There was an article in Fortune Magazine not long ago explaining why investments in stocks - that is the purchase of shares in a private company - tends to give a better return over the long pull than bonds. They explained it this way: "Well managed industrial companies do not, as a rule, distribute to the shareholders the whole of their earned profits. In good years, if not in all years, they retain a part of their profits and put them back in the business. Thus there is an element of compound interest operating in favor of a sound industrial investment." Over the long pull, the stock grows with compound interest while the bond only returns a straight interest to its investor. It makes a very simple point: one primary way America grows its economy, and thus creates more jobs, is when existing companies plow their profits back into the enterprise.
This also points up the damage liberal politicians do to our entire economy when they insist on sticking American business with heavy taxes. If a company is going to grow, and thus create more and better jobs, it must either get money from the profit it makes or go outside and get money from investors. If the federal government is taking, say a half ... that is what many liberals want us to tax business ... of a businesses profits as taxes, then it is obvious that business will have only half as much money to grow as it could have otherwise. And certainly that company is not as inviting an investment as it would be if it had more of its profits to plow back into growth.
You've got to wonder: if government got its hands out of the pockets of American business, just how fast could our economy grow? How many good jobs could we create? This is Gordon Sawyer, from a window on historic Green Street.
http://accesswdun.com/article/2002/3/196852
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