After Taibbi's work at Rolling Stone, I personally am stunned that I'm reading him, and Jeff, I wonder if you are stunned you're reading him, too. Strange times make for strange bedfellows. (Though Taibbi is a great writer, has a slashing wit, and calls out idiocy when he sees it.)
However, I too thought his article's focus on stock buybacks made little sense in relation to the hollowing out of the middle class (and let's be frank, we're talking about the hollowing out of lower middle management and skilled industrial - not trade - workers). Offshoring makes more logical sense as the key factor.
Not sure if your UofC profs mentioned this as another reason for stock buybacks: to get excess cash out of the hands of management, who otherwise would be tempted to make poor investments/acquisitions/"empire build." Forgot who taught me that at GSB (dating myself with that), but it was the sort of cynically realistic viewpoint of agency issues that make a lot of sense.
Kind of funny that they complain about CEO salaries but not a peep when it comes to athletes and hollywood salaries. Be interesting to see what effect Mary Barra's salary has on the cost of a vehicle that you will own for a number of years. Then compare that to the cost of a night out at the movies or a sporting event and see how the salaries of the athlete or actress affect the cost of that.
But I'll keep it simple on Re: stock buybacks. I never understood the Democrat obsession with these things. I simply don't understand why they hate them so. There must be a paper or a book somewhere with someone berating them, but as an economics person I don't get it.
You pointed out the corporate supply side of buybacks, but let's not forget about where the money goes. It goes to investors, who have a number of choices of what to do with it. One, they will invest in another stock or company, thus raising the stock value for others and providing more capital to another company that actually needs it, which is better for the economy. Two, they will cash out and spend the money, thus providing service or manufacturing jobs, thus helping the economy.
In either case, the money is put to use (better use) and just about everyone is better off. In economic terms, it increases velocity, lowers the cost of capital, and helps out everyone on the income spectrum.
So I just don't get where the hatred for it comes from. Am I missing something in their argument?
Is it just wealth envy, like everything else with these people?
Blame the Upper Middle Class! One big reason that the middle class has shrunk is the relative shift towards upper income brackets. All the bankers, lawyers, consultants who want to cement their place in the hierarchy. The most powerful crony and NIMBY class!
On exec comp, you are completely correct in theory. But it doesn't take a lot of exposure to see that there are a lot of clueless people who make a lot of money. The Peter Principle does not work fast enough. It's an another effect of the growth of the upper middle class. And don't forget, the shift towards stock compensation only began as a populist law passed under Clinton to cap executive cash salaries. American business still rocked when CEOs pay was mostly cash.
Finally, I've seen it written, but don't have the article or data. One outlet for smart people who didn't fit into the corporate world was the ability to start/run a small business. As the economy has grown and become more efficient (all good), those opportunities have been reduced as small businesses have gotten bought up by larger ones.
"That's why the pro-life movement keeps shifting their demands. They need something to oppose in order to raise money and keep their grift alive."
Where the hell is all the money in the pro-life movement?!? How is ending the killing of innocent human beings a grift? Shifting demands? Stop killing humans in the womb! That's what the same thing they have been saying since before I was alive.
A fetus only becomes a human in the second trimester? That's absolute rubbish. Look at this video of a healthy nine week fetus, and you tell me what you think you are seeing:
I think it's wrong to assume that all buybacks follow the textbook formula you cite. You assume that all the corporate leaders are acting in good faith. I doubt that. One of Leopold's points that you haven't addressed is his accusation that the money for the buybacks is often extracted from the labor force in the form of cost cutting, layoffs, reductions in benefits, cuts to r&d, offshoring for cheap labor. While workers lose jobs, executives paid partially with stock make more. Boeing was buying back a lot of stock until covid and we're just figuring out where some of the profit for the buyback came from, and why the doors fall off and the engine housings disappear mid flight. Taibbi notes that buybacks were barred as manipulation until 1982. Maybe that was a good thing.
The denial that racism is multidirectional is becoming an integral factor in the beginning process of self cleansing of universities, corporations and cities.(See recent DEI eliminations).
At the risk of sounding Shakespearean, my solution, which admittedly will never come to fruition, is to disallow any attorneys to run for elected public office in alternate elections for a couple decades. They are notoriously poor managers of money, second only to doctors, and generally mediocre in people management skills. From the beginning of their first job out of Law School until somewhere between their 5th and 10th year of their careers, their primary purpose is to increase billable hours and do research, at least until one or both sides run out of money and then they have become solution oriented very quickly. They are a big part of the problem. If we just have the Democrats elect Junior High and High School principals who've learned how to do more with less, and the Republicans elect Big Business Leaders, we will see a tremendous jump in the overall quality of life in this country, probably two decades' worth of improvement in a half decade's time. There will still be no shortage of attorneys to draft legislation and write policy and procedures, which is what they are good at doing. I am quite certain my suggestion appeals to all non attorneys in this country 🤨😄
After Taibbi's work at Rolling Stone, I personally am stunned that I'm reading him, and Jeff, I wonder if you are stunned you're reading him, too. Strange times make for strange bedfellows. (Though Taibbi is a great writer, has a slashing wit, and calls out idiocy when he sees it.)
However, I too thought his article's focus on stock buybacks made little sense in relation to the hollowing out of the middle class (and let's be frank, we're talking about the hollowing out of lower middle management and skilled industrial - not trade - workers). Offshoring makes more logical sense as the key factor.
