
Schumer and Sanders: Limit Corporate Stock Buybacks - projectramo
https://www.nytimes.com/2019/02/03/opinion/chuck-schumer-bernie-sanders.html
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ijpoijpoihpiuoh
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.

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dfxm12
_Why not just pass a $15 minimum wage if that 's the policy goal? Asking this
question as a Democrat._

US Senate Democrats don't have the power to do this. You do see this in local
governments where they do (like NY).

I might also wonder if this is the true policy goal nationally, or if they are
just floating ideas out there to see the public opinion on them. e.g., If a
$15/hr minimum wage isn't passable in their careers, maybe this would be and
is a step in that direction.

Additionally, saying something new like this gets their name in headlines,
which tends to be a goal for national politicians (especially when not
attached to a scandal).

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ijpoijpoihpiuoh
_US Senate Democrats don 't have the power to do this._

They don't have the power to limit buybacks preconditioned on $15/hr wages
either. Their lack of power to effectuate a national minimum wage doesn't seem
to explain the choice to float this policy.

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OliverJones
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.

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WalterSear
> 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?

As long as it didn't do so by paying people less than $15/hour and provide no
sick leave, Sanders and Schumer don't seem to have a problem with that.

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thinkmassive
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.“

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

[https://www.wsj.com/articles/buyback-derangement-
syndrome-15...](https://www.wsj.com/articles/buyback-derangement-
syndrome-1534460606)

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

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elektor
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.

~~~
dfxm12
Not at all. 9.11 * 52 = 473.72. At the very least, it's _very obviously_
somewhere between $468-$520/yr, just over 1/10 of what was promised. There's
no insincerity nor obfuscation...

~~~
creaghpatr
Well, except 'household' is not the same as 'worker', and 'typical' is not
falsifiable so it could mean anything. When you take a 'typical' household,
say 2 employed parents 2 kids and they own a home or other assets it's far
from an unreasonable estimate.

But this isn't about reasonable estimates, of course. Hence the deceptive per
worker per week comparison. You got played by the household versus worker they
snuck in there.

