I didn't say it earlier, but one of the immediate consequences of Cuepee's "utopia" view, would be that large companies would just end up acting more like venture capitalists themselves. If they can't return their profits to investors, but have to "spend" it in some way, then that spending is likely going to be in buying up other companies and doing that direct investing themselves as opposed to returning it to the VCs who them invest it.

Of course.

That is the debate here.

You cannot just proceed as if every is equal or balanced now though. You cannot say 'because what exists now is baked in already that changes that help balance by reducing liquidity are necessarily bad because if what was currently baked in made the market inefficient via too much liquidity, then reducing liquidity becomes positive'.

I believe the markets are out of balance and that change started happening heavily in the Reagan years and has only continued and if it was better balanced the market would be more healthy and long term liquidity would improve.

The Harvard assessment above agrees entirely with my view.

the Harvard 30 year analytic study addresses that.

Even a company many on the left would see generally as a villain, Blackrock, sees it as a problem.

WHY?

Because Blackrock is generally a LONG TERM investor and not a Day Trader and thus they care about the company and economy LONG TERM.

I mean, fine if you guys think Harvard and BlackRock are wrong and you know better but lets not pretend this is not being addressed.

I am not generally dealing with uke's trolling but his last post is exactly the opposite of true.

And i am sure he knows that and is just saying it to provoke.

The more companies utilize Financial Engineering methods to generate returns (Cash hording, Dividends, Stock Buy backs) is the more they are acting like Hedge Funds and companies who generate their Returns not by corporate growth but by Financial engineering.

My position is the opposite of that.

The Harvard article addresses that directly in their 3 decade assessment that incentivizing 'growth' lead to Value Creation for all Stakeholders (Shareholders, Employees, Company and Society) whereas the current skew is creating Value Extraction that is going to the Senior Management and Short term Shareholders.

And understand uke would never be arguing for the Reagan era changes if I was not on the other side.

If I was arguing things are balanced now and this climate of cash hording, cutting R&D, laying off employees due to no growth, etc. was optimal he would be all over my position as wrong, and rightly so.

What you’re repeatedly referring to itt isn’t an analytic study. It’s a Marxist analysis of our economy, which isn’t surprising considering Lazonick is (literally) a trained Marxist who (surprise) specializes in Marxist analysis of capitalist economies along with the typical "seize the means" by way of putting citizens on corporate boards and redistributing corporate profits to the citizens.

haven't read the thread, but I'd say that pretty much all conservative/GOP economic positions have stood the test of time

These "positions" work well at fulfilling their purpose, which is to further enrich the wealthy and powerful business titans and other elites at the expense of the average citizen.

Obviously an economic system such as capitalism is brutally exploitative, intellectually unjustifiable, and is part of what is plunging our Earth into crisis, but said elites will be largely protected from the worst effects of this oncoming disaster, AND don't think emphatically enough or in a sufficiently long-term manner to worry about it anyway.

Fwiw , I think it all comes down as what the role of capitalism should aim at ?

If capitalism sole purpose is too achieve maximum profitability on the short term , regardless if 30-50-70% of the people lives in poverty , conservatism economic notion works great .
(Natural concentration effect of wealth in the hands of a few) .

If the purpose of a capitalistic economy is to assure that at least half the population benefits from that economy , to create a stable society , conservatism capitalism failed miserably.

To me the second point should be favour because the feudal system was arriving at the same result of distribution of wealth in the first instance.
Why was it changed if not to arrive at a better balance in society ?

Now for the technicality of all this .
The means of production are sensitive of how it is distributed among each other to achieve maximum productivity (which to me should arrive at a maximum “sustainable “ profitability).

As soon one factor is abused , diminishing return law comes in effect , reducing the effectiveness/benefits of this factor in the equation overtime .
Logically resulting in a weaker sustainable profitability over the long run .
It can Even reach negative effects if the abuses are too important ( ex: the used of debts) .

From my understanding and the data’s I see , there is a vast disparity between labor and capital , resulting in a increase of wealth disparity, lower gdp growth, lower velocity of money , increase In unproductive debts level , ending up to produce a weaker economy .

