John McDonnell 10%26 Sep 2018 14:19
So McDonnell wants to take 10% of a companies profits by forcing them to give 10% of their shares to their workers. He said the requirement for this to take place is for the company to have 250 or more employees.
So an Entrepreneur starts a company, does well and grows the company, with that growth comes new jobs created. But then he/she realises they are approaching the 250 employee number. Do they (A) employ more employees and lose 10% of the equity in their business. OR (B) Decide not to add anymore employees because they are going to lose out on the equity and income that comes with it. I just asked my Dog, he's not that intelligent but even he says B is the likely scenario.
Another scenario...
Entrepreneur starts a company, does well. But to expand the company he/she needs venture capital (Think Dragons Den)... so he/she approaches Venture Capitalists to offer some equity in their business in return for the money needed to grow the business... the vast majority of people who build big businesses need to do this unless they come from already extremely wealthy families.
My giving some of the equity away in return for money to grow the business the entrepreneur lowers his/her stake in the company to 51%, which means they still control the company, but only by a tiny percentage.... The company had done so well that it now has 240 employees.
The company is continuing to grow and needs to recruit 20 more employees, but the Entrepreneur knows that by having 250 or more employees he/she is going to have to give them 10% if the equity in his/her business... thus effectively losing control of their entire company.
Will the Entrepreneur (A) Gladly lose control of the company they fought hard to build. (B) Decide to reject further orders/growth to stop him/her going over the 250 employees threshold and thus keep control of his/her company.
I asked my dog again, he says if it was him he would choose option B.... I hope John McDonnell asks his dog too, because so far he's shown himself to be financially illiterate.