Nader to Gates:

January 8, 2002 2:36 AM

Nader to Gates: "It is significant that a small number of persons who run the company hold a substantial share of the stock in the company, a fact that is very unusual for such a large publicly traded corporation."

"This also raises questions about whether or not these persons, including yourself, are accumulating these staggering sums of cash to advance other agendas, rather than to advance the interest of shareholders."

Nader Nader Nader
posted by crasspastor (29 comments total)

Microsoft has never paid a dividend in its 15 years as a public company

And shareholders sell their stock paying only 2% tax? Nader is right, dammit. Nader should have written to the IRS instead. Well, being Nader, he probably already has, every week, for the last ten years.

But it's the IRS who should clean up their act. Microsoft are just exploiting a massive tax loop. ( It seems to this know-nothing)
posted by MiguelCardoso at 2:52 AM on January 8, 2002

The IRS is the sum of the US government's parts, in a sense. The US government is the sum of it's corporate coffers.

To proffer a guess, Bill Gates has more legislative punch than the whole of the state of Washington, in which he and I live (I have the nicer pad of course). This saying nothing about various billionaires' influence in everything that has to do with each and every one of us globally. The IRS will never clean up their act as long as the wealthy continue to control everything that is and was "democracy". Like it or not, fascism has firmly gripped this planet. I also believe, we're allowed to converse like this as long as we don't get too far out of line. We can talk and spout off all we want. But it won't make a bit of difference. Until we begin to organize--that's when the arrests will come. . .

In other news it's warm and rainy here in Seattle. . .
posted by crasspastor at 3:42 AM on January 8, 2002

Leaving aside the tax issues, how much of Microsoft's success is down to the clout that small number of individuals have because of their shareholding? They're more likely to take a longer-term and technical perspective to decisions than any institutional shareholders.
posted by kerplunk at 4:02 AM on January 8, 2002

The only way to get money out of politics is to get politics out of money. Of course that solution is also the only remedy Nader is unwilling to pursue.
posted by frednorman at 4:21 AM on January 8, 2002

My common sense feeling is that's it's ludicrous that such a profitable public company has paid no dividends to its shareholders in fifteen years. The bigger shareholders are obvious accomplices. The smaller ones are probably being screwed, as usual.

You invest in a company. The company makes money. The company pays dividends on the shares. It should be that simple. Anything else is fishy, to say the least.

The malodorous thing about capitalism is that it's so damned uncapitalistic whenever it suits the capitalists.
posted by MiguelCardoso at 4:26 AM on January 8, 2002

You invest in a company. The company makes money. The company pays dividends on the shares. It should be that simple. Anything else is fishy, to say the least

I don't think it's actually really that simple, Miguel. First of all, take a quick look at a historical share price chart for Microsoft - I think you'll have a hard time convincing me that Microsoft has been shafting their investors. Second, with most high-growth companies, investors want the company to reinvest cash in the business, leading to profit growth and share price appreciation - dividends make more sense with slow-growth business that do nothing but throw off stable cash. Lastly, there are other (often more efficient ways) to use cash to help investors, including repurchasing stock in the open market (which leaves the remaining shares worth a proportionately greater amount) - something on which M-soft has spent billions.
posted by fluffy1984 at 4:59 AM on January 8, 2002

Come on, folks, let's sing:

Nader Nader Nader!

Woooooo!

Nader Nader Nader!

huh huh huh...
Woooooo!
posted by stavrosthewonderchicken at 5:19 AM on January 8, 2002

How dare Gates and others own the company they created! What gives them the right to succeed on their own merit. I'm insulted that I have not been offered the sweat from his brow.

What would happen if the succesful stopped? Decided not to play the game anymore? Who would you steal from then?
posted by Mick at 5:34 AM on January 8, 2002

Those who dislike MSFT's dividend policy should not buy the stock.
posted by Prawn at 5:52 AM on January 8, 2002

Come on, folks, let's sing:

Nader Nader Nader!

Woooooo!


Actually, my first thought was:

Nader Nader Nader,
I made you out of clay.....

Obviously I'm still recovering from the holidays.
posted by elfgirl at 6:18 AM on January 8, 2002

Yeah those software makers sure are evil, what with them killing the indigenous peoples and all.

I guess rather than harp about businesses who kill people, Nader has decided to talk about something that affects people's pocketbooks. No one will listen to him, because most people don't hold Micros~01 stock.
posted by insomnyuk at 6:20 AM on January 8, 2002

Obviously I'm still recovering from the holidays.

