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Comment by Lazare | Hacker News Reader

> I wonder how much of this could be counteracted simply by capping profits

Buffet's core complaint is about companies not making enough profits due to their profligate spending on other things. A profit cap would not have the impact you're hoping for here. :)

> such that all net revenue in excess of some fixed amount is forced by the corporate charter to be turned into either employee compensation or stockholder dividends.

By definition, only profits can be paid out as dividends, so again, a profit cap would prevent the thing you're you're trying to boost.

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> By definition, only profits can be paid out as dividends, so again, a profit cap would prevent the thing you're you're trying to boost.

Er, sorry, I rather meant that profits after dividends would be capped. You can do anything you like with the money—other than keep it in the corporate coffers (or in commercial paper or anything else that's still liquid assets on the balance sheet.)

But yes, you're still right, it wouldn't have the correct effect.

How about a sliding window cap on non-compensation spending, together with a sliding window cap on headcount? So, in a year with record 10x net revenue, you would be allowed to 10x your salaries/bonuses/dividends, but you wouldn't be allowed to multiply your capital costs, or "new" labor costs, by more than, say, 1.3x. (And keep the fixed profit-after-dividend cap, because otherwise the corporation would just hold all its money in the bank until the sliding window grew enough to let it spend it.)

I mean, you took a simple rule, got on objection, and made it a lot more complex. That's usually a sign that the underlying issue is not all that simple, and a simple rule will not remedy it.

With all the thousands of corporations that get created and destroyed all the time, it seems like parent's proposed rule could probably work for one or two of them? If not, maybe we could come up with something more substantial than, "this could be hard!"

That guy gave solid advice. OP is welcome to implement OP's rule but adding epicycles isn't going to get meaningful responses. When you start adding epicycles it's worth reinvestigating if your original theory has a meaningful basis.

Profits don't generally have a simple/strict meaning in business terms, AFAIK. Maybe you mean EBITDA? (earnings before interest, taxes, depreciation and amortization) I think even that is maybe not what you mean/wouldn't acheive your goals, even if it's theoretically unambiguous, because of what is invested in R&D/aquisitions/etc.

Also, presumably you're talking about new laws in the US here? What stops businesses from just moving their HQ overseas to places with different laws they like better?

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