Ralph welcomes econ professor William Lazonick, to let us know how Apple reached its record 3 trillion-dollar valuation and how what they and other large corporations are doing to enrich themselves is killing the middle class. Plus, Ralph answers more of your questions.
William Lazonick is Professor Emeritus of Economics at the University of Massachusetts Lowell. He’s written extensively on the perils of shareholder capitalism, criticism of stock buybacks, and sustainable prosperity. He is also co-author (with Jang-Sup Shin) of the recent book Predatory Value Extraction: How the Looting of the Business Corporation Became the US Norm and How Sustainable Prosperity Can Be Restored.
Buybacks should have a label on them: “This product kills the middle class.” Like you have on cigarettes.
William Lazonick Economics Professor Emeritus U of Mass/Lowell
The question is: who created all that wealth? It was the people working for Apple. It was government funding of all kinds of technology that Apple’s been able to use. It was not shareholders.
Companies have really taken the accounting systems to try to show numbers that boost stock prices. [They] have taken the SEC and gotten the SEC to mandate things as normal in order to promote the stock market, and in order to become not a regulator of the stock market but a promoter of the stock market.
[Stock buybacks are] nothing but a manipulation of the market.
When a company like Apple buys back $86 billion in one year, they are not increasing wages, they are not bolstering their pension plan, they’re not engaged in research and development, they’re not spending enough to deal with the recycling of their billions of products after they’ve been cast away, which is an occupational and environmental hazard.
I think the basic problem with Apple is they have a new kind of technological monopoly. And they’re not being enforced under the antitrust laws. They have trapped their customers in all kinds of ways… They have trapped them to a point where they are now upgrading, upgrading, upgrading, upgrading.
[Not one of Apple’s] workers in China will ever earn enough money to buy one of the phones that they’re manufacturing. And, to show the level of corporate greed here– for about $3 billion, out of that $86 billion buyback, they could have doubled the wages of 1 million Chinese workers.
Apple is arguably one of the richest, stingiest companies in the history of the modern world.