. She and the other employees worked in M&S, visibly contributing to it, and in return were paid a wage; meantime these parasites who possibly never went near a store also received money just because they happened to have bought a piece of paper with the M&S name on it on the Stock Exchange. They have contributed nothing; why should they get anything when I have to work for my modest wage, was her argument. Cue patient explanation from middle aged accountant on the elements of shareholder capitalism; I think I made some progress but the concepts were clearly all entirely foreign to her. But why should they be otherwise?
What all this shows is that vast swathes of people simply haven’t a clue how business is financed, or even that it needs to be.
The failure to understand the recycling of capital to be better employed elsewhere in the economy is not the only stupidity when it comes to dividends.
Several years ago I found myself in conversation with a friend’s daughter, aged about 18, who had a Saturday job at M&S. She was fulminating about dividends being paid to shareholders when they didn’t in her view deserve anything. She and the other employees worked in M&S, visibly contributing to it, and in return were paid a wage; meantime these parasites who possibly never went near a store also received money just because they happened to have bought a piece of paper with the M&S name on it on the Stock Exchange. They have contributed nothing; why should they get anything when I have to work for my modest wage, was her argument. Cue patient explanation from middle aged accountant on the elements of shareholder capitalism; I think I made some progress but the concepts were clearly all entirely foreign to her. But why should they be otherwise?
What all this shows is that vast swathes of people simply haven’t a clue how business is financed, or even that it needs to be.