Subject: Re: back to topic (was Re: a stocks and dividends question)
From: "Stephen J. Turnbull" <>
Date: Fri, 10 Jan 2003 19:38:54 +0900

>>>>> "Tom" == Tom Lord <> writes:

    Tom> No corporate taxes -- very interesting idea.  We need
    Tom> Greenspan on the list to tell us what the models say about
    Tom> that.

It's not particularly hard.  The abstract economic models say it's a
good thing, because it prevents distortion in allocation of large
chunks of economic resources.  The transactions cost (and political
economic) models say that corporations are (usually) easier and
cheaper to find and tax than individuals, and (since they can more
easily pass through tax increases as price increases) politically more
palatable to tax.

    Tom> I asked for refutation or confirmation of my amateur belief
    Tom> that stock valuations have to be rooted in dividends and got
    Tom> (paraphrasing) "Yeah, that's economics 101".

It is easiest in Economics 101 to explain valuation in those terms.

However, there is no need to actually distribute dividends.  You
simply need to (a) show that you could distribute if the stockholders
insisted and (b) convince the stockholders (not so much the current
ones, but the ones they'll unload your dog shares to) that they're
better off if you retain the earnings.

Ie, it _can_ be a pyramid scheme.  However, not all pyramids are built
of sand.  The Great Pyramid at Giza is 3000 years old, and (assuming
it doesn't get nuked or sold to the Chicago office of the Friends of
Egypt) will probably last another 1000 or so.

    Tom> R&D is a service;

False.  R&D produces a longlasting though intangible asset that can be
transferred from one user to another, and once produced, not even the
continued existence of the producer is relevant.  Not a service,

As you correctly point out, your whole analysis stands or falls by
this assumption.  It's embedded in N*K and similar formulae, which
assume that you have to either continue developing Linux, or leave the
business.  You can't stick with Linux 2.2.22 (K + J = 0) while others
use 2.4.x.

    Tom> And what about the ethics?  Corporations are not people.
    Tom> They have no natural rights.  It is at least arguable that
    Tom> they do not deserve "software freedoms".

This is just like a corporate income tax---it will distort behavior.
If corporations can't use arch for free, but they want to, they'll
simply arrange that their employees bring arch with them to work.  If
you don't allow employees of corporations, they'll fire them, and
treat the same people as "independent contractors".  (Don't think it
could work?  It worked fine for Japan, 1867--1990.)

So really you can't distinguish between corporations and other
businesses; you'd have to prohibit commercial use.  Hello, AFPL!

That's fine with me, but you can't call it "free" by any current

Institute of Policy and Planning Sciences
University of Tsukuba                    Tennodai 1-1-1 Tsukuba 305-8573 JAPAN
               Ask not how you can "do" free software business;
              ask what your business can "do for" free software.