'Companies don’t get better because of buybacks. Shareholders only get richer.'
that buybacks and dividends have soared as a share of GDP, while corporate investments in equipment and infrastructure have stagnated. Many of the social costs of this failure to invest have been shifted to the public-at-large, as we saw in East Palestine.Before 1982, it was illegal for corporations to purchase their own stock to artificially prop up share prices. Then Ronald Reagan’s SEC adopted a rule protecting corporations from being charged for this kind of stock manipulation.
That’s $1.2 trillion that did not go into improving quality of life for American workers or building the American economy. It just went straight into the pockets of already-wealthy shareholders and CEOs.Which is why the Inflation Reduction Act imposes a 1 percent tax on buybacks. And why Biden wants to raise it to 4 percent. The Stock Buyback Accountability Act of 2023, introduced by Senators Sherrod Brown and Ron Wyden, would do just this.
Warren Buffett, one of the richest people in America, defended stock buybacks in his highly anticipated annual letter to“When you are told that all repurchases are harmful to shareholders or to the country, or particularly beneficial to CEOs, you are listening to either an economic illiterate or a silver-tongued demagogue .”
How did the railroad accomplish this? By cutting nearly 10,000 jobs — reducing its workforce by a third while running fewer, longer trains. Some trains now stretch longer than 2 miles. It made these changes despiteThe corporation also refused to provide its remaining workers with sick leave. And it failed to invest in improved safety equipment.
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