Schumer and Sanders: Limit Corporate Stock Buybacks

Like most such proposals, there's very little chance of anything happening. Still, it would amount to a $15/hr minimum wage for companies that are doing well and want to return value to shareholders (unless doing so via dividends would be more efficient). Alternately, companies could just sit on the profits until a friendlier administration came into power.

Why not just pass a $15 minimum wage if that's the policy goal? Asking this question as a Democrat. This seems like an unnecessarily complicated way to achieve the outcome.

Something I wonder about here.

Isn't this idea that corporations should not buy back their stock a consequence of the idea that company shares are for speculation, not to get the company operating capital?

What about a company that sells shares, builds a business, makes a profit, and fulfills their mission? Can't such a company then return some or all its value to its investors by redeeming--buying back--its shares?

That's what happens when a company is sold. VC investors expect it.

Another model of company responsibility is to account for externalities. For example, if a company pays such poor wages that workers need public aid (SNAP/"Food Stamps") to feed their families, that's an unaccounted externality. The company's profit in that case comes at a cost to the government's human services operations.

Similar arguments apply to exhaustion of natural resources, and to pollution.

All that being said, the speculative framework for company valuation is certainly the entrenched model. All big companies are basically financial entities with a side hustle in some kind of product or other.

For what it's worth, Berkshire Hathaway (Warren Buffet and colleagues) rescued General Electric on the condition that they definancialize and stop treating their products as a side hustle.

A few paragraphs deep in the article: “Our bill will prohibit a corporation from buying back its own stock unless it invests in workers and communities first, including things like paying all workers at least $15 an hour, providing seven days of paid sick leave, and offering decent pensions and more reliable health benefits.“

They might be off base on this one....

https://www.wsj.com/articles/buyback-derangement-syndrome-15...

It's amazing how many of our current awful cultural and financial trends can be traced back to "during the Reagan Administration."

From the article: President Trump promised the typical American household a $4,000 pay raise as he pushed for his tax giveaway to the rich. The reality, however, is that from December 2017 to December 2018, real wages for average workers have gone up by just $9.11 a week.

While I agree with Schumer and Sander's viewpoint, I think it's a little disingenuous to compare a per year value to a per week value.