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February 28, 2012

[SSJ: 7226] Re: implications of declining population for J economy

From: Peter Cave
Date: 2012/02/28

A short comment on the debate between M.Helary and Mr Alexander. The latter recommends that companies give more of their profits away to shareholders, in order to increase personal income and fuel economic growth, rather than investing it in a relatively unproductive way.

However, there is an alternative, which strikes me as more desirable in various ways, namely, that companies give more of their profits away to their employees rather than to shareholders. This seems to me more economically desirable because there are many more employees than there are shareholders, so if you want to boost consumption, then increasing employee income is more effective. In addition, I suspect it's a fair bet that employees as a group are poorer than shareholders as a group, and poorer people spend a greater proportion of their income (and especially domestically), don't they? Thus, on this count too this strategy delivers a bigger boost to consumption=

Approved by ssjmod at 11:23 AM