Jen ReiseJan 6, 2023
Robert Reich

By the way, Southwest blew $5.6 billion on stock buybacks in the past few years.

They could have made investments in their services and infrastructure.

They could have prepared for extreme weather events.

But no. They decided to enrich their shareholders.

Jan 6, 2023 at 9:37pmWeb
Show threadAndy LowryJan 6, 2023
@rbreich
Been a lot of that going around.
Show threadRobotJan 6, 2023
@rbreich Sounds like a bunch of them need to be entered into conservatorships.
Show threadYinzer_VJan 9, 2023
@RobotSausage @rbreich The executives have been spending too much money on fancy coffee and avocado toast, too.
Show threadRobotJan 10, 2023
@Yinzer_V @rbreich That's never not funny. lol
Show threadTC Won't Give In To LiesJan 6, 2023

@rbreich
Stock buybacks should be illegal.

Stock buybacks after a bailout should be mandatory jail time.

Show threadMitch DennyJan 6, 2023
@TCatInReality @rbreich curious about this stance. I get the concern about using funds from a bailout to do stock buybacks. But if that isn’t the case why are stock buybacks bad outright?
Serious question since I wasn’t aware of an inherent problem with them but might have a blind spot.
Show threadTC Won't Give In To LiesJan 6, 2023

@mitchdenny @rbreich
What's inherently wrong w buybacks?
- market manipulation
- redirects money that could go into business investments/expansion
- indicative of price gouging
- shifted exec comp to stock performance vs business performance

Buybacks were illegal until Reagan. We forget that.

Show threadTC Won't Give In To LiesJan 6, 2023

@mitchdenny @rbreich
Prior to Reagan, companies typically balanced 3 priorities: growth, customers and employees. Exec comp reflected that. Look at annual reports from the 50s and 60s.

Then that shifted solely to shareholders. That's led to mass layoffs, wage stagnation, price gouging, underinvestment, consolidations - and exec comp skyrocketed because they were paid on stock price. A company could be declining, but could still grow the stock price w buybacks.

#BanStockBuybacks

Show threadMitch DennyJan 6, 2023
@TCatInReality @rbreich that strikes me as a governance issue that shareholders would be able to vote on though. If buybacks are bad for the company holistically would shareholders want to address it since it impacts long term sustainability of the business?
I think the function that companies serve in society is an interesting conversation on its own though.
Show threadMitch DennyJan 6, 2023
@TCatInReality @rbreich did some further reading regarding the rules here in Australia https://asic.gov.au/for-business/running-a-company/shares/share-buy-backs/ which is the market I’m most exposed to via my superannuation (similar to 401k).
Share buy backs | ASIC

Show threadTC Won't Give In To LiesJan 6, 2023
@mitchdenny @rbreich
No doubt buybacks are good for 401k. But IMO, bad for society and the business generally.
Show threadJust Matthew 🙏Jan 7, 2023
@TCatInReality @mitchdenny @rbreich
Truth is share buybacks show a lack of imagination and a poor incentive structure. The money is better either returned to shareholders as dividends or invested in the business. If the C-suite team cannot add shareholder value through investing in the business they probably should not be in their jobs.
Show threadTC Won't Give In To LiesJan 7, 2023
@Irreverent_B @mitchdenny @rbreich
Very, very well said!
Show threadTC Won't Give In To LiesJan 6, 2023

@mitchdenny @rbreich
Yes, the role of companies is a very interesting, but diff thread.

But allowing shareholders to vote on buybacks is absolutely letting the inmates run the asylum. Given most stock ownership is by major investment firms and the company's own execs, why do you think they would choose long-term decisions over short term payoff?