I don't care -- no matter when he's dry and ready, you don't get to play with Nader. He'll break a shin.
posted by dwivian at 6:28 AM on January 8, 2002

i thought this was an interesting discussion:

GL: What would be a maximalist demand? Closure of futures markets? Cracking down on dubious IPOs? How can the shareholder society be undermined, other then see ordinary people being punished, losing their retirement funds?

DH: Well, there was the old Swedish approach, wage-earner funds, which got quashed because Swedish capital didn't like the idea (and they were considerably watered down between original conception and actual implementation). Basically, these were pots of money funded through taxes on corporate profits whose aim was to buy up outstanding shares and manage them on behalf of the working class as a whole. What I'd like to see over the long term is outside shareholders eliminated. They serve no useful social function. I know that seems fanciful in today's political environment, but you never get anywhere in life without making big demands to start with. I'd also like to make the point that there's something illusory and fetishistic about the very notion of retirement funds. Individuals or families can save for a while, then draw down their savings, but societies as a whole cannot. Today's retirees can't be sustained using yesterday's savings - the money has to come from today. Effectively, today's stock buyers are what fund today's stock sellers. Just like a public pension system, a private one depends on the cross-generational transfer of funds from workers to retirees.
posted by kliuless at 6:32 AM on January 8, 2002

The accumulated earnings tax has rarely been applied to bona fide operating businesses; it's really an anti-tax shelter rule, used against corporations which are established for the purpose of avoiding tax on dividends and (to a lesser extent) interest payments.

Moreover, any company which grants large stock options as a matter of practice has a compelling business need to engage in systematic stock repurchases in order to avoid seriously dilution as options are exercised.

In any event, the idea of using an existing regulation in the tax code to force a change in a fundamental American corporate management practice which was manifestly not adopted to spare shareholders tax (i.e., that technology companies return money to shareholders by stock buybacks rather than dividend payments) is truly apalling. At a bare minimum, any shift in this direction should require a new regulation, with a long comment and public review period ... better yet, it should require an entirely new law adopted by Congress, defining maximum profit accumulation as a function of revenue or profits over the long-term.
posted by MattD at 7:13 AM on January 8, 2002

dammit, why do you get to own the company you started?! why?! i want some! gimme gimme gimme!!
posted by aenemated at 7:32 AM on January 8, 2002

Dear Ralph,

Thank you very much for advocating on my behalf. Your kind intentions are noted, but as a MSFT shareholder, I'm quite satisfied with the way the company is being run. If I was not, it would take a simple phone call to my broker to divest.

Regards,
Midas Mulligan
posted by MidasMulligan at 7:35 AM on January 8, 2002

Slightly off topic...

Did anyone catch Ralph Nader on the Simpsons Sunday night?
It was hilarous! The Rich Texan was nearly as good.
posted by nofundy at 8:09 AM on January 8, 2002

Midas: No one's claiming that the shareholders want this; rather, that Microsoft has avoided dividends as a tax shelter. As MattD pointed out, this law has rarely been applied to legitimate companies.
posted by skyline at 8:40 AM on January 8, 2002

No, Miguel, this is the beauty of capitalism. Someone like Ralph Nader can own shares of Microsoft and owns part of the company. He then has a voice (however small) in how the company is run, and is free to express his opinion. If enough shareholders agree with Nader that the company is not (and will not be) maximizing shareholder value, and that they can get a better deal elsewhere, they will sell the shares, thus driving the price (and value of the company) down. The large shareholders can either attempt to avoid that result by agreeing to change, or can accept the consequences. The market takes care of itself.

And since when has Nader been concerned about shareholder value, anyway?
posted by pardonyou? at 8:49 AM on January 8, 2002

Hmm, Kliuless, I'm not sure I'm on board with that discussion at all.

What I'd like to see over the long term is outside shareholders eliminated. They serve no useful social function.

They serve a very useful function - they provide capital for companies seeking capital, and liquidity for investors who want to exit their investment. If you want to do away with capitalism fine, but within the current system outside shareholders are integral to the functioning of the economy, the ability of companies to fund growth and individuals to invest.


I'd also like to make the point that there's something illusory and fetishistic about the very notion of retirement funds. [cut] Effectively, today's stock buyers are what fund today's stock sellers. Just like a public pension system, a private one depends on the cross-generational transfer of funds from workers to retirees.

