Untaxing-IV (Katchings’ Laws) ch 16:     First Law of Capitalism

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Katchings’ First Law (theorem) of Capitalism states that a public company’s revenue  should not be greater than the public company’s market value or capitalization.

Examples clearly demonstrate (perhaps for the first time) that equity can be 6,566%, 9,900%, or 482,601% more powerful than debt. So how can a public company have a market value that is less than its revenue? How can a public company produce equity that is less than its revenue?

The capitalistic formula supports the fact that $1 of revenue can produce $100 of equity. Multiply this fact by thousands or millions of customers and you get thousands or millions of equity values collectively known as the public company’s market value (or market capitalization). The sum of all the equity values produced equals the market value of the public company.

The lack of distinction between the Conservation of Energy formula and the capitalistic formula coming from Katchings’ Two Laws of Capitalism may be the reason why so few people actually know what capitalism is, and many people bastardize the term “capitalism” daily.

Even students of physics, when asked to apply their mathematical prowess in the validation of the capitalistic formula, will confuse economic thought with the Conservation of Energy formula. A thorough understanding of economics must be combined with the rigors of scientific training.

Let’s stop being confused about exactly what capitalism is and not confuse physics with capitalism. 1 unit of energy = 1 unit of energy.  X=(A*B/Y)/C. Both formulas are correct in their contexts.

According to an empirical examination at this moment in time, 38% of the top 2,000 global public companies have revenues that exceed their market values. Their Chairmen-CEO-CFOs don’t know that this delinquency isn’t supposed to happen; however, we know it through the science of the capitalistic formula.

We can reason from this empirical study that at least 38% of the 73,349 global public companies are not aware of the nuclear-like power of capitalism. Shareholders are penalized while excuses are made for low performances, and incorrect economic literature on capitalism supports the excuses.

20% of the Dow Jones Component 30 has revenues that exceed their market values, violating the Katchings’ First Law of Capitalism. But as soon as the taxes on these under-performers are eliminated, their market values increase by a whopping 370%, and the average market value for all components of the Dow Jones 30 increases by 170%!

We learned in the discussion on the Laffer curve how an ill defined tax policy on corporate profits suppresses the market value of the public company and hence suppresses the tax revenue for the countries that use capitalism and the public company market values for their GDPs.

Go to (part IV) chapter 17: Second Law of Capitalism