Naked Capitalism has the article Wolf Richter: The Big Hoax Of The Wall Street Hype Machine.

The S&P 500 index keeps bumbling from one all-time high to the next as corporations are issuing record amounts of debt to spend record amounts on buying back their own shares: $160 billion in the first quarter alone, according to CapitalIQ. Borrowing money to buy back shares and hyping it ceaselessly as “returning value to the shareholders” is the most effective way to manipulate up the stock, even if revenues are declining quarter after quarter.

In this climate of ZIRP, any major corporation can do it. The heavy buying during these low-volume times pushes up shares, the hype surrounding the buybacks pushes up shares, expectation of more buyback announcements pushes up shares, the mere idea that shares are being pushed up pushes up shares…. And in the end, the buybacks lower the share count for the all-important EPS ratio.

There may be some good points of hoax mentioned in the article, but I commented on my appraisal of one point in the article.

“And in the end, the buybacks lower the share count for the all-important EPS ratio.”

Thinking as a dividend oriented investor, the buybacks also allow for higher dividends per share. What is wrong with that?

If it is true that non-financial corporate growth is going to be lower in the foreseeable future compared to post-WWII history, then the way for companies to prosper like they did before is to lower their output capacities to match falling demand. Companies can adjust to this new environment while we stock owners can have value inflation in the stock price per share and increasing dividends per share. If this buyback is done with idle cash rather than by borrowing, then it isn’t even mortgaging the future of the company.

What are the flaws in this line of reasoning?

I anxiously await any comment on whether or not there are flaws in my point of view.

Naked Capitalism has the post Randy Wray: Taxes and the Public Purpose.

If Congress ever got hold of its senses (no, I’m not holding my breath), it would increase spending (or reduce taxes) to employ idle resources. At some point (probably later rather than sooner) we could come up against resource constraints. At that point we might need to curtail spending and/or raise taxes.

We can examine how to deal with the happy problem of chock-full employment later—we haven’t seen it in the US since WWII and it isn’t on any horizon at present.

Taxes can serve other purposes, too, as I’ve argued earlier in this series. We can use taxes to discourage “sins”—in which case the purpose of the tax is to eliminate “sin” so the optimal sizing of the tax would eliminate sin and hence raise no revenue at all.

Previously, I argued that we can view excessive riches as a sort of “sin” that we want to tax away. Some commentators have argued that high tax rates on high incomes in the early postwar period “worked” by discouraging corporations from paying high incomes to top executives. Exactly! That is how sin taxes are supposed to work. The goal is not to raise revenue but to reduce sin.

This is the clearest description of the attitude MMT proponents have about taxes.  It doesn’t cover all taxes, though.  The topic will garner more attention in later articles.  Above, I have excerpted some statements on issues on which I am particularly focused.  There is more good stuff in the article.

The Real News Network has the interview Piketty: The Market and Private Property Should Be The Slaves of Democracy.

So the human capital illusion is saying that now with the modern economy all that matters is human capital. And education, personal skills, personal talent, as opposed to traditional forms of non-human capital – financial, real estate, etc. Now this is an illusion because in fact in the long run you have a rise of both human and non-human capital in comparable proportions. So of course you have a rise of human capital. You have more education and higher level of human skills today. But you also have a higher level of real estate, equipment, patents, robots and other non-human assets. So that in the long run, you know I’m not saying that robots will dominate humans but I’m just saying that the balance between human capital and non-human capital has no reason to move in the direction of human labor. And indeed, if we look at the recent trends, you know the capital share in GDP has actually been going up and the labor share, for the share of income going to labor earners in the form of wages or other forms of compensations for labor, has actually been reduced. And I’m not saying it’s going to reduce forever but it can very well stabilize at a level that is not so different from the 19th century. So in other words, the capital labor split today is not that different from the 19th century. And it would be wrong to assume, and this has been an illusion to assume, that technological change alone and modernity alone in the form of technical change would make the triumph of labor over capital, and the triumph of human capital. So this is the first illusion.

I am so glad to finally hear Piketty in his own words. Up till now I have just been reading and hearing what reviewers have to say about his book.

It is good to hear his own take on the applicability and limitations of what is in the book. He also puts his projections for the future into a proper perspective.

The excerpt that I chose to highlight above goes to the concern that I have expressed by my suggested thought experiment. Imagine a world where only a very few people are needed to run the automated systems that can produce all the goods that the world population needs to sustain a decent standard of living. How will the potential output of such a system be allocated in such a way that everybody shares in the benefits to some degree or other?

My thought, like Piketty’s above is that this allocation can not be depended on to happen automatically because of capitalism. We actually need to think about how humans and democracies can make decisions to shape that allocation.