Book Cover

Capitalism,  The Way to a World of Peace and Plenty

To Chris Hayes –MSNBC Stock buy-backs

In your May 23 interview you missed an opportunity to expose stock buy-backs as a way that finance capitalism dominates the economy and makes mal-distribution of wealth even worse. CEOs, with Board approval, took a record $800 billion of potential growth capital out of corporate surplus for stock buy-backs in the past year. The CEO incentive was to hype the value of their stock options.

A Board member seeking long term value, not short-term earnings, should favor reinvesting cash surplus in growth opportunities or in better wages, benefits and profit sharing. All of these add to consumer spending and economic growth

An examination of how cash surplus is distributed is a good way to understand the alternatives in capitalism. The surplus is in cash compared to profits that include accounting opportunities that managers manipulative.

Most CEOs should not be called capitalists as they invest very little in growth capital while taking the $800 billion out. The workers are a major source of growth capital through their pension funding but few companies have Board participation by the workers consequently there is little opposition to the CEO pushing stock buy-backs.

A Fortune article summarized “Stock Buy-Backs, Party Now, Regret Later” (May 1 2018). Other studies have indicated that companies buying back stock have a profit level a few points lower than the S&P 500.

Ray CareyRay Carey

Ray Carey learned through managing companies for 33 years how to change the work culture to provide employees with their best opportunities to develop and contribute. This experience began as a 28 year old plant manager and later president of an electric motor company, and concluded with eighteen years as president , chairman, and CEO of ADT, Inc.

See Carey's autobiography of his work career in chapter two of his first book,

Democratic Capitalism, The Way to a World of Peace and Plenty.

For more information about Ray Carey and his advocacy of democratic capitalism, visit the pages of this website.