Not sure if your UofC profs mentioned this as another reason for stock buybacks: to get excess cash out of the hands of management, who otherwise would be tempted to make poor investments/acquisitions/"empire build." Forgot who taught me that at GSB (dating myself with that), but it was the sort of cynically realistic viewpoint of agency issues that make a lot of sense.
Kind of funny that they complain about CEO salaries but not a peep when it comes to athletes and hollywood salaries. Be interesting to see what effect Mary Barra's salary has on the cost of a vehicle that you will own for a number of years. Then compare that to the cost of a night out at the movies or a sporting event and see how the salaries of the athlete or actress affect the cost of that.
Whew. There's a lot here in this one!
But I'll keep it simple on Re: stock buybacks. I never understood the Democrat obsession with these things. I simply don't understand why they hate them so. There must be a paper or a book somewhere with someone berating them, but as an economics person I don't get it.
You pointed out the corporate supply side of buybacks, but let's not forget about where the money goes. It goes to investors, who have a number of choices of what to do with it. One, they will invest in another stock or company, thus raising the stock value for others and providing more capital to another company that actually needs it, which is better for the economy. Two, they will cash out and spend the money, thus providing service or manufacturing jobs, thus helping the economy.
In either case, the money is put to use (better use) and just about everyone is better off. In economic terms, it increases velocity, lowers the cost of capital, and helps out everyone on the income spectrum.
So I just don't get where the hatred for it comes from. Am I missing something in their argument?
Is it just wealth envy, like everything else with these people?
Blame the Upper Middle Class! One big reason that the middle class has shrunk is the relative shift towards upper income brackets. All the bankers, lawyers, consultants who want to cement their place in the hierarchy. The most powerful crony and NIMBY class!
On exec comp, you are completely correct in theory. But it doesn't take a lot of exposure to see that there are a lot of clueless people who make a lot of money. The Peter Principle does not work fast enough. It's an another effect of the growth of the upper middle class. And don't forget, the shift towards stock compensation only began as a populist law passed under Clinton to cap executive cash salaries. American business still rocked when CEOs pay was mostly cash.
I've posted this before, but David Brooks makes some of your same points! The administrative state sucks. Even Brandon Johnson agrees that property development is too slow. https://www.nytimes.com/2024/01/18/opinion/american-life-bureaucracy.html
Finally, I've seen it written, but don't have the article or data. One outlet for smart people who didn't fit into the corporate world was the ability to start/run a small business. As the economy has grown and become more efficient (all good), those opportunities have been reduced as small businesses have gotten bought up by larger ones.
George Santos gave money to the Biden campaign and works as a lobbyist? That doesn’t sound right.
"That's why the pro-life movement keeps shifting their demands. They need something to oppose in order to raise money and keep their grift alive."
Where the hell is all the money in the pro-life movement?!? How is ending the killing of innocent human beings a grift? Shifting demands? Stop killing humans in the womb! That's what the same thing they have been saying since before I was alive.
A fetus only becomes a human in the second trimester? That's absolute rubbish. Look at this video of a healthy nine week fetus, and you tell me what you think you are seeing:
https://www.youtube.com/watch?v=5q30ao8phNY
Great rant. Maybe this will reach Taibbi and you two can have a conversation about it.
One quibble: nobody goes into pro-life activism for the grift. There’s no money in saving lives anymore. At least in Obama’s America.
Lot of ground covered here Mr Carter! All done well.
"guy like George Santos dropping the max", I presume that you meant George soros ? Excellent article by the way. Very thought provoking.
I think it's wrong to assume that all buybacks follow the textbook formula you cite. You assume that all the corporate leaders are acting in good faith. I doubt that. One of Leopold's points that you haven't addressed is his accusation that the money for the buybacks is often extracted from the labor force in the form of cost cutting, layoffs, reductions in benefits, cuts to r&d, offshoring for cheap labor. While workers lose jobs, executives paid partially with stock make more. Boeing was buying back a lot of stock until covid and we're just figuring out where some of the profit for the buyback came from, and why the doors fall off and the engine housings disappear mid flight. Taibbi notes that buybacks were barred as manipulation until 1982. Maybe that was a good thing.
The denial that racism is multidirectional is becoming an integral factor in the beginning process of self cleansing of universities, corporations and cities.(See recent DEI eliminations).
At the risk of sounding Shakespearean, my solution, which admittedly will never come to fruition, is to disallow any attorneys to run for elected public office in alternate elections for a couple decades. They are notoriously poor managers of money, second only to doctors, and generally mediocre in people management skills. From the beginning of their first job out of Law School until somewhere between their 5th and 10th year of their careers, their primary purpose is to increase billable hours and do research, at least until one or both sides run out of money and then they have become solution oriented very quickly. They are a big part of the problem. If we just have the Democrats elect Junior High and High School principals who've learned how to do more with less, and the Republicans elect Big Business Leaders, we will see a tremendous jump in the overall quality of life in this country, probably two decades' worth of improvement in a half decade's time. There will still be no shortage of attorneys to draft legislation and write policy and procedures, which is what they are good at doing. I am quite certain my suggestion appeals to all non attorneys in this country 🤨😄
Related post & discussion: What, Precisely, is the Issue with 'Elites'?
https://chicagoboyz.net/archives/70852.html
I wouldn't mind exec comp if they were competent and non-Marxist.