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Even President Trump and congressional Republicans have spoken out against corporations’ use of anticipated bailout funds to buy back stock.
One of the makes-sense-but-we-didn’t-expect-it consequences of the coronavirus pandemic has been the at least rhetorical support that centrists, conservatives, and Republicans have given to what until a couple of weeks ago had been left-wing ideas—many of them niche left-wing ideas.
Consider, for instance, the phenomenon of share buybacks, which went largely unnoticed by anyone save those who profited from them until economist William Lazonick documented in a 2014 Harvard Business Review article that America’s publicly traded corporations were funneling virtually all their profits into buybacks and dividends, greatly benefiting major shareholders and their own senior executives, at the expense of investment in expansion or better pay and benefits for their employees. (Lazonick has since elaborated his findings in the Prospect.) In the years since, as further research has confirmed Lazonick’s findings and adduced them as a causal factor in our stratospheric economic inequality, discussion of the buyback problem has slowly seeped from the ghetto of left-wing economic scholars and journalists to the broader universe of center-left conventional wisdom.
Today, however, even President Trump and congressional Republicans feel obliged to call out buybacks as something that businesses receiving the anticipated federal bailout should not do. To be sure, the Republican legislation that Democrats refused to pass on Sunday and Monday gave Treasury Secretary Steve Mnuchin the authority to waive that ban for particular companies; it’s not clear whether some vestige of that escape hatch will remain in the compromise legislation.
Still, the everybody-hates-buyback phenomenon, even if only at the level of rhetoric, demonstrates the inescapability of thinking for the collective during a pandemic. It also underscores what is perhaps the fundamental difference between left and right on economics: The left thinks for the collective generally; the right, only when their own individual well-being is subject to the well-being of the collective, against which they normally erect walls to distance themselves.
Of course, we’re all erecting walls in physical space. With Karl Marx and Howard Hughes as our guides, America battles the plague.