It’s clear to me, if the point of capitalism is too create a strong economy , the labor function as to be elevated as to where it was when the US had much stronger economy .
Considering labor as a less relevant factors than capital is to me the biggest mistake conservatism economic are making .

Capital, labor and land are all 3 as important as each other’s .
Socialism as nothing to do with that , even tho that is what conservative try to make it out to be ….
It is just freakn math …

I think the contrast is important. "Harvard" didn't lay out an opinion. One person wrote an article. Apparantly a marxist, who knew? It is great that you have coopted that article and are cribbing it up and down the thread (note that it suggest nothing at all like the "utopian" view you began the conversation with). But you don't get any internet forum points for quoting from it over and over.


I wasn't aware I had offered any opinion on reagan era changes. I believe I said your utopian view was highly distortive. That's about the only positive thesis I've outlined. Can you quote me where I allegedly said this, or are you just making stuff up?

Out of curiosity, the article claims 91% of profits go to buy backs or dividends. What do you think the number should be? Like are we quibblig over 91 vs 85 or are we talking about a fundamental difference of 91 vs like 5?

the concepts he discusses are not new.

We can have a debate if you are on team 'Stock buy backs', 'Dividends' and 'Financial engineering' are the best use of that cash and what should be incentivized by Gov't as opposed to my view that long term investment in employees, R&D and growth benefiting the workers and community is where the gov't should be incentivizing.

It is fair to discuss the Short Term vs Long Term strategies and many do.

If uke and others are on team 'we want gov't incentives to be put towards Stock Buy Backs and Dividends that is a fair position to hold. They can find and quote articles too supporting that view.


But any pretending my view is radical or not founded that over the last few decades the incentives have shifted to more of a short term, where cash hording and Financial Engineering are bigger keys to profit than the prior decades of re-investment, growth and long term profits, is just ignorant of the corporate market.

Fwiw , buyback shares could be fine in certain cases .
But obv., knowing to make money you need to buy low and sells high is the way to invest while doing the inverse is a sure way to lose money , when you see every companies going full Beast mode in share buyback at all time high prices , you know something about to go wrong .

But since they know the FED put will always be there to bail them out because the real economy couldn’t takeover the profitability of the economy , the FED is stuck to keep bailing the out and so buybacks shares won’t stop .

In the end it is just paper money creating more paper with debts money while the real economy just stagnate .
Gdp growth just keep going smaller and smaller .

Yeah. Which can lead to early 2000s GE style energy/appliance/aircraft/media/financial services/health care companies that become virtually impossible to manage.

I posted about AMZN in this thread asking QP about them.

AMZN doesn’t pay a dividend.

Amazon doesn’t buy back stock for 30th Straight Quarter

Actually this article is dated and it is actually longer than 30 months. The number of shares that have been repurchased is miniscule, way less than 1%. I think it is fair to state that AMZN invests a lot of its profits in growth. Also when you look at their balance sheet their cash assets are not that much given their revenue. AMZN doesn’t hoard cash. So …

AMZN doesn’t pay a dividend
AMZN doesn’t buy back stock
AMZN doesn’t hoard cash
AMZN invests a substantial amount of their profits in growth.

QP spewed some nonsense about my post but it is more than clear that this company exemplifies the principles thst QP is promoting. AMZN spent many years showing a loss on the income statement while investing in growth. They’re a behemoth now. I was throwing QP a bone but he couldn’t/wouldn’t acknowledge that.

AMZN isn’t the only company that performs this way.

Do you just not read? Like at all? Is it just pure reflexive that if someone is vaguely in opposition to you that you just paint whatever viewpoint on them you wish?

Indeed, amazon really is the biggest template example of "reinvest everything into growth". Of course other companines have different risk/growth profiles and this strategy doesn't make as much sense, which is why having other pathways to return capital to investors is important.

Suppose all the earnings used for buybacks never accrued because the companies gave their employees raises instead. And then suppose those same employees went on to buy the same stocks with the same money. Are those employees now the value extracting, cash hoarding villians to be blamed for stifling innovation and preventing future economic prosperity?

of course. I am not arguing that Dividends, Stock Buy Backs and Cash hording should not be a part of the arsenal available.

