By Rachel Goldfarb, originally published on Next New Deal
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Stock Buybacks Are Killing the American Economy (The Atlantic)
Nick Hanauer blames the high percentage of corporate profits going to stock buybacks for our slowed economy; that money could otherwise go to higher wages or new corporate investments.
As economic power has shifted from workers to owners over the past 40 years, corporate profit’s take of the U.S. economy has doubled—from an average of 6 percent of GDP during America’s post-war economic heyday to more than 12 percent today. Yet despite this extra $1 trillion a year in corporate profits, job growth remains anemic, wages are flat, and our nation can no longer seem to afford even its most basic needs. A $3.6 trillion budget shortfall has left many roads, bridges, dams, and other public infrastructure in disrepair. Federal spending on economically crucial research and development has plummeted 40 percent, from 1.25 percent of GDP in 1977 to only 0.75 percent today. Adjusted for inflation, public university tuition—once mostly covered by the states—has more than doubled over the past 30 years, burying recent graduates under $1.2 trillion in student debt. Many public schools and our police and fire departments are dangerously underfunded.
Where did all this money go?
The answer is as simple as it is surprising: Much of it went to stock buybacks—more than $6.9 trillion of them since 2004, according to data compiled by Mustafa Erdem Sakinç of The Academic-Industry Research Network. Over the past decade, the companies that make up the S&P 500 have spent an astounding 54 percent of profits on stock buybacks. Last year alone, U.S. corporations spent about $700 billion, or roughly 4 percent of GDP, to prop up their share prices by repurchasing their own stock.
Follow below the fold for more.
Obama and Congress Offer Bogus Rhetoric on Tax Reform (AJAM)
David Cay Johnston says that both the Democrats and the Republicans are only discussing tax reform that benefits the political donor class, instead of reform that help average Americans.
- Roosevelt Take: In a white paper released last year, Roosevelt Institute Chief Economist Joseph Stiglitz proposed a tax plan that would promote equity and growth for all.
Right-to-Work Laws are Every Republican Union-Hater's Weapon of Choice (The Guardian)
There are no philosophical or economic arguments in favor of right-to-work laws, writes Michael Paarlberg, only a political preference for supporting employers over workers.
Illinois Governor Acts to Curb Power of Public Sector Unions (NYT)
Monica Davey and Mitch Smith report on Governor Rauner's executive order, which will strip public sector unions of the fair share dues that non-members pay for the benefits they get anyway.
Red States' New Tax on the Poor: Mandatory Drug Tests for Welfare Recipients (TNR)
Elizabeth Stoker Bruenig points out that only certain public funds require invasive tests to ensure recipients are worthy of assistance. Other forms of welfare, like public schools, are simply accepted.
In at Least 22 States, Your Student Debt Could Cost You Your Job (Jobs With Justice)
Chris Hicks points out the disconnect inherent in laws that revoke professional licenses from people who aren't able to pay their student debt. How will they make enough to pay it off without that license?
