Tuesday, March 13, 2018

Windfalls for the rich

 The media literally spews out some number every hour indicating that the Dow Jones Average of stock prices is up, down or sluggish — as though everyone is waiting breathlessly for that news.
But wait — nearly all stock is owned by the richest 10 percent of Americans, so the Dow Jones Average says nothing about the economic condition of the 90 percent majority of Americans. For us — and for the true economic health of America as a whole.
As we've seen for years now, stock prices keep rising to record highs, while wages and living standards of the middle class and poor majority have been held down by the same corporate and political "leaders" telling us to keep our eye on the Dow. Indeed, they also play a dirty language trick on us when they issue the monthly report on the health of America's job market. Currently, they say, with the unemployment rate down to four percent, the job market is booming!
But wait again — that only reflects the number of jobs, not their dollar value in terms of wages and benefits. Having lots of people doing poorly paid work is not a healthy job economy. Notice that they don't measure the stock market by the number of stocks out there, but by their value. And they should measure your job market the same way.
Using the cash from tax cuts and repatriation of foreign cash, businesses are  spending their windfall on themselves, not on jobs, wages, or boosting America's economy.
Mainly, the bonanza is being poured into an unproductive, self-serving scheme called "buybacks." These giants literally are spending their newfound billions to buy up their own shares of stock. Why? By reducing the total number of shares on the market, the value of each remaining share increases, for those lucky shareholders get a bigger piece of the company's profit pie. Yes, less magically means more!
 And the top executives doing the manipulating are primary beneficiaries, since most of them are paid in shares of their own corporation's stock. The executives of Lowe's, for example, say they'll spend $5 billion of its taxpayer bonanza on buybacks, Google chieftains will spend $8.6 billion, PepsiCo is in for $15 billion, Cisco for $25 billion and Apple for $30 billion.

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