Quote:
Originally Posted by Boomer
The 2017 tax law cuts were lauded and applauded by CEOs. corporation boards, and their lobbyists when that change in the law slashed the corporate tax rate.
It did not take long for corporations to decide to increase stock buybacks by using a mind-boggling amount from their new slush funds created by those tax cuts.
I have never liked stock buybacks -- even though I was seeing increases in share prices. I always thought stock buybacks running rampant were causing a bloated market.
I could never understand why those tax cuts did not come with some kind of parameters requiring corporations to use their new-found money for employees and capital improvements -- things to improve the overall economy. Of course, some of that money has been spent that way. BUT I guess nobody told corporate bosses not to use a huge percentage of those piles of money to line pockets by buying back their own stock.
Granted, I am a mere bumpkin, and could be accused of not understanding the wonders of stock buybacks. And, oh my, some might accuse me of being anti-capitalism -- which I absolutely am not. (I have not given up the market.)
I have been questioning stock buybacks for the past few years, but the recent train derailment that has ruined East Palestine, Ohio, sent me on a search to see what Norfolk Southern has been doing with their corporate tax cut money.
What you can read in the following link is an announcement from Norfolk Southern dated almost exactly one year ago. The announcement is for the stock buyback program that began on April 1, 2022 -- on the heels of their previous stock buyback program.
Here's the link to the year-old announcement straight from Norfolk Southern:
Norfolk Southern Announces New $10 Billion Stock Repurchase Program
And here is the first paragraph from the above link:
Norfolk Southern Corporation (NYSE: NSC) today announced that its Board of Directors has authorized a new program for the repurchase of up to $10 billion of its common stock beginning April 1, 2022. The company’s current program will be terminated on March 31, 2022.
10 Billion Dollars!
And, yet, there goes Norfolk Southern, waltzing around trying to buy real people's lives with a few mil thrown in the kitty.
This is about ethics. This is about right and wrong. This is about all of us.
Norfolk Southern must pay up, but never, ever be allowed to make the call as to when and whether East Palestine is safe -- unless that smarmy CEO moves there, with his family, to stay.
Furious Buckeye and Furious American Boomer |
The "evils" of capitalism versus the alternative economies, is an age old debate. You are absolutely correct, most incidents boil down to "ethical" conduct. In this case you identified THE important element....to put it simply, the tax changes did NOT require ONLY reinvestment which, probably, many of us, including myself, was the point !
Look of the many coal mine disasters in our country, and the unethical acts of pharmaceutical manufacturers, auto manufactures, Three Mile Island nuclear tragedy, etc. etc. Then, take a look at the alternatives to a capitalist system, outcome of the many coal mine disasters in China, a communist country, or outcomes of such disasters in dictatorships ? I don't know about you, but I contemplate this frequently. Last night we watched a history of Stalin's reign, from his rise as a philosophical believer in Marx, Trotsky, Lenin, and others, a kind of UP with the oppressed, the workers, an equal share for ALL, to his ACTUAL actions and behaviors. Collective agriculture (government control of food and grain) resulted in millions and millions of deaths from starvation. In Venezuela, one of the most oil rich countries in the world, people resorted and eating domestic and zoo animals as a result of choosing an alternative to the greedy, evil, capitalist system. So, it's a complex choice we make, and it involves qualitative characteristic which can't be predicted. Choosing capitalism, provides a high standard of living, even for the lowest level of society, but the "trade off" is non government owned entities MUST also produce profits for those who invest in them (individuals like you and I, but also unions and organizations who rely on those investments to be able to pay pensions to their members). It all boils down to the ethical (some might term it "spiritual") base of the human beings involved (CEO's, CFO's, board members, share holders, etc.) A LOT to consider in these cases ! Southern is definitely responsible... drip drip drip... with each day that passes we find out more steps they "could" have taken. If this finally results in the demise of one of our major providers of movement of goods in this country, how will it effect each of us in our daily lives ? Remember the "too big to fail" concept (banks, auto makers, and so on) ? As we slowly move to more government control, will that finally guarantee that only highly ethical people will be in control ? ? We have MAJOR decisions ahead of us all !