LETTER FROM THE EDITOR
Beginners” feature that uses your dad’s and your uncle’s apple orchard as an example. My dad and my uncle didn’t sell apples, they sold cars. Plow your profits back into that business and you’re buying the cars you just sold. The motives, strategies, and tactics behind “Zero-Profit Corporations” are well-explored in this issue of American Consequences. But I’ll throw in my two cents anyway. (That’s more than you’ll get from Berkshire Hathaway dividends.) Buying a stock only because I expect someone else to buy the stock later for a higher price makes me feel slightly like I’ve been plopped down in Giza between Khufu and Khafre in the land of pyramid schemes. Never taking a profit from a healthy business also reminds me – more than slightly – of my supposed savings account when I was a kid. Every Christmas and birthday $5 bill that I received... along with all of what I was paid for mowing the neighbor’s lawn... went in there. The balance was several hundred dollars. “We’re saving for your college education,” my mother would say. Maybe we were saving for my college education. But I was saving for a Wham-O slingshot. I had $2.38 in an old Prince Albert can, mostly from pop-bottle deposits and change found under the sofa cushions. To this day, I believe I would have been happier with taking one less English Lit. course and shooting a lot more squirrels and pigeons.
Meanwhile Apple, which is considered to be a legendarily brilliant and innovative company, does pay a dividend, had a 6% net income return, and has a P/E of 17.6. What’s happening here is far beyond the brain power of an old liberal-arts major like me. But I’m told Apple’s stock price is low because gigantic investment funds already own so much Apple stock that they can’t stay diversified unless they buy something else. That might cause a more conspiracy-minded person than myself to wonder how much freedom there really is in the Free Market. Four of America’s top 12 companies – Amazon, Facebook, Google, and Berkshire Hathaway – don’t pay dividends. All of them have net income (see chart). Even famed burner-through-capital Amazon had 2016 net income in excess of $2 billion and Berkshire Hathaway had 2016 net income in excess of $24 billion. Not a penny of it went to shareholders. I understand the idea behind plowing profits back into the business. There’s a website called “the balance” with an “Investing for That might cause a more conspiracy-minded person than myself to wonder how much freedom there really is in the Free Market. The For-Profit Not-For-Profits
12 | August 2017
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