It makes no sense to force companies to reduce dividends

We often hear calls for a reduction in dividends paid by companies on a permanent basis, not only temporarily for companies that are struggling now. But this proposal makes no sense: the return on equities is the equilibrium return that equalises supply and demand for equities. If the dividend yield is reduced, capital gains will at equilibrium be increased to keep the total return on equities unchanged. Shareholders will then be remunerated by rising indices if they are not remunerated by dividends, and wealth inequality will be increased if income inequality is reduced. This is what we can see when comparing the United States (low dividends) and the euro zone (high dividends ).