Friday, August 19, 2011
Shock poll — 83% of Groan readers oppose capitalism
Yes folks, it's true. I have the link to prove it (link).The back-story is Stagecoach's £340mn distribution to shareholders. The company has generated a pile o' cash and has paid off a shedload of debt. More, in fact, than is fashionable, so it intends to shell some cash out to shareholders to make itself a bit leaner of balance sheet.Of course, your average Guardian reader is utterly uninterested in the workings of the capital markets , and so does not realise that (for example) shareholders can elect to take their share of the distribution in any proportion of income and capital they wish (src). (Some have been calling it a 'dividend': for some this will be true; for others, less so. For holders in pensions or Isas, this will be irrelevant.)Others, I suspect, do not quite comprehend what would happen if the payment were 'blocked'. This almost certainly includes the Guardian staffer who thought up this bizarre question. For the company would have access to borrowing facilities it wasn't using. (I thought current Guardian economic, um, 'thinking' was that companies' balance sheets ought to be stuffed to the gunwales with debt.) Now, the directors have a legal duty to use it to further the interests of shareholders, which would entail using those facilities expanding Stagecoach's market share and other activities I am quite certain the Guardian readers would dislike intensely.It is one thing to question whether rail franchises should be, in effect, Crown monopolies. Some Groan readers seem perilously close to this view (I say perilously, since to hold it would imply supporting liberalisation, not nationalisation). But if the company has earnt its revenue legally by conducting itself in a commercially sound manner, with all due probity — if, in short, it has earnt it well — then why should Guardian readers object to its shareholders receiving their compensation as owners and suppliers of capital? After all, they would be most put out if its employees had their salaries blocked. I imply no slight. It is perfectly fine to be utterly uninterested in the workings of the capital markets; taking an interest is very much a minority sport. But if one is so uninterested, then one ought to avoid holding strong opinions on them, for fear of being caught believing something not only contrary to fact, but also to good sense.I neither hold nor intend to hold shares in Stagecoach.