It’s time to rewrite the rules to boost investment in workers.
The Roosevelt Rundown is an email series featuring the Roosevelt Institute’s top stories of the week.
The Price of Stock Buybacks
On Thursday, Roosevelt Institute Fellow Lenore Palladino testified before the House Committee on Financial Services for its “Examining Corporate Priorities: The Impact of Stock Buybacks on Workers, Communities, and Investors” hearing. “[T]he current use of stock buybacks poses a threat to a productive and equitable economy. In order to ensure that capital markets are not manipulated by tremendous repurchase activity or the interests of a small group of executives and share-sellers, new policies to rein in stock buybacks are required,” Palladino argued. Watch here.
- Buybacks 101: Learn more about stock buybacks and extractive corporate power in Roosevelt’s latest buyback factsheet. In a new explainer video—”How American CEOs Got So Rich”—Vox explores how buybacks have contributed to skyrocketing executive pay and record inequality.
- Why this matters: In a must-watch exchange between Rep. Chuy García (D-IL) and United for Respect leader Janie Grice, García cited Palladino’s eye-opening research on Walmart’s buybacks program. “The Roosevelt Institute found that if Walmart had redirected $10 million of [the company’s latest round of buybacks] to 1 million employees, they could have given those employees an hourly wage increase of over $5.66 an hour,” García said.
- Moving forward: “When we finally start focusing on stakeholder value as well as shareholder value, our companies will be more successful, our communities will be more equal, our societies will be more just and our planet will be healthier,” Salesforce chairman and co-CEO Marc Benioff writes in an op-ed for the New York Times.
- On the trail: Under Sen. Bernie Sanders’s new corporate accountability and democracy plan, “large-scale stock buybacks will be treated like stock manipulation, just as they were before 1982. This will be done by repealing the Securities and Exchange Commission’s misguided Rule 10b-18.”
Why a Wealth Tax Is Only Fair
“Researched and defended by economists Gabriel Zucman and Emmanuel Saez, a wealth tax is one of the most progressive government levies available to us, falling entirely on the extremely wealthy. It would help with some of the evasion problems: Efforts to hide income as wealth would be rendered futile, as that fortune would be taxed anyway,” Roosevelt Fellow Mike Konczal writes for The Nation. Read on.
- What’s different: “Two years ago, nobody was talking about wealth taxes. And now it’s the core new idea that everybody at least has to respond to, if not adopt, on the Democratic side,” Roosevelt Fellow Michael Linden says in the Washington Post. Read more.
Students Not Profits
Introduced yesterday by Rep. Pramila Jayapal (D-WA) and Sen. Sherrod Brown (D-OH), the Students Not Profits Act calls for the removal of tax-payer subsidies for for-profit colleges. As Roosevelt Fellow Julie Margetta Morgan writes for the blog, “A ban on federal subsidies is currently the only solution that truly confronts the power imbalance that has built up in the for-profit education sector and also ensures sustained improvement in affordability and equity for all students.” Read more and check out Rep. Jayapal’s retweet of Margetta Morgan’s explainer Twitter thread.
- Why this matters: “[It’s] about spending on the financial sector and making investments for endowments and stakeholders instead of focusing on student’s needs and emphasizing their education and the affordability of their education,” Roosevelt Network financialization of higher education policy coordinator Angela Tsao tells Teen Vogue. “So much of what’s happening all boils down to: Where is the money coming from and why?” Read on.
- Hidden rules of race: “Only full cancellation completely protects the vulnerabilities of Black students and students in general, while at the same time establishing higher education as a universal right and offering restitution to all those who have had to rely on debt finance,” Roosevelt Fellows Naomi Zewde and Darrick Hamilton write for Rewire.News. Keep reading.
An Anti-Monopoly Fund
Yesterday, Facebook co-founder and Roosevelt Senior Advisor Chris Hughes announced that the Economic Security Project—which he co-chairs—will be launching a $10 million anti-monopoly fund to promote antitrust research and advocacy. As reported by the Washington Post, “The fund, which will invest in projects until March 2021, aims to provide financial support to a wide array of organizations. That includes academic researchers studying mergers and market power, policy advocates pursuing new rules to rein in tech and other industries, and grassroots groups that have battled bigness on the ground.”
Ahead of this week’s Democratic debate, a group of progressive organization leaders including Roosevelt President & CEO Felicia Wong released a statement calling for a sharper focus on the economy: “Debate questions should help voters evaluate what the candidates are offering and what their overall economic approach would look like. The moderators should also be careful not to inadvertently advance outdated and disproven narratives about how the economy works.” For Roosevelt Forward Program Director Katie Kirchner and Program Manager Fernanda Borges Nogueira, the moderators’ debate-night questions didn’t quite pass muster. For next time, they’ve got five questions they’d like answered.
What We’re Reading
- The Climate Crisis and the Failure of Economics – Vox
- How 2020 Democratic Presidential Hopefuls Want to Help Communities Vulnerable to Climate Change – Vox
- How the Trump Administration’s New Labor Policies Could Screw Over Restaurant Workers – Vice
- Sexual Harassment Isn’t a “Women’s Issue”—It’s an Economic Epidemic – Ms.
- The US Tax System Is “a New Engine of Inequality” – CBS News
- How to Build a More Responsible Corporate Capitalism – Financial Times