Another article from the author helped clarify the points being made in the original article: https://hbr.org/2014/09/profits-without-prosperity https://hbr.or

Another article from the author helped clarify the points being made in the original article: https://hbr.org/2014/09/profits-without-prosperity https://hbr.org/2014/09/profits-without-prosperity A gist of the argument: 1. Companies with large profits are spending an enormous amount of money on open market stock buy backs. 2. Buy backs are almost exclusively done for stock manipulation reasons: to stabilize or increase the value of a stock. 3. Most executive compensation is in the form of stock. So the incentive of management is to maximize stock value. 4. Instead, management should be incentivized to engage in activities that increase reinvestment, research, and development. Of which longer-term, more stable employment is one positive effect; increasing U.S. innovation and inventions is another. My own amateur take on #2 is that it's popular because it's a non-risky, conservative action that management can take. If Company X has a billion dollar profit, spending that on open market buy backs of company stock effectively keeps the the profits within the company, without incurring a tax penalty. Combined with the stabilizing effect on stock prices makes it a no-brainer for many. Also, having a profit doesn't justify increasing R&D spending, or automatically expanding into new markets. It's only wise to risk an expansion if you have confidence it will generate a return. The author conflates government spending (which is unbound by risk) with private spending (which necessarily must be bound by risk). A billion dollar publicly funded research project that results in no measurable return for society will not bankrupt the government. A risky, unwise, billion dollar private investment that does not generate a return can destroy a company.