You are a CEO and you get a salary of, say, $10k, plus 1000 shares, each worth $1. So, in total, that year your worth is $120k + $1000 = $121k.
Now, you’re incredibly successful as a CEO, you make your shareholders drool for your company’s shares. Which makes their price skyrocket. Each share is now worth $1000! Such success!
But wait! No! Catastrophe!
Your worth has just gone up to $120k + $1000k! The share’s value on their own hits the upper limit of wealth!
They’re not your money, mind you, you can’t do anything with them unless you cash them in, sell them.
So, you have two choices - you stop getting any salary and have $0 for spending (hopefully the office cafeteria is well stocked!), or you sell some shares, give the money to charity, and pray the stock price doesn’t go up. And if it does, you have to sell again, lose the money, and… oh, but now you no longer hold a controlling interest in your own company - some three dudes who work together bought up the shares, spread them around evenly (so neither of them goes above the $1000k), and they effectively control your own company, telling you what to do with it.
Companies shouldn’t be able to have over, say 1000 employees either.
So, instead of having some large companies, you end up with chains of “totally not the same” companies that just work together. “Oh, we’ve outsourced our HR to company X, which is Totally Not The Same as our company, they just don’t work with anybody else and we have full data transparency with them.”
I am pretty sure than between the current model that is slowly but inexorably going towards: “2 kinds of people in the world: trillionaires and people depending on trillionaire’s charity to survive”, and the model decribed above, we can find a middle ground.
Not so long ago, the ratio between CEOs pay and median worker pay was 20. Today it’s 280. There were successful and motivated CEO at the time.
The US had a period during which the highest tax bracket was 90%. There were CEO, there were rich folks and there were entrepreneurs.
Enough with all the “impossible”. The current situation is the anomaly. The current situation is the not sustainable approach. It’s not just the US, neo-liberalism has spread over the decades with the very very very exact same results absolutely everywhere it was tried:
-impoverished population overall
-reduction of services to the population
-increased public deficit
-ultra-rich getting immensely richer
Either we keep saying “it’s complicated” and keep course. Its end is already known: a collapse of the economy on itself: there is not enough people left making a decent enough living to buy what is produced, and everything belong to the ultra-rich.
Or we change course. It’s almost a matter of survival for the poor.
So, what you’re writing is in good faith, I can tell, but shows a fundamental lack of understanding how shares work.
If the value of a company goes up, the number of shares doesn’t change, the price per share increases. So, if a company emitted 100 shares, and they were valued at $10 each, for the worth of the company being $1,000.
Now, stuff happens, and the company is now worth $10,000. It doesn’t mean that there are now 1000 shares, it means that each share is now worth $100.
Which means that there are no “excess shares”.
What a company could do is something called “stock dilution”. For example, you have that company from before, worth $10,000, with 100 shares, $100 per share, right? They dilute the shares and emit another 100 shares, bringing the total to 200. But the value of the company is still $10,000, it just means that the value per share is now $50.
Seems like a good idea? Here’s the problem - control over a company is still determined by the percentage of owned shares. You had 100 shares? You need 51 to independently control the company. You now have 200? You now need 101 shares for the exact same level of control.
Which means: either the CEO of that company loses control of the company (effectively “gives it away”, potentially to malicious actors from the competition who just want to shut him down), or he still needs to own 50%+1 shares (so from 51 to 101 shares), meaning his wealth doesn’t change at all.
Alright, let’s run a quick model.
Let’s say the upper cap is $1000k.
You are a CEO and you get a salary of, say, $10k, plus 1000 shares, each worth $1. So, in total, that year your worth is $120k + $1000 = $121k.
Now, you’re incredibly successful as a CEO, you make your shareholders drool for your company’s shares. Which makes their price skyrocket. Each share is now worth $1000! Such success!
But wait! No! Catastrophe!
Your worth has just gone up to $120k + $1000k! The share’s value on their own hits the upper limit of wealth!
They’re not your money, mind you, you can’t do anything with them unless you cash them in, sell them.
So, you have two choices - you stop getting any salary and have $0 for spending (hopefully the office cafeteria is well stocked!), or you sell some shares, give the money to charity, and pray the stock price doesn’t go up. And if it does, you have to sell again, lose the money, and… oh, but now you no longer hold a controlling interest in your own company - some three dudes who work together bought up the shares, spread them around evenly (so neither of them goes above the $1000k), and they effectively control your own company, telling you what to do with it.
So, instead of having some large companies, you end up with chains of “totally not the same” companies that just work together. “Oh, we’ve outsourced our HR to company X, which is Totally Not The Same as our company, they just don’t work with anybody else and we have full data transparency with them.”
Yes, they’ll find loopholes. Close those, too.
I am pretty sure than between the current model that is slowly but inexorably going towards: “2 kinds of people in the world: trillionaires and people depending on trillionaire’s charity to survive”, and the model decribed above, we can find a middle ground.
Not so long ago, the ratio between CEOs pay and median worker pay was 20. Today it’s 280. There were successful and motivated CEO at the time.
The US had a period during which the highest tax bracket was 90%. There were CEO, there were rich folks and there were entrepreneurs.
Enough with all the “impossible”. The current situation is the anomaly. The current situation is the not sustainable approach. It’s not just the US, neo-liberalism has spread over the decades with the very very very exact same results absolutely everywhere it was tried:
-impoverished population overall -reduction of services to the population -increased public deficit -ultra-rich getting immensely richer
Either we keep saying “it’s complicated” and keep course. Its end is already known: a collapse of the economy on itself: there is not enough people left making a decent enough living to buy what is produced, and everything belong to the ultra-rich.
Or we change course. It’s almost a matter of survival for the poor.
I agree! I’m only saying that often the “simple solutions” aren’t really solutions when you stop for a moment to really think about the consequences.
There are several countries that have a wealth tax and they still have rich CEOs, so there is a way to address the problems that you’re describing.
https://en.wikipedia.org/wiki/Wealth_tax
Of course! It’s just never as easy as people think.
Oh yeah, 100% agree.
You’re right that their plan won’t literally work as they’ve designed it, but they have the right idea and ideas can be refined.
When share prices drive someone above the wealth limit, the excess shares are distributed equally among everyone involved in the companies
So, what you’re writing is in good faith, I can tell, but shows a fundamental lack of understanding how shares work.
If the value of a company goes up, the number of shares doesn’t change, the price per share increases. So, if a company emitted 100 shares, and they were valued at $10 each, for the worth of the company being $1,000.
Now, stuff happens, and the company is now worth $10,000. It doesn’t mean that there are now 1000 shares, it means that each share is now worth $100.
Which means that there are no “excess shares”.
What a company could do is something called “stock dilution”. For example, you have that company from before, worth $10,000, with 100 shares, $100 per share, right? They dilute the shares and emit another 100 shares, bringing the total to 200. But the value of the company is still $10,000, it just means that the value per share is now $50.
Seems like a good idea? Here’s the problem - control over a company is still determined by the percentage of owned shares. You had 100 shares? You need 51 to independently control the company. You now have 200? You now need 101 shares for the exact same level of control.
Which means: either the CEO of that company loses control of the company (effectively “gives it away”, potentially to malicious actors from the competition who just want to shut him down), or he still needs to own 50%+1 shares (so from 51 to 101 shares), meaning his wealth doesn’t change at all.