She goes on to talk about it in more detail. It’s not an accident. — Mikie
There needs to be a crisis, an ideology, an enemy (anyone but the rich). All supplied and propagated dutifully by the very organisations who should have been holding the government to account. — Isaac
None of this has happened by accident, according to Peter Goodman, the author of Davos Man: How the Billionaires Devoured the World. “It’s not an accident,” he tells me, “that our economies have concentrated greater wealth in fewer hands. Quite simply, wealthy people have used their wealth to purchase democracy, to warp democracy in their own interests. They’ve done that through a global template that involves lowering taxes, privatising formerly public attempts to deal with common problems, liquidating the spending that went into things like social services, and then putting that money into their own pockets.” The main power of the billionaire class, Goodman says, is in their creation of values, not value, that maintain a friendly political climate. Davos, he says, is “a prophylactic against change, an elaborate reinforcement of the status quo served up as the pursuit of human progress”.
Now, when you're a profitable company, you have a lot of options for what to do with those profits. You can reinvest in the business, upgrading your equipment or hiring more people. You can issue a dividend to shareholders, as a treat. Or, in America, you can do a buyback, in which you use the profit to purchase your own stock on the open market.
Buybacks are increasingly common, and controversial (in fact, they were flat-out illegal until 1982).
On one hand it's an easy way for a company to reward shareholders and signal confidence in its own value (after all, what moron would buy shares in a company whose stock is about to go down?). But critics say the practice artificially inflates the stock's value by creating fake demand. Conveniently, it also gooses executive compensation, the vast majority of which comes from stock options.
See here: Chevron, which is expected to report Friday that profits for 2022 doubled to more than $37 billion, is essentially balking at calls from investors and the White House to funnel its extra cash into more drilling capacity to help reduce prices for inflation-weary customers.
Instead, Chevron is buying $75 billion worth of its own shares, and jacking up its quarterly shareholder dividend. That decision prompted rebuke from the Biden administration.
It's an example of the obsessive short term view of focusing on the next quarter.Buybacks should be banned immediately.
More evidence of capitalism gone off the rails. Thanks, Reagan. — Mikie
But when you give stock options to compensate corporate leaders, there's a huge personal interest for these people to jack up the price of the stock whatever it takes. And to do that, stock buybacks are a perfect way. — ssu
I think there are several reasons just why the corporate manager level transformed from high paid employees to a class of their own in the US. First is that because of institutional investors (mutual funds, pension funds, etc) in ownership, hence corporations owning each other, and the emergence of an trained leadership which aren't entrepreneur-owners, but have started their career through an academic training in business managerial skills. Hence there has become this class of executives that have the real power in the corporation. In the 19th Century and still in young industries you the Bill Gates / Elon Musk types, individuals that have started their own companies and created them to be giants. These are typically replace professional career managers, who usually haven't been entrepreneurs or done their own startups.I’m trying to find more information on the history of CEO compensation and changes in performance metrics. I think the shift started around 1990 or so. — Mikie
Directors that issue more dividend, will more readily be appointed later on in their career and a managerial culture is established as a result. Succesful directors are those that generate the most profit but nobody reviews how those profits come about and whether it reduces the capacity of the company to absorb shocks or basic long term fitness. — Benkei
The second reason is that the labour movement in the US simply seems to have been crushed. It hasn't helped that labour unions were related to organized crime and their political power has been related only to work with one political party, but not much with the dominating party. — ssu
. That's why destroying the unions was so high on Reagan's priorites. With the unions demonized and decimated, and the labor party out of the way, here begins the era of the Washington consensus — Mikie
This wouldn't be a problem assuming the focus would be in the long run, but of course the classic corporate raider tactics shows that this can be quite harmful (basically when the raider first gets a huge debt to buy the company, thus making a usually low debt company drowning in debt and then starts selling parts of the company away to bolster the dividends/winnings and pay the debt ruining the corporation in the long run.Don't forget the perverted incentive for directors, who are appointed by shareholders, to keep shareholders happy. In a very real sense the more dividend they pay out, the higher their salary will be. — Benkei
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