Detractors of share buybacks say that the capital used could go to more job creation and innovation. In conjunction with Senate Democratic leader Charles Schumer of New York, Sanders recently proposed legislation that would effectively place preconditions on a company’s ability to repurchase shares of its own stock.

“Our legislation would set minimum requirements for corporate investment in workers and the long-term strength of the company as a precondition for a corporation entering into a share buyback plan. The goal is to curtail the overreliance on buybacks while also incentivizing the productive investment of corporate capital,” Schumer and Sanders wrote.

According to an article in CNBC, “more than $1 trillion in buybacks were announced by large companies after a corporate tax cut pushed through Washington in late 2017 left companies with a lot of extra cash to spend. But instead of significantly raising worker pay or investing in equipment, companies mostly used the cash to buy their stock. And some large companies are buying back billions of dollars of shares while announcing layoffs and factory and store closings, the senators wrote.”

The legislation came about as companies like Walmart and Harley Davidson have caught heat for laying off hundreds of workers in order to free up capital to repurchase their own stock.

“At a time of huge income and wealth inequality, Americans should be outraged that these profitable corporations are laying off workers while spending billions of dollars to boost their stock’s value to further enrich the wealthy few,” the senators said.

To challenge this view, former Goldman Sachs CEO Lloyd Blankfein tweeted that “the money doesn’t vanish It gets reinvested in higher growth businesses that boost the economy and jobs. Is that bad?”

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