Re "If you're missing dividend stocks, you're missing out" ("Where to invest in 2004," Cover Story, Dec. 29-Jan. 5): You say investors would "do better by regarding [dividend-paying stocks] as bonds that pay out increasing amounts of income over time -- as well as healthy capital gains over the long haul." If they paid out increasing amounts of income, why are dividends so low now? Stocks do not pay healthy capital gains. Stocks do not pay capital gains.
For dividend-paying stocks and mutual funds that specialize in them, the share price drops by the amount of the [taxable] dividend. This is more noticeable in funds, especially if the fund pays a dividend once a year. When the dividend is reinvested, you have more shares at a lower price -- the only thing gained is the ability to reach into one's pocket to pay the tax.
People who need dividends to live should not be in the stock market. They should be in bonds. The stock market can drop by the amount of the dividend in a matter of days, and their stock will be gone, too. With bonds, they know they will get their money back.
Merritt Island, Fla. Re "Richard Branson: Winning Virgin territory" (News: Analysis & Commentary, Dec. 22): I was introduced to the value of Virgin Group Ltd.'s cell phones when my 80-year-old aunt bought one. Virgin's prepaid service seemed like a great deal for someone who rarely needs to use a cell phone but likes to have one available for emergencies. I canceled my account with Sprint PCS Group (PCS) and signed on with Virgin (as did several of my equally unhip middle-aged friends).
Toledo, Ohio Despite disappointment in some quarters (often based on unrealistic expectations) and criticism from those who opposed it in the first place (such as the AFL-CIO), NAFTA has been an outstanding success ("Mexico: Was NAFTA worth it?" Special Report, Dec. 22). There is much unfinished business in all three countries to realize NAFTA's full potential, and you correctly point out some of those steps. Unfortunately, the recent vote by the Mexican parliament against President Vicente Fox's tax proposals will not make matters easier. On the U.S. side, we should go back to where we were on Sept. 10, 2001, and resume the process of creating conditions on both sides of the U.S.-Mexican border that will, over time, create conditions similar to those that prevail along our border with Canada.
Thomas M.T. Niles, President
United States Council for International Business
Editor's note: The writer was U.S. ambassador to Canada from 1985 to 1989.
In "How to turn Canada into a powerhouse" (International Business, Dec. 29-Jan. 5), the tax gap you cite exaggerates the disparity between our countries. The higher Canadian tax burden includes the cost of universal medical care, much of which is an individual's responsibility in the U.S. Further, unlike the U.S., we are not deferring taxes by running a government deficit, and the Canada Pension Plan (roughly the equivalent of Social Security) must by law be actuarially funded to cover future obligations. While we may be running behind the U.S. economically, it is revealing that a government that has already been in power for two terms continues to enjoy popular support to the extent that its reelection next year is virtually assured.
Raymond K. Suutari
"Happy Birthday, NAFTA" (Editorials, Dec. 22) claims that NAFTA is unable to provide "better education to compete with China and India." I would think this is exactly where Canada and the U.S. might help. With great North American research universities second to none, there is ample scope for initiative. The relative "failure" of K-12 public education in the U.S. is largely due to local conditions, not lack of expertise, and there is plenty to share with Mexico on the part of Hispanic educators and Spanish-language education at the elementary and secondary levels.
David B. Stewart
Tokyo Institute of Technology
Tokyo Re "Boeing: What really happened" (Cover Story, Dec. 15): The Pentagon has delayed a $17 billion contract from the Air Force for 100 Boeing Co. (BA) 767 air-refueling tankers pending the outcome of an investigation. This month, Boeing's board decided to build the new, fuel-efficient 7E7 midsize airliner, which will replace the 757 and 767. Unfortunately, Boeing has not obtained any firm orders for the new plane. If the Air Force reopens the tanker contract for new bidders, Boeing should substitute 7E7s for the 767. Once the Air Force becomes Boeing's first customer, the commercial airlines will follow.
Theodore J. Sheskin
Lakewod, Ohio "Seniors' big drug problem" (Personal Business, Dec. 22) offered excellent advice on managing medication of the elderly. Seniors are overmedicated in our country. On average, Americans who are 65 or older take six medications. For residents of nursing homes and other long-term-care facilities, that average rises to eight. Because seniors metabolize drugs more slowly, they should also ask their physicians about taking lower doses or avoiding some drugs completely. And patients and their families must be strong advocates, questioning the ease with which many physicians prescribe medications to speed visits and increase volumes under tightened Medicare reimbursement.
The $400 billion cost of the new Medicare Prescription Drug Benefit will be dwarfed by the increase in emergency-room and other hospital admissions that will result from the avalanche of additional medications elderly people will be taking as the new law unfolds. While many patients need to be on prescription drugs, our society increasingly looks to medication as a silver bullet. In truth, keeping the number of drugs as low as possible is critical to the well-being of our elderly citizens as well as the economics of health care in our nation.
Hebrew Home for the Aged at Riverdale Bronx, N.Y.