Some grow faster, most grow slower. But there are other factors such as senior employees retiring, lower starting pay, start-ups being able to pay more as their revenue base becomes more stable, etc.ladajo wrote:For one thing, companies do not grow at the same rate.
And where rises are not sustainable, companies will ultimately fail.
Don't get me wrong, I'm in no way arguing that a fixed percentage increase is the right salary policy for all (or even many) companies. It's just one policy out of many, and I think it's way overused. Flat raises aren't always the right choice either. There's no one-size-fits-all solution for making employees feel happy, rewarded, motivated and loyal.ladajo wrote:Another thing to consider is the choice between reinvestment in company infrastructure and development, or widening the earnings gap. Why not give flat raises, pay more attention to contribution bonus programs based on profit/efficiency, and take the rest of the net take and grow the business (as well as return on investment to investors)?
The same is true for investors, and employees and owners are effectively competing for the proceeds of the business. If employees feel undervalued, paying out dividends or even reinvesting in growth (which is also about raising the company value, not necessarily improving the outcome for individual employees) might not be such a good idea.
I don't see this as an argument against compounding, though.
So you borrow $1,000, promising to pay back $1,100 after one year. You use it to create something of value but as the due date nears you lack liquidity, having only $50 in cash. You don't want to renege on your promise. Because it looks likely that you'll have the cash later, someone else is willing to help you out by lending you $1,050, with $1,155 due after another year. Voilà, there's compound interest.paperburn1 wrote:The other way loans were made was, I give you 1000 dollars and you give me back 1100 dollars . you must do it in so many days/week years.Maui wrote:Huh? Isn't that like saying mathematics is one of the greatest crimes ever foisted upon the populace? Compound interest isn't a policy, it's an equation. Or what am I missing?
This meant your "credit rating" was based on how fast you paid off your loans . but if you were slow to pay them back and it took you longer you did not keep piling on interest payments without paying down the principle amount. You just were not able to borrow again because you still owed money. A self regulating system.
The fact that credit ratings are a poor representation of reality, or that some people are effectively defaulting by paying down less than the interest and having nothing of value, isn't a direct consequence of compound interest. It just typically isn't in the interest of lenders to write off a loan.
If the congress is not going to allow them to manage the budget on a line item basis, No calling in one thing and doing another to keep things going at all costs. This in part is a reaction to the congress calling to exempting their services and aids from the cut because they are more important to solving the problem. ( Nancy Pelosi is protesting a possible Congressional pay cut for her and her staffers should a sequester deal not be reached prior to the March 1 deadline) There is an ancient Chinese curse " may you live in interesting Times" I think that's about to come true. they are going to follow Budget Sequestration and Selected Program Exemptions and Special Rules”–identifies certain programs that are exempt from sequestration and lays out special rules that govern the sequestration of others. - to the letter and let the chips fall where they may. I got to get me some popcorn because meetings have just got interesting.
Wonder who is going to win? Where did I put that popcorn?
