A “license to loot” is what our guest, economist William Lazonick, calls stock buybacks. Until the Reagan Revolution, stock buybacks were considered market manipulation and at the very least are an unproductive use of profits used only to pump up the stock price and enrich upper management, while neglecting workers’ wages, capital expansion, and innovation. Ralph and Professor Lazonick break it all down for you.
William Lazonick is Professor Emeritus of Economics at the University of Massachusetts Lowell. His recent work includes Predatory Value Extraction: How the Looting of the Business Corporation Became the US Norm and How Sustainable Prosperity Can Be Restored, and the forthcoming book Investing in Innovation: Confronting Predatory Value Extraction in the U.S. Corporation.
The ideology that enables buybacks, that makes a lot of people including economists say, “Oh, they’re just fine. The money’s just going to the economy,” is what I call the myth of the market economy—the way in which we get capital formation in the economy is just by money zipping around. But it doesn’t work that way. The money has to stop somewhere.
It’s not because the United States does not have the capability to do these things— the capability is in the wrong hands. And it’s being wasted and destroyed. So it’s not simply the amount of money that’s making people rich. But those people who are getting rich are actually getting rich by helping to destroy the industrial base of the United States, including the middle class.
These giant companies— these US companies that grew in the USA on the back of their workers, went to Washington for subsidies or bailouts when they were greedy or in trouble, and had the US Marines defend them around the world— are not only disinvesting on a massive scale in the necessities for a productive economy. But they are engaging in the ironic trend that can be called the corporate destruction of capitalism, whose base, in essence, is investment.
While these corporate bosses insist on massive domination of our political economy—from Washington to Wall Street— they’re not delivering. For the economy, for the workers, for the people who are trying to make it through every day and protect their families and their descendants. In behaving this way, they have reached a historic level of conflict of interest with their own companies.
In Case You Haven’t Heard
1. The automotive news website Jalopnik reports that a whistleblower has turned over 100 gigabtyes of “Tesla Secrets” to German media. These files contain “more than 2,400 self-acceleration complaints and more than 1,500 braking function problems, including 139 cases of unintentional emergency braking and 383 reported phantom stops resulting from false collision warnings. The number of crashes is more than 1000.”
2. While national Democrats dither and cave to outrageous Republican demands on the debt ceiling, the Minnesota Democratic-Farmer-Labor Party has delivered on an expansive progressive agenda. In the current session, with only a single-vote majority in the upper house, Common Dreams reports that they have passed bills to mandate 20 weeks of paid family and medical leave, legalized recreational cannabis, and made school meals free for public and charter students. They also passed a bill codifying Roe v. Wade, established legal protections for transgender youth, set a livable minimum wage for Uber and Lyft drivers, and approved Right to Repair legislation. While not all of these will be signed into law, it is clear that Minnesota is setting the bar for Democratic-controlled state legislatures throughout the country, and putting Congress to shame.
3. A new piece in the Lever covers “The $20 Billion Scam At The Heart Of Medicare Advantage.” The article details how insurers are manipulating the medicare privatization scheme and “milking massive profits from systematic overbilling and kneecapping modest Biden proposals to stop the scheme.” Rep. Ro Khanna, responding to this article, advocated for his “Save Medicare Act,” cosponsored by Reps. Mark Pocan and Jan Schakowsky, to ban private insurers from “profiting off the Medicare brand.”
4. NPR reports that The White House has unveiled its plan to combat rising antisemitism in the United States, and in a major victory for Left-wing anti-zionists, they did not adopt the IHRA definition of antisemitism, which would gag criticism of Israel. In response, Palestine Legal tweeted “After months of Israel advocacy groups calling on the White House to adopt the distorted IHRA definition of antisemitism, today even the staunchly pro-Israel Biden administration declined to do so. Why? Because IHRA is wrong, useless, and clearly unconstitutional.”
5. A leaked document from the Office of the Director of National Intelligence, published in the Intercept, expresses frustration that the budget of populist Left-wing Mexican President Lopez Obrador – commonly known as AMLO – prioritizes social spending for the poor in Mexico above US interests in our southern neighbor. The document reads “President Lopez Obrador’s federal budget for 2023 gives priority to social spending and signature infrastructure projects, rather than the investments needed to address bilateral issues with the US such as migration, security, and trade.” In other words, the Military Industrial Complex is not content with monopolizing the budget of this country, and feel that they are more entitled to the tax money of other countries than their own citizens.
6. 60 Minutes reports that Raytheon, a major military contractor, has been scamming the Defense Department via “inflated prices for planes, submarines, [and] missiles.” Shay Assad, a negotiator who has been on both sides of these procurement debates, drew attention to an oil pressure switch that cost $328, but was purchased by the Pentagon for over $10,000. When asked “what accounts for that huge difference,” Assad answered, “Gouging…what else can account for it?”
7. The Philadelphia Inquirer reports that “A judge dismissed all charges...against a former city police officer [named Darren Kardos] accused of participating in the beating of a 28-year-old mother [Rickia Young]” during the 2020 protests. A key reason why this case was dismissed hinged on the fact that a witness, another police officer, did not appear in court despite being subpoenad – making it “impossible” to try Kardos. Prosecutors “immediately vowed to re-file the case and bring it back to court.”
8. Two high-profile former Democrat representatives have joined the Global Advisory Council at the cryptocurrency exchange, Coinbase. These are: Tim Ryan, the former Congressman who was defeated by J.D. Vance in his 2022 bid for US Senate in Ohio, and Sean Patrick Maloney, another former Democratic Congressman and head of the DCCC, whom many hold responsible for the Democrats’ slim loss of the House in that election cycle. Coinbase has previously run afoul of the Consumer Financial Protection Bureau, and is likely banking on the political clout of these former members to navigate a possible crackdown on crypto. The revolving door just keeps spinning.
9. In a small but meaningful win for workers, LaborNotes reports that the Biden NLRB has restored “the rights of union representatives to use heated language, including occasional profanity, during arguments with management.” Union officials were barred from using such language by a Trump-era NLRB decision. The article breaks down the three major implications of this ruling: (1) “employers can no longer claim that the law allows them to discipline representatives for ‘lack of civility,’” (2) “Vigorous debate and ‘salty’ language must be tolerated, including allegations that managers are not telling the truth,” and (3) “Picket line rhetoric does not put strikers at risk.” And to that we say, FUCK YEAH!