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The point is that they are good for management, share prices and share holders. The economy is made of more than just those groups.
by hef19898 3y ago
The point is that they are good for management, share prices and share holders. The economy is made of more than just those groups.
- konschubert 3y agoStock buybacks are good for the economy because they allocate money to where it can be used more efficiently, which is usually not in existing big corporations. The alternative to stock buybacks is that the corporation make stupid acquisitions and try to integrate them into their processes, thereby killing them.
- jowea 3y agoThe closest alternative to buybacks is dividends. But to be honest I'm not sure if that's what the critics want the money going.
- konschubert 3y agoStock buybacks and dividends are the same thing economically, I mean both when I say “stock buybacks”. The difference is only in taxation.
- sumuyuda 3y agoShouldn’t the money be used more efficiently for society’s benefit or not concentrated by the share holders? Share holders will only further their own interests and not society’s interests.
- qwytw 3y agoHow do you accomplish that? Historically "shareholders" as a group have been quite effective (often but obviously not always) have been quite effective at using at their money for society’s benefit. In fact every society which tried to take all of their money away and eliminate them as a class (more or less violently) has failed economically. Turns out when it works properly free market competition is strongest force for economic and technological progress that has ever existed.
- konschubert 3y agoThey are also good for everybody else, because they incentivise investment that grows the economy, which means rising real wages.
- hef19898 3y agoNow that you link stock buybavks to growing salaries, I cannot ignore it anymore. Stock buybacks only benefit shareholders and companies, not the economie. Trickle down and all that doesn't work, stock buybacks reduce a companies tax burden, especially when leveraged which they often are, do not lead to more investment. And they make the rich even richer. See, for example, here: https://hbr.org/2020/01/why-stock-buybacks-are-dangerous-for-the-economy https://hbr.org/2020/01/why-stock-buybacks-are-dangerous-for... And salaries rise, primarily, through labour organization and collective bargaining.
- YuccaGloriosa 3y agoThis...exactly
- kortilla 3y agoStock buybacks are not “trickle down” economics. It’s returning money to investors who then have to rebalance their portfolios and find something new to invest in. This is what is good for the economy.
- jehb 3y ago> It’s returning money to investors I believe the parent commenter's point was exactly this. Giving money to the investor class and expecting it to benefit everyone is the definition of trickle-down economics.
- kortilla 3y agoThe comparison is leaving it with the company and hoping something good comes out of it. That’s also trickle down economics by that moronic definition.