executive options

Max Sawicky sawicky at epinet.org
Wed Apr 5 11:46:04 PDT 2000


. . . In a rational but simple world, the returns to stock ownership ought to track the ratio of profits to capital stock, or the rate of return on capital. Putting aside all the reasons this does not happen, the ROR could exceed GDP growth indefinitely without profits eating up GDP. . . .

Amendment: Share values should increase with the level of capital and/or profits (a company gets bigger, it is worth more), not just with a change in the ROR. The ror on share ownership is not the same as ROR on capital. It remains the case, I think, that the ROR need not equal the growth rate of GDP, capital, or profits.

mbs



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