Show threadTinFoilAwards Jan 6, 2023
@mitchdenny @TCatInReality @rbreich That’s the problem -- it's good for shareholders in the short term, but bad for literally everyone else, especially the employees. Most of the major problems with the current US economy stem from the fact that we put shareholders above anyone else. That's why wages have been stagnant for over 40 years. The employees are treated not as an integral part of the company, but as a cost that needs to be minimized.
Show threadGDJan 6, 2023

@TCatInReality @mitchdenny @rbreich

Then along came a Nobel Prize winning economist from U Chicago who sagely pointed out - it's the shareholder stupid. And so it now is.

Show threadMitch DennyJan 6, 2023
@GWD @TCatInReality @rbreich I guess I'm not versed enough in the pros/cons of buy backs either from a business point of view nor an ethical perspective, which is what was behind my question. Based on this conversation I can now see that there are at least some causes for concern that are at least worth discussing.
Show threadGDJan 7, 2023
@mitchdenny @TCatInReality @rbreich It's hard to talk about share buybacks in sound bites, and it's really a second order issue. Deeper issue is putting shareholders above everything else all the time. Read Milton Friedman's piece in Sunday Times Mag from 1970 ish. He lays out the basic arguments there. Ideas took hold! Then executive comp. got wound in. The whole edifice needs a make over.
Show threadPatrickFromFWJan 7, 2023
@TCatInReality @mitchdenny @rbreich yes, we have Milton Friedman’s enormously influential shareholder theory to thank for that. He changed the world and not for the better.
Show threadTC Won't Give In To LiesJan 7, 2023
@PatrickFromFW @mitchdenny @rbreich
Exactly right!
You know your history.
Show threadMitch DennyJan 7, 2023
@TCatInReality @PatrickFromFW @rbreich taking notes :)
Show threadJcmacomberJan 7, 2023
@TCatInReality @mitchdenny @rbreich
The Reagan years definitely were pivotal time for so many things. Beginning of the age of greed.
Show threadEcthompsonmdJan 6, 2023
@rbreich #SouthwestAir should not have been allowed to do stock buy backs since we gave them $6 billion in #COVID19 funding.
Show threadRichservo Jan 6, 2023
@rbreich They also got $7 billion in covid relief funds.
Show threadBoomerJan 6, 2023
@rbreich it’s a bit bigger isn’t it? ROE tied bonuses/options help one group only.
Show threadRichardOntarioJan 6, 2023
@rbreich Gotta love that American version of capitalism eh buckaroos
Show threadJürgen Voskuhl Jan 6, 2023
@rbreich There's no glory (aka. money) in preparing for extreme weather events. 🤷‍♂️
Show threadcaptivatingdorkJan 6, 2023
@rbreich Ah, the American way: money over EVERYTHING.
Show threadSeedlingJan 6, 2023
@rbreich no sympathy for Southwest
Show threadwardJan 6, 2023
@rbreich I don't understand how stock buybacks are legal in a civilized society.
Show threadPhil KJan 6, 2023
@rbreich hopefully the recent fiasco will inform consumers that no amount of cheap fares will justify the purchase of nothing - I.e. cancelled flights and lost luggage. If/when Southwest collapses into bankruptcy, it’s stockholders will lose their investment.
Show threadKevin RussellJan 6, 2023

@rbreich

Maybe licence businesses to operate, and add the costs of their unlooked after eexpences to the licence cost, yearly, on top of taxes.

So Walmart can pay for food stamps their employees get, oil companies can pay for dirty closed wellheads, and Southwestern can pay for destroyed travel.

Show thread~Nuts~Jan 6, 2023

@rbreich
They are not alone. Overall it was much easier and honored to invest in lobbying to keep the status quo than to invest in/create their and our all future.

Instead they are riding a dead horse, and capital is satisfied.

#RatRace

Show threadgeobeck 🏳️‍🌈Jan 6, 2023

@rbreich
Probably the most destructive force in a deregulated capitalist system is the law that requires a corporation to put the needs of its shareholders first. If there's a gray area in almost any other law, a corporation is obligated to exploit it to benefit its shareholders.

It's "me first" on a grand scale: a system steered by the powerful to trample the powerless.

