The most important book written in the last 50 years is The Limits To Growth written in 1972 by three scientists from MIT created a computer model that analyzed global resource consumption and production. Their results shocked the world and created stirring conversation about global 'overshoot,' or resource use beyond the carrying capacity of the planet. Their work has been validated over time, republished updated time and again yet we continue with an economic growth model.
Gret work Kareem! Anti- trust laws for sure. And far more progressive tax on Wealth- "His so-called generosity obscures the fact that the world would be in less need of charity if Buffett, and other investors like him, hadn’t been able to accumulate so much wealth in the first place." Here is the heart of the problem. Accumulating Obscene wealth is not just accepted in our society but makes you a success in our Society. When we know that no man deserves that much more than the poorest man.
Setting limits is something we stay away from. Not setting limits has put everything out of balance.
Setting limits is our only way out of our wreckage.
Here are some reasons why buybacks are considered bad:
Buybacks can be used to cover up stock issuance to managers.
Buybacks may allow managers to enrich themselves at the expense of shareholders.
Buybacks can starve the business of money needed in other areas, such as research and development or investment into new products and facilities.
Buybacks falsely inflate the share price, meaning the boost is temporary.
Buybacks may not always be the best use of capital for a company, which may hurt its value down the road, adversely impacting investors.
Stock buybacks made as open-market repurchases make no contribution to the productive capabilities of the firm.
Kareem you might want to read Malcolm Gladwell's Outliers- Timing is everything when it shouldn't be and needn't be. That’s me interpreting Malcolms telling of the Bill Gates story of success and Bill's own words to show how things fell into place perfectly for him-his enormous good luck. With slightly different circumstances...1 or 2 years later or earlier...he would have been just another computer programmer of talent working for another corporation. Luck- Timing is everything...but it shouldn't be. Timing says who gets rich off of doing nothing but owning a house and timing determines when that house becomes so valuable- too costly to buy unless you already own a house. Humankind has the ability to set limits-the capacity to not to leave things to the luck of timing. Humankind even has the capacity to increase the luck- the fortune for all! Imagine that! Timing will always be important...but it shouldn't be everything. Yet it mostly is.
This is from the book I am writing a book about Our Malady- our blind spots...ideology. I find you have to almost write it like Hans Christian Anderson wrote the Emperor's New Clothes. Keep it simple because we have made so many assumptions-we have so much arrogance- we have so many specialized theories-so much siloing-so much putting things into technical terms rather than human terms... we are so clever that we fool ourselves and are far away from simple truths. Imagine That! From Our Malady to be published in the next three to four years...when I am ready-I am not in a rush-no deadlines-don’t need the money-don’t want the fame or glory. Deadlines-rush-fame-credentialism-glory -extrinsic rewards are all part of Our Malady. Yet I would be a liar if I did not say I was concerned about my ideas being plagiarized and copyright...yet I post it publicly-I am but a conflicted soul. Lol
Officially a subscriber and enjoyed the article. But you haven’t convinced me that buybacks are bad for society!
I think your article rightfully highlights that corporate profits are well above historic norms (currently at 11%+ of US GDP vs. 7% historically), which has translated to wealth accumulation for business owners. I think it also rightfully calls out management abuse of share buybacks for personal benefit (which is also bad for shareholders). However, I disagree with the blanket attack on share buybacks. Share buybacks and dividends are just a mechanism for distributing corporate profits (which is your fundamental concern). They can create value for ongoing shareholders if shares are repurchased below fair value; they can also destroy value for ongoing shareholders if shares are repurchased above fair value (think of any company that bought back shares last year). I think the argument would be stronger to focus on your view of excessive corporate profits vs. share buybacks (a release valve for corporate profits).
The most important book written in the last 50 years is The Limits To Growth written in 1972 by three scientists from MIT created a computer model that analyzed global resource consumption and production. Their results shocked the world and created stirring conversation about global 'overshoot,' or resource use beyond the carrying capacity of the planet. Their work has been validated over time, republished updated time and again yet we continue with an economic growth model.
Gret work Kareem! Anti- trust laws for sure. And far more progressive tax on Wealth- "His so-called generosity obscures the fact that the world would be in less need of charity if Buffett, and other investors like him, hadn’t been able to accumulate so much wealth in the first place." Here is the heart of the problem. Accumulating Obscene wealth is not just accepted in our society but makes you a success in our Society. When we know that no man deserves that much more than the poorest man.
Setting limits is something we stay away from. Not setting limits has put everything out of balance.
Setting limits is our only way out of our wreckage.
Here are some reasons why buybacks are considered bad:
Buybacks can be used to cover up stock issuance to managers.
Buybacks may allow managers to enrich themselves at the expense of shareholders.
Buybacks can starve the business of money needed in other areas, such as research and development or investment into new products and facilities.
Buybacks falsely inflate the share price, meaning the boost is temporary.
Buybacks may not always be the best use of capital for a company, which may hurt its value down the road, adversely impacting investors.
Stock buybacks made as open-market repurchases make no contribution to the productive capabilities of the firm.
Kareem you might want to read Malcolm Gladwell's Outliers- Timing is everything when it shouldn't be and needn't be. That’s me interpreting Malcolms telling of the Bill Gates story of success and Bill's own words to show how things fell into place perfectly for him-his enormous good luck. With slightly different circumstances...1 or 2 years later or earlier...he would have been just another computer programmer of talent working for another corporation. Luck- Timing is everything...but it shouldn't be. Timing says who gets rich off of doing nothing but owning a house and timing determines when that house becomes so valuable- too costly to buy unless you already own a house. Humankind has the ability to set limits-the capacity to not to leave things to the luck of timing. Humankind even has the capacity to increase the luck- the fortune for all! Imagine that! Timing will always be important...but it shouldn't be everything. Yet it mostly is.
This is from the book I am writing a book about Our Malady- our blind spots...ideology. I find you have to almost write it like Hans Christian Anderson wrote the Emperor's New Clothes. Keep it simple because we have made so many assumptions-we have so much arrogance- we have so many specialized theories-so much siloing-so much putting things into technical terms rather than human terms... we are so clever that we fool ourselves and are far away from simple truths. Imagine That! From Our Malady to be published in the next three to four years...when I am ready-I am not in a rush-no deadlines-don’t need the money-don’t want the fame or glory. Deadlines-rush-fame-credentialism-glory -extrinsic rewards are all part of Our Malady. Yet I would be a liar if I did not say I was concerned about my ideas being plagiarized and copyright...yet I post it publicly-I am but a conflicted soul. Lol
Officially a subscriber and enjoyed the article. But you haven’t convinced me that buybacks are bad for society!
I think your article rightfully highlights that corporate profits are well above historic norms (currently at 11%+ of US GDP vs. 7% historically), which has translated to wealth accumulation for business owners. I think it also rightfully calls out management abuse of share buybacks for personal benefit (which is also bad for shareholders). However, I disagree with the blanket attack on share buybacks. Share buybacks and dividends are just a mechanism for distributing corporate profits (which is your fundamental concern). They can create value for ongoing shareholders if shares are repurchased below fair value; they can also destroy value for ongoing shareholders if shares are repurchased above fair value (think of any company that bought back shares last year). I think the argument would be stronger to focus on your view of excessive corporate profits vs. share buybacks (a release valve for corporate profits).