In his blog post as part of FT Alphaville’s Mission Finance series, William Lazonick argues that stock buybacks and dividends are the mechanism by which financial interests, including top executives, reap gains that should be going to taxpayers and workers.
Whenever financial markets get hyperactive (the norm rather than exception over the past three decades), we hear calls for “patient capital” that can fund long-term investment in the productive capabilities that are essential for a prosperous economy.
What the pundits invariably mean is that those who make investments in productive capabilities have to be willing to wait long periods of time before demanding financial returns from them. But these admonitions are often vague about what functions “patient capital” perform, and who stands to benefit from it.
Why, we might ask, is patient capital a virtue?