From: Rafal Smigrodzki (rms2g@virginia.edu)
Date: Tue Sep 10 2002 - 17:16:33 MDT
Dan Fabulich wrote:
Of course, chewed gum certificates could serve as an adequate currency.
Maybe that's the point I'm overlooking? That anything worthless can stand
for a currency? But then, why would this currency be at all tied to the
firm's performance? Surely we can all pretend that Enron certificates are
of value, and trade them like currency, even if Enron goes out of
business...?
### Theoretically, since you have voting power, you and your designees, e.g.
a mutual fund, could buy enough of a firm's stock to vote yourself all the
dividends it could give. This cannot be said of collectors of Enron
certificates or chewing gum. And the more your firm grows, the more money
you could squeeze out of it, if you want.
Owning a stock is one of the few methods a small investor can use to control
something that has a direct, and indeed, causal relationship to the growth
of an economy - the money you invest in stock (as opposed to gold and other
speculative investments) is used to build the means of production, including
such intangibles as organizational excellence, and improvements in
productivity due to research and innovation. In the long run, it is the
increased productivity that really fuels growth in the, as you said,
"intrinsic" valuables - you can build a better cell phone because the
stockholders of Motorola and other companies once contributed money to it,
without charging interest upfront. The best method of making sure you will
have your intrinsically valuable goods is to control the means of their
production, and this is what the stock market supplies (imperfectly, but
still better than nothing).
Rafal
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