Hacker News Reader

Comment by reaperman | Hacker News Reader

Stock buybacks represent excess profits which otherwise could be used for employee bonuses or salary raises. There's a lot of room for argument here, because it's not clear if in the absence of stock buybacks, that excess profits wouldn't go more directly into the pockets of the owners via direct capital withdrawal.

But it's not an entirely invalid viewpoint. There really is a lot of room for reasonable minds to disagree.

View on HN

There is no such thing as "excess profits" -- people start businesses and invest in businesses in order to get rich. Anything less than "excess profit" isn't enough profit.

I can’t believe I’m saying this, but that’s anti-capitalistic in an original sense.

One purpose of the free market is to deliver the best value to consumers at the lowest expense possible. If a company is making excessively vast profit, then there isn’t enough competition making a cheaper product of the same value to the consumer.

‘Excess profit’ can be argued as the free market not working. Profit has no value to humanity if the system doesn’t deliver on other promises.

> ... employee bonuses or salary raises

or pensions, fully paid HC, the list goes on.

Stock price increase benefits workers quite a bit though.

Assuming workers own stock.

We are talking about Twilio specifically.

Which they do. Twilio's equity comp was fairly generous, at least for a time, and I believe all employees had equity as some percentage of their compensation. In addition, Twilio offered an ESPP that all employees could take advantage of.

(Full disclosure: former Twilio employee and current Twilio stockholder.)

Stock holder =/= worker

Maybe sometimes that's true but at Twilio all employee's are stock holders.

Thanks !

I didn't know, and apparently yes, Twillio employees get RSU at entry as a standard perk. Now, those are still just RSU.

I couldn't get an exact number but if they are in line with most other companies, the stock raising while hypothetically the employee compensation goes down the drain would still a net negative for employees.

No, just no. Capital extraction, be it dividend payout or stock buybacks, benefit existing stockholders, by definition. Stock buybacks, however, as opposed to dividend payout, in a free-ish market increase stock price, which prevents those with less free capital from being stockholders in the first place, which, under capitalist system, are the workers.

Stock buybacks benefit those with previously free capital while at the same time hurting those without free capital currently. In a capitalist system this does hurt workers quite a bit.

Am I missing something in your argument?

Are you saying the price of an individual stock is what's pricing people out? Having trouble reconciling that with the fact that only a few stocks are above $1000 (which doesn't seem to hard to reach if you want any substantial savings), and then stock splits and fractional shares happen often.

Or are you just saying that they will own a smaller percent of the total stock, so they have less say as stockholders?

Reply on news.ycombinator.com