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Tag Archives | Productivity and Innovation

How the stock market destroyed the middle class

By Rex Nutting (originally published by MarketWatch) – There’s something seriously wrong with an economy that nurtures a few billionaires but can’t sustain the middle class. Many factors have been blamed for the plummeting fortunes of the American middle class: globalization, technology, deregulation, easy credit, the winner-take-all economy, and even the inevitable tide of history. […]

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A buyback or biotech bubble?

By Leo Kolivakis (originally published by Seeking Alpha) – Steven Davidoff Solomon, professor of law at the University of California, Berkeley, wrote a comment for the New York Times, General Motors’ Stock Buyback Follows a Worrying Trend: General Motors’ announcement that it will buy back $5 billion worth of stock raises the question of whether the […]

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Corporate borrowing now flows to shareholders, not productive investment: Study

By Owen Davis (originally published by International Business Times) – Why do companies take on debt? The conventional answer is that they need to invest: to hire more workers, upgrade facilities or invent new widgets. But fresh research shows that in the past three decades corporations increasingly borrow simply to reward shareholders…. [Cross-posted from International […]

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What are you going to do with all that money?

By Michael Boyette (originally published by Rapid Learning Institute) – If it seems like it’s getting harder and harder to get funding for your training programs, you’re not crazy. And the culprit may be Wall Street. According to Training Magazine’s most recent report on the training industry,spending on training has declined by 7.2% since 2011. Over […]

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Think debt-funded stock-buybacks are pernicious? Here’s why you’re right

By Steve Roth – I’ve ranted about this phenomenon for a long time: Do Businesses Borrow to Invest in Productive Assets? Quoting JW Mason: “the marginal dollar borrowed by a nonfinancial business in this period was simply handed on to shareholders, without funding any productive expenditure at all.”… [Cross-posted from Angry Bear publication of September 24, 2014 […]

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How ‘short-termism’ is hurting the US economy, in 3 charts

By James Pethokoukis (originally published by American Enterprise Institute) - Earlier this year, BlackRock boss Laurence Fink wrote an open letter to Corporate America bemoaning its short-termism: “Too many companies have cut capital expenditure and even increased debt to boost dividends and increase share buybacks.” Economist William Lazonick (h/t to Joshua Brown) cites Fink in his Harvard […]

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From value creation to value extraction

By Shareholders Unite (originally published by Seeking Alpha) – We had a feeling we were onto something when we asked last year whether the stock market had become dysfunctional. Our particular worry was that the stock market had changed from a means to finance companies, that is, new ventures, production capacity, ideas and innovations, to […]

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HBR: How CEOs became takers, not makers

By Steve Denning (originally published by Forbes) – Business leaders generally present themselves as the creators of jobs, the real makers of the economy, claiming to add value to their organization, to the economy and to society. But in the US over the last few decades, through the pervasive practice of share buybacks, the incumbents of […]

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