Remember last year when Trump’s then-National Economics Council director and Goldman Sachs CEO Gary Cohen asked a room full of CEOs to raise their hands if they were planning on reinvesting in their company with the corporate tax breaks Republicans were promising? Yeah, no one raised their hands at the time, because they knew that they wouldn’t be “job-creating” with that money. Instead, they would be building up their company reserves and inflating their stock prices. Here’s an unrelated article I’m going to just try to shoehorn in here, care of Bloomberg.
According to Goldman Sachs, aggregate share repurchases (or buybacks) rose by nearly 50 percent to $384 billion in the first half of 2018. That tops the $341 billion spent on capital expenditures, which are rising at the fastest pace in at least a quarter century.
Remember that job your uncle got at the corporate share buyback plant? Neither do I. But, the good news for Donald Trump and friends is that they are making “history.”
“For the first time in 10 years, buybacks are garnering the largest share of cash spending by S&P 500 firms,” writes chief U.S. equity strategist David Kostin. “Capital spending has typically represented the largest single use of cash by corporations, a position it has held for 19 of the past 20 years.”
These buybacks will boost their shareholders’ pockets in the short term, allowing the already wealthy to get a touch wealthier.
In the long run, you get the sluggish economy we have right now, with the promise of collapse in the future! Just remember this every time workers ask for “livable wages”—for wages that are not even “good.” They are told that the companies cannot afford to pay their workers while still running a successful business. Those companies have the cash reserves: they just aren’t interested in creating worthwhile jobs or lives for the majority of people helping them stay up to their necks in yachts.