Kevin Wandtke
Robert ReichCompanies have already announced roughly $175 billion worth of stock buybacks so far this year.
That’s more than double last year's pace.
If there was ever a time to ban stock buybacks — or at least tax them more heavily — it's now.
Justin Dearing@rbreich ok I don't understand how stock buybacks are bad, or at least related to the whole let's engineer a recession and force people back into the offices. Wouldn't a company that wasn't mostly controlled by institutional investors be more likely to not bow to oligarch peer pressure?
Brett@zippy1981 @rbreich Stock buybacks are literally concentrating wealth into the hands of fewer people.
Abazigal@bflipp No difference from higher dividends. Even without buybacks, the money won’t be used for higher wages either way.
Nobilis ReedYou are right, stock buybacks are good for institutional investors. They are a huge wealth transfer from the company to the investors; from a nonhuman entity to actual human beings.
Alternatives to stock buybacks include:
1> Investment in the corporation's expansion, which generates employment and raises wages, especially in a low-unemployment environment
2> Buying out competitors, which is highly regulated and can result in a court case
Ted_Cville@rbreich but .. it won't happen. 🫤
DinCA 🏳️🌈 🎾 🐶 🖖🥄@rbreich The video in this Vox article is a great expainer for stock buybacks. Really, the executive branch can simply go back to the rules prior to Regan.
https://www.vox.com/2018/8/2/17639762/stock-buybacks-tax-cuts-trump-republicans
https://www.vox.com/2018/8/2/17639762/stock-buybacks-tax-cuts-trump-republicans
SFborn1940@rbreich Never happen. Congress is paid off by special interests. It is how corrupt governments work. We can complain and vote but no matter, greed will always overcome.
OGJester has moved@rbreich railroads spent more on stock buybacks last year than they spent paying their workers.
VHaschGuess who should have spent on track maintenance and crew safety instead of stock buybacks? (There's a horse on their engines, and a big, toxic mess on their rails.)
Badtux the Snarky Penguin@rbreich The alternative would be to pay their workers more. But that won't increase production because the problem is supply chain, not capital investment. Same production, more money circulating, means inflation (see pigeonhole principle, a fundamental mathematical law) rather than economic gain. It is arguable that putting the money into the one asset that has deflated recently -- stocks, via stock buybacks -- is the least harmful thing they can do until the supply chains are unfucked.
Jack of all trades@badtux @rbreich That is not the only alternative. They could look for ways to reinvest (new factories, new technology, etc.) and actually grow the company and the economy.
There are many industries that are not currently experiencing supply chain problems, and even those that are present just another investment opportunity.
Buybacks do not change the amount of money in the economy. The company spends money to buy the stock. The same money that its employees could spend if they were paid more.
@jackofalltrades @rbreich I think you forget about the velocity of money. Employees spend money. The investor class effectively stuffs money under (virtual) mattresses for later. During a time of supply-chain-driven inflation, where there isn't enough goods for all the money in the economy, stock buybacks basically increase the supply of mattress money and decrease the supply of circulating money by transferring money to the investor class.
@badtux @rbreich That doesn't sound right at all. Is this based on economic research? If so I'd love to read it.
It doesn't sound right because there are two sides to every transaction. Let's say you're right and investors that cashed out thanks to a buyback then go and buy stock of some other company. Then someone had to sell them that stock, so *they* got cash. In the end someone will spend in on consumption: a regular person selling stock to pay for necessities or a CEO buying another jacht.
@jackofalltrades @rbreich The whole problem with the investor class hoarding all this money is that they're not spending it. Instead, they're causing asset price bubbles as they park the money, or the money simply lingers in the Fed as bank reserves as they search for a place to park the money. The average consumption percentage of the investor class is *way* below that of the worker class. Workers spend almost 100% on consumption, the top 1% spend less than 20% on consumption.
Let me make sure I understand. What you're saying is:
Stock buybacks are "the least harmful" option, and definitely less harmful than paying higher wages to workers, as that would increase inflation.
Investors spend smaller percent of their income on consumption therefore don't cause inflation.
Investors take stock buyback money to create asset bubbles (i.e. asset price inflation) that can cause recessions when they pop. Which is good somehow...?
Did I read that right?
@jackofalltrades @rbreich You are reading absolute principles into a situational scenario.
Paying higher wages to workers NOW would not result in increased goods and services in the hands of workers because of supply chain constraints. *HOWEVER*, under normal circumstances where the supply chains aren't fucked up by a deadly illness that has caused havoc in major manufacturing regions, paying higher wages to workers WOULD result in increased goods and services in the hands of workers.
@jackofalltrades @rbreich You are looking for a religious statement. I am not making religious statements. I am making observations of the current state of the economy and why certain things are advisable under the *current* state of the economy. Those are not the things to do under *other* possible states of the economy. If you are looking for someone who is slinging out religious doctrine that must be followed regardless, go find yourself a Chicago School adherent.
For example, you said workers spend 100% on consumption while the top 1% spend just 20% on consumption. That doesn't sound right to me, I haven't fact-checked this, but even if it's true, consider the following:
Median wage in the US is $37k.
Top 1% are incomes of $300k and up.
Now you do the math and tell me who, in absolute terms, spends more on consumption, and would contribute more to inflation.
@jackofalltrades @rbreich An asset price bubble where the investor class is selling assets to one another does not do anything for employment or consumption. The reality is that the money spent pumping asset price bubbles is effectively mattress money from the viewpoint of the rest of the economy.
@jackofalltrades @rbreich So anyhow, back to stock buybacks. That money came from consumers, and is going to the investor class to pump up the price of artificial assets (stocks). The money stays in the investor class to buy similar assets that do not add to the personal consumption that drives employment and economic activity. It isn't used for consumption or capital goods purchases, thus for the purpose of the overall economy, is effectively mattress money.
@jackofalltrades @rbreich Under normal circumstances, where there are not supply chain disruptions, we don't want stock buybacks. We want that money instead going into pay or into capital goods purchases so that it can be used to drive economic activity. But we are in a very odd place right now where we have shortages of many goods due to supply chain issues and thus more money in the consumptive economy is not going to cause more economic activity, it'll just cause inflation.
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“We’ve been told a story that workers need to restrict wage growth and accept a permanent reduction in living standards in order to fix inflation,” he said. This evidence shows that’s an economic fairytale.
ABS data shows that without excess price hikes through the pandemic, inflation would likely be within the RBA target band.
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JW prince of CPH@rbreich It should be noted that stock buybacks were illegal until - drumroll, please - the 80's, the decade when They™️ really got the deregulation train running.
It should also be noted that most of the arguments for dismantling these regulations, originally put in place in recognition of the highly specific problems we'd otherwise face, basically amounted to "but we want to make more money". It's not like people back then thought it'd be OK and were surprised to find they were wrong.
Scenario@rbreich @nando161 You should do an expose of Musk’s pump and dump crypto gambit in 2021 and his Twitter fraud in 2022, where he drained the retirement accounts of Tesla shareholders to make both purchases — under the guise of paying taxes he didn’t even owe on unrealized gains. I reported both acts of securities fraud to the SEC and was completely ignored.
Nando161
The Biggest Scam In Twitter History
Elon Musk Scam on National Television
Can't agree with prohibiting, but certainly can agree with taxing more than the current 1%
Margaret