Click here for an article by Robert Reich (Bill Clinton's Secretary of Labor, leftie economist) entitled "Why Warren Buffet is wrong and Joe Biden is right about stock buybacks."
Buffet says (in his annual letter to Berkshire Hathaway shareholders):
“When you are told that all repurchases are harmful to shareholders or to the country, or particularly beneficial to CEOs, you are listening to either an economic illiterate or a silver-tongued demagogue (characters that are not mutually exclusive).”
Reich replies:
But the Oracle of Omaha is dead wrong about buybacks being good for the country. They merely enrich people who own shares of stock (the richest 10 percent of Americans own 92 percent of the stock market) rather than add to the productive capacity of America.
Reich trashes the Norfolk Southern Railway (villain of the recent hazardous-waste train wreck in Ohio), which cut 10,000 jobs -- a third of its work force -- while boosting stockholder payouts by 4,500 percent over the last 20 years.
Last year, Norfolk Southern spent $4.7 billion on stock buybacks -- while running fewer, longer trains (despite warnings it was worsening safety risks), failing to invest in safety equipment, and denying its workers sick leave.
Great for stockholders -- and Reich points out that "While railroads spent more on stock buybacks than rail safety, Warren Buffett’s wealth increased by $42 billion."
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