Stock buybacks are a major drag on America’s economy, argue William Lazonick and Ken Jacobson of The New York Times. Companies buy their own stocks to increase their value. This almost exclusively benefits top executives whose pay goes up when stocks do, and big shareholders, whose investments gain value. The practice diverts funds away from making investments in aspects like training and re-training employees, which boosts innovation and economic growth. Stock buybacks contribute to America’s huge inequality issues, disproportionally benefitting the wealthy while disadvantaging the working class.
Stock buybacks can drive great growth for companies and the economy, infers Christina Mitsopoulos of The Hill. The notion that they deprive the economy or workers of investment is wrong. JPMorgan increased salaries for 22,000 of its workers, creating 4,000 new jobs while engaging in stock buybacks. Investors can use profits from them to invest in other areas. Even when these funds are put elsewhere, they create growth. Invested in the market they benefit pension funds and mutual funds as well as individual investors. Companies should be able to use their money as they please; stock buybacks can be highly productive.