Untaxing-IV (Katchings’ Laws) ch 17:     Second Law of Capitalism

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Katchings’ Second Law of Capitalism states that the GDP of a country should not be greater than the total market value of its public companies.

By definition when capitalism is ill-defined, a government’s tax policy is ill-defined. Not only is an ill-defined tax policy detrimental to a country’s citizens. But when entrepreneurs elect a corporate structure that penalizes the shareholders, then public company market values and the GDP of the country are also suppressed.

We see a crystal example in the $17.14 trillion market value for the 19,893 US public companies, which currently exceeds the $14.72 trillion US GDP. The total market value of US public companies exceeds the US GDP. This is the correct relationship. The US example serves as the standard for the globe’s other 265 entities-countries to correct their economies with the use of the public company tool and tax policies that efficiently produce the most value for their citizens.

We are in awe that 19,893 US public companies (just 0.0642% of the 29.6 million businesses in the US) produce $17.14 trillion in market value, exceeding the US GDP of $14.72 trillion, without a clear understanding of capitalism.

Let’s put this $14.72 trillion GDP and $17.14 trillion market value into perspective by dividing the US GDP and then the total market value of US public companies by 313,232,044 US Citizens.

Are you a statistician?

Notice the $2.42 trillion difference between the US GDP and the market value of the US Public Companies. This relationship demonstrates three startling facts:

  • The market value of the US public companies exceeds the US GDP by $2.42 trillion, conforming to The Katchings Second Law of Capitalism
  • The US GDP is intractably connected to the market value of the US public companies.
  • The US economy would collapse if just 0.0672% (19,893 ÷ 29.6 million) of all US businesses — the US public companies — were extracted from the US GDP.

What happens to the US economy and the globe’s economies when capitalism and the public company are understood correctly for the first time?

Go to (part IV) chapter 18: Corporate Structures