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Comment by spikels | Hacker News Reader

Can you give some examples of the "Really Bad Things" you are thinking of?

Not even as sinister as sibling comment here talking about genocides, these billionaires are wielding disproportionate political power to encourage policies that effect lower classes negatively to the benefit of their own bottom line.

On a foreign scale, defense contractors have a vested interest in keeping the Middle East unstable and have the political power to push congress towards putting more US forces there. Domestically, it's hard to find a more plausible explanation for so many state governors doing things like opting out of ACA, limiting unions, closing schools, or enabling the Flint water crisis.

> so many state governors doing things like ... enabling the Flint water crisis.

Beware of simplistic narratives. It now looks like Flint took on the very tough job of water treatment as a jobs / stimulus program[1] -- something they turned out to be completely incompetent at -- and also as a way to resolve a pricing spat with Detroit over water supply.

As well the Michigan DEQ shoulders a lot of the blame for covering up the issues.

1. http://reason.com/blog/2016/01/25/the-flint-water-crisis-is-...

Ahhh good point, I haven't actually been following that story very closely.

use lobbyists. throw lots of soft money at politics. hold bazillions off shore so they can avoid as many taxes as possible. become patent trolls. buy back their own stock so they make themselves rich while screwing ordinary investors and employees and companies. pay less in taxes than their secretaries. Colluding into oligopolies and monopolies so that can extract monopoly profits. stop spending in a recession then complaining because the government does. not training employees and cutting benefits.

> buy back their own stock so they make themselves rich while screwing ordinary investors and employees and companies

I'm not sure how this is valid reasoning... Aren't stocks "bought-back" on the public market? If so, then buybacks would push up the stock price, which would benefit arbitrary investors directly (those who were willing to sell at a slightly higher price) and all investors indirectly.

I'm not 100% sure this is what the GP was referring to, but a common (and totally legal!) technique to prop up a flat or trending downward company is to start a share buyback program. You take cash that you have no idea what to do with anyway, and rather than return it to investors through a dividend, you start buying back shares. That props up your EPS, since there are fewer shares on the market, and you continue to make your numbers.

In addition, this helps to keep your share price high/growing, which benefits insiders who then sell the stock, knowing that the fundamentals of the business are shaky.

The best part is that all of this is done in the open, it's just that typical retail investors are not necessarily sophisticated enough to understand what's happening, and accept the company's argument that they're buying back their stock because it's "undervalued"

This is the same as dividends, except that the shareholders pay lower taxes.

Suppose you own 100 shares shares worth $100. If they issue $10 worth of dividends, then you receive $10 and the stock price goes down to $0.90, so your 100 shares are worth $90. If they do a share buyback, you get $10 and your remaining 90 shares are worth $90.

The main difference is that in the first case you pay dividend tax on $10, in the second case you only pay capital gains tax on 10x($1 - cost basis), plus the cap gains rate is lower than the dividend rate.

I hear again the notion that investors are too stupid to know what is going on. The institutional investors, the ones who manage funds, are the ones that move markets, and they know damm well what is going on, and the shares get priced accordingly.

So - I do advisory work sometimes for institutional investors. They ask me to consult on technology companies and talk about their market prospects and what X means in a company's earnings report. Those folks, while definitely savvier than the retail investor I described, are often so far off from the realities of the business we are discussing that it's shocking. There are exceptions of course, but by and large the market makers are equally victim to the representation of the company management

A CEO once told me how he (legally) manipulated the books to "get the numbers Wall Street was looking for". The stock tanked. Evidently he was only fooling himself.

A CEO might be able to hide poor results for a quarter or two, but the investors always catch on.

The downside of that strategy, of course, is that if you incur losses after the buyback, those losses, on a per-share basis, are magnified to the same degree as your earnings were. The sword cuts both ways.

Yes, but since you are the insiders and have a long-term vision of subsequent quarters, you often know (or suspect) what will happen and adjust accordingly.

not gp, but I think of rwandan genocide where this idea of power/wealth superiority lead to Really Bad Things.

Maybe French Revolution or Soviet Revolution of 1917? Here I mean that things before the revolutions were really bad and the revolutions were bad in themselves (as bloody).

In addition to what soneca said, it could also motivate a government to enact bad populist policy (confiscatory tax rates, punitive wealth confiscation) and leave us all poorer.

Or the elites could convince the government to execute bad policy to protect themselves at the expense of society (like our awful patent system).

Trump elected President.

they wear bathrobes and gucci slippers around for one!

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