Save the Buyback, Save Jobs

In a recent New York Times editorial, Senators Chuck Schumer and Bernie Sanders described stock buybacks-and dividends, too-as "corporate self-indulgence" and "an enormous problem for workers and for the long-term strength of the economy." It's true, of course, that the growth of jobs and median wages in recent decades has been disappointing, but the senators identify the wrong culprit. And in so doing, they perpetuate a misconception about the role of dividends and buybacks. Besides failing to note how such payouts increase capital productivity, the senators miss their critical economic function of recycling "excess capital" from large, mature companies with fewer investment or employment opportunities to the next generation of Apples and Amazons.