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Comment by chank | Hacker News Reader

They hit the nail on the head right here: "Companies are psychologically and emotionally geared not to raise wages as a matter of course." Our current business culture is basically to maximize profits and minimize expenditures.

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For whatever reason, maximizing profits and minimizing expenditures is a popular trend among many successful companies

It's popular until a company loses its market. Minimal expenditures mean minimal investment and retainment. That's not healthy in the long-term for a company.

If you'd like to discuss further then please provide more than a summarized sentence.

Potential side-effects directly caused by this are also similarly trending

underemployment, opioid addiction, crime, suicide, widening wealth gap all come to mind

>Our current business culture is basically to maximize profits and minimize expenditures.

Yep, what the shareholders get is profit, what employees get is an expenditure.

shareholders don't get profits; hardly anyone is paying dividends. Corporations are just hoarding cash.

There is some cash hoarding (mostly overseas for tax reasons), but mostly what companies are doing are share buybacks. These are functionally equivalent to dividends but more tax efficient.

Less and less people get to own more and more of the company, until it's completely self owned and the board won't answer to anybody anymore?

Funny thing is, it may work better than the current conflict of interest company boards have.

nah they just re-issue the stock at a big discount to their friends and then issue more at an inflated price to dilute regular shareholders

In practice they split the stock once they brought back too much of it, so people can sell part of their holdings and the cycle goes on.

That cash is then reflected in stock price increase, which is preferable to dividends for tax purposes.

a bird in hand is worth two in the bush

And yet buy-and-hold is a thing in investment world.

Buy-and-hold investors should desire dividends more than anyone else. Dividends allow the investor to determine where to reinvest profits, it's nice to have the option to hold your cash in something with returns better than t-bonds (which is how these companies hold their cash). Companies can go bankrupt, and it's better to have gotten a payout dividend payout rather than nothing. Borders did a huge stock buyback a few years before declaring bankruptcy. Plus, mountains of cash can entice managers into making poor investment decisions.

I'm absolutely pro-dividend because I've seen too many blue chips squander investors money. But if you're only in it for the short-term, then executives using cash-on-hand to artificially inflate the company's stock price works in your favor.

https://www.forbes.com/sites/aalsin/2017/02/28/shareholders-...

Which isn't necessarily a problem is employees share in ownership. Unfortunately, it seems this is generally an option only for those that already make a relatively good income.

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