This is third level of commitment to the Common Good Capitalism Movement!
For those who choose to provide even more capital for the growth of the Common Good Capitalism Movement, they can place a cap on the return to equity investors.
It is not important what cap they choose. What is important is that they make it public. This will allow for a public debate of what the cap should be.
They also commit to invest any capital they earn over the cap in Common Good investment-banking firms (CGIBFs). If the company is a start-up, the cap can be a 1000% annual return to make it easy for investors to invest. However, if the firm is in the position P&G is in, it should be somewhere south of 15%. Whereas they used to have over 1,000 products they now have 250 and every one is number one or two on the planet. With their competitors they are the equivalent of a duopoly monopoly in their product markets and their position cannot be easily changed. A duopoly monopoly is when two companies control a very large percentage of a product market.
Today there are many duopolies in product areas and the number is growing rapidly. Some with which you are probably most familiar are Home Depot-Lowes, CVS-Walgreens, and Visa-MasterCard.
A monopoly is illegal but a duopoly is legal.
This is a natural maturation of a capitalist marketplace and today it is much easier to accomplish and can even be global. There is also nothing that can easily stop its continued rapid growth. Therefore the only way to have their financial priority be the common good is to have them voluntarily choose to place an appropriate cap on the return to equity investors and invest any profit above it in CGIBFs.
Financial planners tell their clients they will try to provide an average of a 9-11% return. More than 80% of the capital is invested as savings. It is not hot money looking for a quick and high return. Therefore, if a company such as P&G should place their cap at 13%, their stock would be very attractive to long-term investors: the 80% of the market. Not only would they be providing a steady strong return; but if there is a year when P&G will not be able to do it, they could borrow the necessary capital from the CGIBFs, particularly the ones where they have investments, to provide a special dividend that will have them achieve the committed cap return.
They will be able to borrow the capital at an interest rate close to the return they normally receive from the CGIBFs. Therefore, the borrowing is at virtually no cost. Also, the capital committed to the CGIBFs will remain committed to them. Future equity earnings beyond the cap will be used to repay the loan until fully repaid.
This will result in the stock of Cap Club companies being extremely attractive to investors. And the duopolies that choose to become Cap Club companies will receive strong public support. They are furthering the common good capitalism movement.
Duopolies are not going to cease to exist and there will only be more of them. Having them become Cap Club members is the way they can financially participate in our maturation into common good capitalism.
If an organization has been a Cap Club member for a year and has made the commitment to continue doing so in future years, it can reveal to the public on all its publications that it is a Cap Club Member.