I am saying that gov't can and does influence the weighting of these items and that can incentivize a company towards 'Pay Out' over 'Growth'.

To make it painfully simple if gov't said today '6 month tax holiday on all Dividends paid out' where the share holder recipient would pay zero tax, you would then see a rash of payouts as that tax elimination would tip the return on each dollar higher to pay out (with zero tax) then re-investment.

If we accept the above to be true then we can agree there is a spectrum or balance here and it is fine if we agree to disagree over where that balance is.

The issue we have here in this thread as that we have certain people motivated instead to act as if my opinion is WRONG and NOT informed instead of just saying 'we agree to disagree over the balance point' in which case we could all just move on.

But as long as others feel the need to say my view is wrong or ill informed I will prove it is not, as it is not.

Why?

Why suppose such nonsense.

There is no reason to believe TODAYS dividend tax rate is Go'ds rightful rate and moving it back up to a rate that worked just years ago is some destructive force.

The parallel today would be arguing that reversing the Trump tax cuts would necessarily be harmful to the economy as we call agree 'more taxation generally worse than less taxation'.

Or better yet arguing that because Original Position would say that because the subsidies for Big Oil are already 'priced in' somehow giving subsidies to Green Energy is necessarily bad and wrong because we can all agree gov't should not be 'picking winners and losers and using tax payer money'.

We can actually agree to the latter while at the same time saying 'subsidies to Green Energy ARE warranted because the playing field is badly tilted by the current skew of subsidies.'

Since Democrats in Congress are currently considering including an excise tax on stock buybacks in the reconciliation bill, I've looked more closely at the Lazonick article cuepee linked earlier.

Lazonick says that from 2003-12 S&P 500 companies "used 54% of their earnings—a total of $2.4 trillion—to buy back their own stock, almost all through purchases on the open market. Dividends absorbed an additional 37% of their earnings. That left very little for investments in productive capabilities or higher incomes for employees."

This is typically interpreted as saying that 91% of profits go to shareholders. However, a later HBR article by Jesse Fried and Charles Yang from 2018 claims that this is a misleading measure of what it is meant to pick out. First, they show that this ratio shareholder payouts to net income is still increasing - from 2007-2016 the ratio of dividends and stock buybacks to net income is increasing, now up to 96%.

However, this ratio ignores stock issuances. That is, companies do not only buy back stock, they also issue new stock. Thus, to have an accurate picture of how much money is going to shareholders we should be looking at net shareholder payouts (dividends and share buybacks minus stock issuances), not just outflows. Including these issuances as well reduces the ratio of stock buybacks/dividends to net income over this time period to 50%.

Furthermore, net income is not a good measure of how income is available for investment since R&D costs are counted as expenses. That is, a company that is investing heavily in R&D will show a lower net income (and thus also show a greater ratio of money being returned to shareholders relative to income). But this misses the point at issue here - if we are worried about companies not investing heavily enough in themselves we should use a measure that shows the money spent on R&D as part of available income.

Thus the authors settle on the ratio here of net money returned to shareholders to R&D-adjusted net income for S&P 500 companies from 2007-2016 as 41%.



Of course, S&P 500 companies are the largest companies in the US and so more likely to be mature companies that will return more money to shareholders. In fact, from 2007-2016, non-S&P 500 public companies on net received more money from shareholders than they returned. Thus, if instead of focusing only on S&P 500 companies you look at all public companies, the ratio of net shareholder payments to R&D-adjusted income is at 33%.

This way of measuring what percentage of public company profits is being returned to shareholders seems to me much more accurate than Lazonick's. Of course, you can still argue that 33% is too high and that companies aren't doing enough investment, but this lower ratio makes this claim lose much of its surface plausibility.

The big problems today with buybacks and all the stuff about dividends and all is that money gets cheaper and cheaper to borrow ( low interest rates) and so big corporations borrows cheap free money to buyback shares knowing they will get a higher yield on their stocks .
Why ? Because they get bailed out every single times….
There is no downside risk !
So why should they care about real investment in the real economy with risk when they can invest in paper money stock market with no risk , propping to All time high valuation and getting big fat bonus for management and shareholders non stop , thx to the fed ?

