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unhinged
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'in the 1960s, forty percent of company earnings and borrowing went to investments in new production, equipment and company growth. by the 1980s, only ten percent of earnings was going back into investment, thanks to the growing power of shareholders demanding dividend payouts and higher stock values, which could be procured via stock buy-backs. today, companies are literally borrowing money so as to pay shareholders and buy back their own stock, rather than invest in new production. according to economist william lazonic, co-director of the center for industrial competitiveness at the university of massachusetts-lowell, the 449 publicly traded companies in the s&p 500 index used more than half of their profits - nearly $2.5 TRILLION in earnings - from 2003 to 2012 simply to repurchase their own stock shares, and thirty-seven percent more to pay dividends to shareholders. less than one dollar in ten earned by these firms was put back into production, expansion, hiring, research or development. and some companies were actually spending more to repurchase stock than what their firms were making in net income in a given year.
but as disturbing as those numbers may sound, 2014 was even worse. last year, the same companies spent *ninety-five percent of profits* on stock repurchases and dividend payouts. obviously, when earnings are used to buy up stock or pay shareholders, rather than expand a company or produce goods (which would require more workers or raises for those already working), the result will be increasing inequality between those at the top who make their money from things like stock value and the masses who make their money from labor income. although the strategy works well for companies in the short term - by inflating stock values, share buy-backs help firms meet quarterly 'earnings-per-share' prices - but in the long run can undermine their financial health by diverting resources from growth and development into activity that benefits only a very narrow stratum. because the practice of open-market stock buy-backs has been largely unregulated since 1982, companies are increasingly using the practice less to help stabilize undervalued shares (one of the arguments made in favor of the practice) than to manipulate stock prices for the benefit of executives and short-term stockholders, contributing significantly to rising incomes and wealth at the top and stagnant income growth for everyone else.' - tim wise
which is exactly what all the corporations did with their tax cuts that were supposedly going to lead to job creation. invest in the workers...HA. trickle down...HA. there isn't even a dribble coming out of that tap for the rest of us.
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181007
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