Show threadjohn r red-horseJan 6, 2023
@rbreich And to think, the stock buyback flurry was precipitated by the 2017 tax reform bill that was supposed to boost job growth. Guess what many of the companies did with the money instead.
Show threadMsbrisaqtJan 6, 2023
@rbreich
When will people realize that is all they will do with profits. Give themselves money they won’t fix problems. The capitalist way is to just give themselves money.
Show thread⚡️ axeshun ⚡️  Jan 6, 2023
@rbreich there are 'employee posts' being propagated all over facebook rn, to pin the blame solely on a few bad apples in corporate, who have now been replaced with 'good guys' and 'everyone needs to calm down- they have it completely under control now...' type of stuff. It makes me physically ill.
Show threadJohn Bell 🇺🇦🇪🇺🔸🕷️🏴󠁧󠁢󠁷󠁬󠁳󠁿Jan 6, 2023
@rbreich I cannot see any advantage to the corporation in stock buybacks. I can see advantages to the CEO’s stock options.
#StopStockBybacks
Show threadPlmktJan 6, 2023
@rbreich Their shareholders will be a suffering bunch soon.
Show threadJon StaebellJan 6, 2023
@rbreich They enriched their shareholders in the *short term.* If they had chosen to enrich their shareholders in the *long term* they would have invested in their infrastructure
Show thread bitterseedsJan 6, 2023
@rbreich And what is so different about this vs. the last 40+ years? Nothing really. It's sad really.
Show threadFastusJan 6, 2023
@rbreich unbelievable!! If they even spent a small percentage of that money on updating their systems- holy crap!!!
Show threadMarcJan 7, 2023
@rbreich they're little more than a bus ride in the air. Have avoided #Southwest for years since they really aren't any less expensive than #Delta #AA #United and others, plus have a cattle car mentality.
Show threadTony LoroJan 7, 2023
@rbreich Same gave us the Boeing's 737 Max crashes.
Show threadWesDymJan 7, 2023
@rbreich That was predictable for two reasons: 1) By law, corporations must prioritize shareholder profits. 2) Current law ALLOWS buybacks. It shouldn't -- It didn't used to -- but it does.
Show threadcslinuxboyJan 7, 2023
@rbreich #capitalism breeds greed, which should not make things like this surprising. It's sad what we've become as a species.
Show threadBobby DombrowskiJan 7, 2023
@rbreich government provided bail outs paid for those stock buy backs.
Show threadMs ScullyJan 7, 2023
@rbreich they used to be such a good airline. Did they get a new CEO who drove it into the ground?
Show threadCubs_2016WSJan 7, 2023
@rbreich
…..and are now crying poor because they said today that they will be taking a loss for the 4th quarter/2022.
Show threadMatt J. - WriterJan 7, 2023

@rbreich We see it in every industry.

They have the data. They see the gravy train is ending. So now it’s every last buck that can be squeezed out before it derails.

Show threadschalkenJan 7, 2023
@rbreich It's almost as if class societies were geared towards enriching the owning class, not producing for human need...
Show threadΩ 🌍 Gus PoseyJan 7, 2023
@rbreich It's like that episode of The Office where they're trying to decide between a new copier and new chairs and Michael takes the bonus instead.
Show threadEungerJan 7, 2023
@rbreich but that’s literally what corporations are obligated by law to do. Enrich shareholders. Until we fundamentally change the structure of corporate entities to be driven by something other than next quarter’s profits, this will never change.
Show threadRo Laren RED57🥄💩🦨🍈🍊🤡Jan 7, 2023

@rbreich

It’s not just their infrastructure. Their backend accounting is a joke. I’m in corporate travel; their reservations people can’t tell you how much a partial refund will be, and have been told to stay out of the accounting system to keep it from getting overloaded. I spent hours holding to talk to someone, only to find that it has to be requested on their #southwest.com/traveldisruptions page.

It used to be worse, back when they didn’t use proper electronic ticketing.