A return as quickly as possible, a return to full employment whenever it is compromised, is the great result to be obtained.
But where is the master key? One avenue is the financing of enterprises. The remuneration of the most stable part of this financing can only be ensured by earnings. Let us look at the partition of earnings.
1. Let us consider again the doctrine of earnings partition that prevails today.
This doctrine is the three-portion doctrine. One portion goes to supplement wage, another to remuneration for the placements in capital, the third to improve the enterprise's financial situation.
2. Another solution is the full distribution of distributable annual earnings.
In this solution, the distributable earnings — what remains of net earnings after wage-earner earnings-sharing and, where applicable, the allocation to the reserve imposed by the legislator — go entirely to the effective remuneration of the placements in capital.
3. Let's compare this solution.
The E1 and E2 enterprises have a capital that does not include quasi-capital. They allocate the same proportion of their earnings to the earnings-sharing of their wage-earners. Their earnings per euro of capital are very much the same. They remain so throughout the multi-year period in question. For E1 and E2, the number of shares, all negotiable131, and the amounts of capital are the same at the beginning of the period. For E1 and E2 respectively, Let us call R1 and R2 what remains of net earnings after wage-earner earnings-sharing and allocation to the mandatory reserves. The profits paid throughout the period under consideration are half of R1 for E1, the whole of R2 for E2.
4. Year after year, E2's dividends are roughly double those of E1.
E2 uses this superiority to increase the capital each year in excess of E1's undistributed earnings. While the number of shares of E2 increases, that of E1 remains stable.
5. The board of directors of E1 does not want to imitate that of E2.
The main argument put forward by the E1 board is the rejection of dilution. But thanks to the other solution, E2 has managed to grow its capital savings mobilization faster than E1Placement_en_Capital. In this way, E2 has also been able to grow its assets and sales faster than E1.
6. E2 has been more job creators than E1.
This was due to higher growth in assets and sales through higher capital savings mobilization. When one of E2's minority shareholders decides to liquidate its position, it is easier than its E1 counterpart to have it taken over. This is due to the rate of return on E2 shares, double that of E1 shares, as well as the strength of the balance sheet and the growth of E2.
7. The comparison between E1 and E2 suggests that the alternative solution is more economically relevant.
But it is generally only so if a macronomic feedback provides for it. We will see in the next chapter that such feedback exists.
8. Taxation offers a means of forcing the full distribution of distributable earnings.
This means consists of increasing the tax on undistributed earnings to 100%, unless there is a contribution to the reserves made compulsory by the legislator. One way to do this is as follows, the tax in question is only the tax that enterprises pay on their earnings. Over several consecutive years, the tax rate on distributed earnings is lowered. Symmetrically, the tax rate on undistributed earnings is increased. At the end of this reform, the first rate is zero and the second is 100%.
9. The full distribution by an enterprise of its distributable earnings establishes sound shareholder exchange.
Through this sound economic exchange, from year to year, each shareholder grants or not to the enterprise a fraction of the capital increase that the management and the board of directors request. He disposes of what belongs to him as he sees fit. Through his placements in capital, he arbitrates more. The freedom to choose better regulates the freedom to offer.