It’s actually a pretty funny game …

They have lowest tax rates since ww2
Lowest interest rates ever or very close
They have a free FED put

Meanwhile common man get almost no raises in wages and get stuck with huge governments debts , unaffordable home prices and weak pension funds due to low interest rates.

Great system right ?
Free market been long gone in the US ….
Sadly it’s just socialism for the rich and those that actually do not need it .
Oligarchy ftw and they voted for 1 in 2016 with guess what ?
Huge tax cuts (creating even bigger governments deficit ) for the corporations an top 1% lol .
As if they needed more …

Sometimes I think it ain’t China getting stronger, it’s the USA that getting weaker with ****** economic policies …

This is more a Social Position than economic one but yikes!


Boise State professor: Don’t recruit women into engineering, medical school, law

- Scott Yenor is a professor at Boise State University. Recently - at the National Conservatism Conference - he stated that women should be kept out of Engineering, Law and Medical school. Women should be focusing on feminine goals like homemaking and having kids.

- He also said independent women are more medicated, quarrelsome and meddlesome than women need to be.

- The conference took place in Florida, and included keynote speakers: Ted Cruz, Josh Hawley and Marco Rubio


“Our culture is steeped with feminism,” Yenor said during the conference. “It teaches young boys and girls that they are motivated by much the same things and want much the same things.”

“Thus girls are told to become as independent as boys are said to be. … They are more medicated, meddlesome and quarrelsome than women need to be.”

“Young men must be respectable and responsible to inspire young women to be secure with feminine goals of homemaking and having children,” he said, adding that male achievement in the country is not “celebrated.” “Every effort must be made not to recruit women into engineering, but rather to recruit and demand more of men who become engineers. Ditto for med school, and the law, and every trade.”

...

For the record, I do think there is a lot of truth to this 'Conservative Men's gripe'. I do think increasing women's freedoms and financial mobility is a big cause of the decline of marriages, increase in divorces and generally growing struggles between men and women to to find common ground and get along better.


That said women are not to blame for it which is where Conservative men get it wrong.

A basic premise is 'compromise between people is difficult' and it becomes more difficult the more empowered people feel to walk away from the table. In the olden days (MAGA) women had no power and were at great risk financially and socially and even to lose their kids if their relationship with their husband failed. Even if the husband was a cheater, substance or physical abuser, many times the woman was told to find a way to make it work.

When one side does most of the bending, because they have no power, compromise becomes easier to obtain.

Women today have increasing power and directly parallel to that come these type of compromise type struggles. Some men, especially conservative men, seem to hate this emerging power dynamic and what it means for flawed men, who cannot compromise or change and thus find themselves alone. In the good ole days that would rarely of happened.

There was an over compensation in divorce law, imo that swung it too far and actually incentivized many divorces for financial gain reasons but overall the balancing of the power is a positive thing even if it makes co-equal relationships that much harder to maintain.

You can mark this prediction down by me as i put on my Nostradamus hat :

- Divorce laws will swing back to more balanced within the next 30 years or so. I know of two incidence now of young men and women who married, she went on to get several degrees and a great career. He struggled, stayed home and let her pay all the bills while slipping in to video game and/or porn addiction (in one of the cases). She then divorced him, and they sued for and got full spousal support.

When people hear of these incidents there is a visceral reaction. No one likes the idea of lazy men, sitting home doing nothing but collecting spousal support from their hard working ex wives. Society reacts very aggressively to that. And thus with women now making up more than 50% and rising rapidly of top degrees and soon to be primary bread winners in many marriages such incidents will only grow. Society won't stand for it, IMO, and will reform divorce laws as a result.

I would bet on it.

I'd say your "pillars" are nothing but strawman arguments.

Define strawman arguments.

It would be a good bet, but I think it will be hard to get someone to take the other side considering I believe this has been happening for some time now, at least here in Canada.

At least that's what I recall from the last time I asked a good friend, who has a family law practice, about it. I should ask him again when I see him over the holidays.

This word...I do not think it means what you think it means.