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Profit Sharing

ZenBear
Posts: 23
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1/29/2016 7:26:50 AM
Posted: 10 months ago
Instead of taxing the rich so that the government can redistribute the wealth, what if companies were required to give every employee a share of their profits? If your pay increased based on how well your employer is doing, you would work harder to see that your employer made a profit. If your company is doing well you would attract hard working employees who are driven to earn a spot in your successful business. That's the spirit of capitalism, is it not?

If more money is distributed to more people, more people will be able to purchase goods and services, and more people will be paying higher taxes, meaning the government is still well funded and can adequately fund infrastructure, military, legislation, etc.

Is there any way to accomplish this that doesn't overly infringe on the free market?
Rosalie
Posts: 4,605
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2/4/2016 3:11:05 PM
Posted: 10 months ago
I'm surprised nobody has posted to this yet.

Posting here now as a reminder to reply to this later tonight.
" We need more videos of cat's playing the piano on the internet" - My art professor.

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Officially Mrs. 16Kadams 8-30-16
ResponsiblyIrresponsible
Posts: 12,398
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2/4/2016 5:00:33 PM
Posted: 10 months ago
I like this topic a lot. Someone should remind me to comment on it later -- after I make my thread on the yield curve.
~ResponsiblyIrresponsible

DDO's Economics Messiah
dylancatlow
Posts: 12,242
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2/4/2016 7:09:51 PM
Posted: 10 months ago
I think it would be a very bad idea to replace our current redistribution model with a profit sharing model. For one thing, some lines of business are just inherently more profitable per employee than others. For instance, the oil industry is far more profitable per employee than the retail industry. Some companies, like Amazon, don't make hardly any profits; they're lucky if they even break even. Are its employees just out of luck when it comes to government benefits? Secondly, companies rarely make steady profits year after year. It would be cruel to tie workers' welfare benefits to something prone to wild fluctuations. This system would also encourage companies to engage in very strange business practices - that is, avoiding profits wherever possible. They would look for ways to spend as much of their revenue as they could get away with e.g., on outrageously high CEO salaries. Shareholders would see their profits plummet as companies tried to reinvest their revenue in "productive" ways. It would also strongly discourage hiring to begin with. The notion that the best way to encourage employees to work hard it to cut them in on their company's profits is totally unrealistic. Even in a medium-sized company, an employee's individual contribution amounts to very small part of the whole. You could work twice as hard and perhaps increase your pay by half a cent. Do people respond to that kind of incentive? Of course they don't. The best way to encourage hard work is to reward employees at the individual level through, example, commissions, or bonuses for exceptional performance. Furthermore, in the same way that restaurants can hire waiters and wait stresses at low base rates because of the expected income they'll receive from tips, employers could hire workers at lower base rates, which means the variable income from the profit sharing would take on a larger role that might at first be assumed.
dylancatlow
Posts: 12,242
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2/4/2016 7:17:28 PM
Posted: 10 months ago
I should also add that even if hard work translated into significant profit gains for the company, there's no guarantee that the company wouldn't just use those profits to expand, thereby cancelling out any "benefits" of the hardworking employees.
famousdebater
Posts: 3,934
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2/6/2016 5:23:21 PM
Posted: 10 months ago
At 1/29/2016 7:26:50 AM, ZenBear wrote:
Instead of taxing the rich so that the government can redistribute the wealth, what if companies were required to give every employee a share of their profits? If your pay increased based on how well your employer is doing, you would work harder to see that your employer made a profit. If your company is doing well you would attract hard working employees who are driven to earn a spot in your successful business. That's the spirit of capitalism, is it not?

Yes it is the spirit of capitalism but how in your opinion how many companies do you know (excluding charities) that want to redistribute the money that they make instead of giving most of the profit to the people in charge?

If more money is distributed to more people, more people will be able to purchase goods and services, and more people will be paying higher taxes, meaning the government is still well funded and can adequately fund infrastructure, military, legislation, etc.

It's fairer, easier for the government, easier for the poor but the rich don't like it and the government practically worship the rich these days.

Is there any way to accomplish this that doesn't overly infringe on the free market?

Yes but it won't happen.
"Life calls the tune, we dance."
John Galsworthy