Once again, if you want an economic system not predicated on the existence of money, fine. Within the current system, however, this exchange is no more fetishistic or illusory than any the regular business of any company: a company invests present money in developing/producing something that will be bought in the future. If you cut it off at any time (no one buys the crap you make) it all falls apart just like a pension plan would if all of a sudden no one wanted the securities which it had bought. Anyway, I don't think it counts as fetishism if its based on reasonable expectations of future events - you're not counting on magic or mass hypnosis or fals consciousness, just on basic, rational, human self interest.
posted by fluffy1984 at 8:56 AM on January 8, 2002

I don't see Nader can complain about Gates and his friends owning a large chunk of the company, and then accuse them of not being interested in shareholders. Of course Gates and his friends are interested in shareholders, which just happen to be themselves. Duh!

Next he'll be calling for people actively involved in the management of companies to divest themselves of ownership, despite the fact that stock ownership is a powerful incentive to put aside one's own interests for the good of the company, since if the company succeeds all stockholders benefit.
posted by kindall at 8:59 AM on January 8, 2002

nofundy: that was classic

Monty Burns: Anyone else have any ideas to further promote our far right agenda?

Nader (raising his hand): Oooohhh Oooohhh Ooohhh!

Monty Burns: Oh no Mr Nader, you've done more than enough already

(or something along those lines)
posted by jonah at 9:54 AM on January 8, 2002

yeah, i agree fluffy1984. plus there's just something cool about people owning shares (trading cards) of companies that millions of people can vote "am i hot or not?" on everyday. i just thought it was an interesting discussion (marxist critique).

doug henwood wants to change the system. that's his "maximalist demand" (wishful thinking) and i think he is arguing for a false consciousness raised by the system, independent of individual expectations. earlier in the interview he states, "Expanding your hoard of money is what the whole system is all about."

if you want an economic system not predicated on the existence of money

the interesting part to me is that there are different kinds of money/currencies. not just fiat-based fractional reserve systems administered by central banks.
posted by kliuless at 9:57 AM on January 8, 2002

Miguel - a lot of this is as a result of subtleties in US individual tax law. A share of stock can make you money in two ways - it can bring you a dividend, or it can increase in value (presumably because the company increases its profits). But, dividends are taxed as regular income (between 30% and 40% for most shareholders), while if you hold a share for more than eighteen months, the money you make selling it is only taxed at 20%. This gives companies more incentive to reinvest their profits internally so as to increase the value of their company; so that's what they do.
posted by jaek at 10:08 AM on January 8, 2002

That's fair enough Kliuless. Within the boundaries of its own set of rules, the current system makes sense; DH clearly wants to look at it from outside those boundaries, which can show a remarkably different beast. Any framework of exchange/value is going to be based on this sort of inside/outside thing - I wouldn't really call it false consciousness.

the interesting part to me is that there are different kinds of money/currencies. not just fiat-based fractional reserve systems administered by central banks.

Like what? Not being sarcastic, just genuinely interested.
posted by fluffy1984 at 10:25 AM on January 8, 2002

well i read this book called the future of money (almost in paperback :) by bernard lietaer, one of the architects of the euro, which was really cool. he talks about LETS (local exchange trading systems) like those found in england and ireland or ithaca, NY but also bringing back some form of "commodity-reserve" currency that was oringinally envisioned by keynes and benjamin graham as a stabilizing force for the international financial system.
posted by kliuless at 10:37 AM on January 8, 2002

Well, I'll take a look at the book when it's out in paperback. I don't know about the commodity reserve currency idea - I read the brief overview in the intro section (the theory page isn't up yet). I'm unsure whether anchoring currency to commodities is any more stable than the current system - you'd still have some equivalent of the Fed buying or selling commodities to control the value of the currency, and still be prone to destabilization in the event of gluts or production declines. On the whole, I like the arbitrary quality of baseless currency. There's somethinf perfect and abstract about it, and it would be a pity to tie the ethereal stuff down to oats and wheat.
posted by fluffy1984 at 11:15 AM on January 8, 2002

Ralph Nader?

I wouldn't piss on him if he were on fire.
posted by BarneyFifesBullet at 12:00 PM on January 8, 2002

As flammable as your piss is I wouldn't let you on me either.
posted by crasspastor at 2:28 AM on January 9, 2002