Corporate buybacks: Have you heard about this trillion dollar Ponzi scheme?

Few know about the trillion dollar crime that stole pay raises while weakening our economy. The “lootocrats” and their courtiers are taking us for a ride.

1. A scheme that was till recently a crime now consumes trillions of dollars. That’s one of many market maladies Rana Foroohar publicizes in her book Makers and Takers: How Wall Street Destroyed Main Street.


2. Share buybacks were illegal “market manipulation” until 1982. They now divert $0.5-0.8 trillion annually from investments, R&D, wages, etc. A slow “corporate suicide” (over $7 trillion extracted by “lootocrats”).

3. Reagan’s SEC chief John Shad (an ex-Wall St boss) legalized buybacks. But Clinton-era folks (Robert Rubin, Larry Summers, etc) accelerated the fox-guarding-chickens games.

4. The justification? Chicago School shareholder value maximization theory (aka “The World’s Dumbest Idea”). And general free market fundamentalism that presumes markets allocate efficiently.

5. Foroohar counters the Chicago catechism with empirical evidence. And markets-know-best folks must face the many facts Foroohar marshalls to falsify their fig-leaf faith. For instance:

6. Only ~15% of flows to Wall St get to real businesses (the rest on games “not unlike a Ponzi scheme”).

7. "Privately owned firms invest more than twice as much… as public firms.” And drug companies spend more on shareholder maximization than on R&D.

8. 80% of our CEOs would “pass up making an investment that would fuel a decade's worth of innovation” to hit a quarterly target (foreign firms think in “decades rather than quarters”).

9. Walmart did ~$8.3 billion in buybacks in 2016, ~$3,600 per worker. Welfare for Walmart workers cost taxpayers ~$6 billion.

10. Total S&P 500 2016 buybacks = $536 billion ~$22,000 per worker.

11. Any fraction of that recently criminal misuse of money going to workers would benefit us all. They tend to spend more of their gains (generating growth) than the rich (tend to prefer Wall St’s Ponzi-ing).

12. Or that $½ trillion could be spent on “real” economy equipment, etc (as it was till 1982).

13. Business schools literally teach “greed is good,” which encourages short-term exploitation.

14. Bankers now manipulate commodities markets (Goldman Sachs caused food riots in 22 countries).

15. Always ask—what do business leaders serve? What are they loyal to? What would they not harm?

16. To trust those who aren’t loyal to anything beyond their own gain is foolish.

17. Unless business leaders are loyal enough to their companies, customers, employees, communities, nations, to not harm them, the whole market system is at risk (+see Good vs Bad Rich).

18. Buyback shenanigan fixes aren’t difficult. Let’s reban them. Or mandate X% must go to workers.

19. But deeper business leadership diseases will be harder to cure (e.g. the dysfunctional 3-way dance: greedy executives cherry-pick from backseat-driving reality-denying economists to shape policy-maker ideas).

20. If we don’t stop these economy-sapping schemes, the “lootocrats” and their courtiers will continue to take us for a ride.

21. “The 1% grabbed 82% of all wealth created in 2017.”

 

Illustration by Julia Suits, author of The Extraordinary Catalog of Peculiar Inventions, and The New Yorker cartoonist.

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Can dirt help us fight off stress? Groundbreaking new research shows how.

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Are modern societies trying too hard to be clean, at the detriment to public health? Scientists discovered that a microorganism living in dirt can actually be good for us, potentially helping the body to fight off stress. Harnessing its powers can lead to a "stress vaccine".

Researchers at the University of Colorado Boulder found that the fatty 10(Z)-hexadecenoic acid from the soil-residing bacterium Mycobacterium vaccae aids immune cells in blocking pathways that increase inflammation and the ability to combat stress.

The study's senior author and Integrative Physiology Professor Christopher Lowry described this fat as "one of the main ingredients" in the "special sauce" that causes the beneficial effects of the bacterium.

The finding goes hand in hand with the "hygiene hypothesis," initially proposed in 1989 by the British scientist David Strachan. He maintained that our generally sterile modern world prevents children from being exposed to certain microorganisms, resulting in compromised immune systems and greater incidences of asthma and allergies.

Contemporary research fine-tuned the hypothesis, finding that not interacting with so-called "old friends" or helpful microbes in the soil and the environment, rather than the ones that cause illnesses, is what's detrimental. In particular, our mental health could be at stake.

"The idea is that as humans have moved away from farms and an agricultural or hunter-gatherer existence into cities, we have lost contact with organisms that served to regulate our immune system and suppress inappropriate inflammation," explained Lowry. "That has put us at higher risk for inflammatory disease and stress-related psychiatric disorders."

University of Colorado Boulder

Christopher Lowry

This is not the first study on the subject from Lowry, who published previous work showing the connection between being exposed to healthy bacteria and mental health. He found that being raised with animals and dust in a rural environment helps children develop more stress-proof immune systems. Such kids were also likely to be less at risk for mental illnesses than people living in the city without pets.

Lowry's other work also pointed out that the soil-based bacterium Mycobacterium vaccae acts like an antidepressant when injected into rodents. It alters their behavior and has lasting anti-inflammatory effects on the brain, according to the press release from the University of Colorado Boulder. Prolonged inflammation can lead to such stress-related disorders as PTSD.

The new study from Lowry and his team identified why that worked by pinpointing the specific fatty acid responsible. They showed that when the 10(Z)-hexadecenoic acid gets into cells, it works like a lock, attaching itself to the peroxisome proliferator-activated receptor (PPAR). This allows it to block a number of key pathways responsible for inflammation. Pre-treating the cells with the acid (or lipid) made them withstand inflammation better.

Lowry thinks this understanding can lead to creating a "stress vaccine" that can be given to people in high-stress jobs, like first responders or soldiers. The vaccine can prevent the psychological effects of stress.

What's more, this friendly bacterium is not the only potentially helpful organism we can find in soil.

"This is just one strain of one species of one type of bacterium that is found in the soil but there are millions of other strains in soils," said Lowry. "We are just beginning to see the tip of the iceberg in terms of identifying the mechanisms through which they have evolved to keep us healthy. It should inspire awe in all of us."

Check out the study published in the journal Psychopharmacology.

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