Citizens Lose Power as Corporations Buyback Stock

[coberst]

Citizens Lose Power as Corporations Buyback Stock

 

Corporations are “spending record sums repurchasing their own stock” so says the Wall Street Journal.

 

What happens when buyback happens? I suspect many things happen when this happens; one important thing that happens is that corporate management gains greater power.

 

Great power in America resides in America’s large institutions. “Power is not an attribute of individuals, but of social organizations.” Power is the potential to control. You have power over me when you have the potential to thwart my self-determination and to cause me to be determined by you.

 

In society most power lies within the roles an individual has rather than in the individual as a single entity. Few corporations are owned primarily by single families. The power residing in big corporations is exercised by management. The less the stock holding by the public the more power is in the hands of managers. With buybacks the power of management is enhanced.

 

A democratic form of government is one wherein the citizens have some voice in some policy decisions; the greater the voice of the citizens the better the democracy. As management power increases democracy is weakened.

 

In America we have policy makers, decision makers, and citizens. The decision makers are our elected representatives and are, thus, under some control by the voting citizen. The policy makers are the leaders of American institutions; less than ten thousand individuals, according to those who study such matters. Policy makers exercise significant control of decision makers by controlling the financing of elections.

 

Policy makers customize and maintain the dominant ideology in order to control the political behavior of the citizens. This dominant ideology exercises the political control of the citizens in the same fashion as the consuming citizen is controlled by the same dominant ideology.

 

“Thomas R. Dye, Professor of Political Science at Florida State University, has published a series of books examining who and what institutions actually control and run America. To understand who is making the decisions that affect our lives, we also have to understand how societies structure themselves in general. Why the few always tend to share more power than the many and what this means in terms of both a society's evolution and our daily lives. They examined the other 11 institutions that exert just as powerful a shaping influence, although somewhat more subtle: The Industrial, Corporations, Utilities and Communications, Banking, Insurance Investment, Mass Media, Law, Education Foundation, Civic and Cultural Organizations, Government, and the Military.”

http://www.21stcenturyradio.com/12-dye.html

[C1ay]

the greater the voice of the citizens the better the democracy.

Not true! The greater the voice of the people the closer it gets to direct democracy, aka mob rule, which has failed throughout history time and time again. As soon as the people realize they can vote themselves gifts from the public treasury they will and then the system will fail. We are already treading in that direction with more and more of the people favoring entitlements over personal responsibility. Beware that voice you are supporting....

[DarkColoredLight]

Not true! The greater the voice of the people the closer it gets to direct democracy, aka mob rule, which has failed throughout history time and time again. As soon as the people realize they can vote themselves gifts from the public treasury they will and then the system will fail. We are already treading in that direction with more and more of the people favoring entitlements over personal responsibility. Beware that voice you are supporting....

 

IF everyone TOGETHER, made it fail every second of everyday till the end of time, wouldn't we, as mankind, be a hell of alot closer to a "earth bound/man made" heaven?

 

 

Make room for heaven, by raising hell. Exploiting hell, untill we, as mankind, realize hell is wrong.

 

Bible talk non the less. But, in the circle of life, you can take 359 steps left to be one step right by yourself. Or, take 359 steps right to be one step left by yourself. I just have the "free" will to go a little left of center now.

 

 

Here ends the readings of DarkColoredLight; Chapter Rambling, Verses -1,0, and +1.

[Zythryn]

Strongly disagree with the original post on a number of points.

 

The difference between a board of directors/owners owning 51% and 100% of the stock is virtually nil.

 

Whether you own 2% of a company's stock or 1% makes no difference. You still have one vote.

 

If you are leading up to the mega-corporations lobbying power, the public has virtually no say (and that is being generous) in what direction that takes. You can own 2% or 1%, you still will have virtually no say in it.

[coberst]

It seems to me that the less corporate stock owned by stockholders outside the corporation the more power rests in the hands of the corporate managers. If the corporation owns all stock then the manager and board have no outsiders with power.

[IDMclean]

Direct Democracy has suffered one thing for ages, and now in this age and day it may not suffer such.

 

It is the very thing that allows me to discourse on this site, at this moment.

 

For power to the masses.The masses need mass communication. Further as with any good government, you need checks and balances. I agree with heinlein on this point to a degree, but it is a degree that is important, yes if people can vote themselves circuses and bread they tend to. So therefore we have Right, now we need responsibility. If one votes themselves circus and bread then one needs to work in said circus and help grow said wheat, cause TANSTAAFL.

 

Democracy, Anarchy, Socialism, Communism, and a few others require something that many cultures have been without for ages. Mass Communication and Archives of Information. These two put together with the will to learn and change creates Education, which is the main stay of advanced cultures. Those who Educate themselves, and whom strive to educate others tend to innovate.

 

/rant/soapbox

-The People's Red KickAssClown

[Zythryn]

It seems to me that the less corporate stock owned by stockholders outside the corporation the more power rests in the hands of the corporate managers. If the corporation owns all stock then the manager and board have no outsiders with power.

 

Sorry, we both had the wrong definition. Companies reabsorb stock when they buy-back stock. This acttually increases the percentage each stock represents and increases the value of the stock.

 

See http://beginnersinvest.about.com/cs/newinvestors/a/060401a.htm

[coberst]

Zythryn

 

Say corporation X has authorized and outstanding one million shares. X buys back half those shares and thus there are only 500,000 shares outstanding and thus only half the power rests in outsiders as before. Assuming a share of stock gives the owner some voice in the corporation.

 

Generally managment controls the power of the corporation and the fewer outstanding shares the less power rests outside the corporation.

 

I think that consideration of CEO pay will give a person a good idea of who controls the power of the corporation.

 

Presently it appears that CEOs receive about 500 times the pay of the average worker and this ratio contnues to increase. It appears that there exists little control of corporate power beyond management.

[Zythryn]

Zythryn

 

Say corporation X has authorized and outstanding one million shares. X buys back half those shares and thus there are only 500,000 shares outstanding and thus only half the power rests in outsiders as before. Assuming a share of stock gives the owner some voice in the corporation.

 

The conclusion 'thus only half the power rests in outsiders as before' is incorrect.

Prior to the buyback lets say I own 1000 shares. At a shareholder meeting I would get 1000 votes of the 1000000 total. A ratio of 1/1000.

After the buyback I still own 1000 shares. At the next shareholder meeting I would get 1000 vote of the 500,000 total. A ratio of 1/500. My power actually goes up! This holds true as long as I didn't sell my shares when the company offerred to buy them.

[coberst]

I am having computer problems. Sorry

[coberst]

Zythryn

 

Buyback shares are owned by the corporation. The CEO exercises the will of the corporation. The buyback shares increases the power of the CEO.

 

When I say that the citizen loses power when a corporation exercises a buyback I mean that all citizens of the nation (not the citizens who are shareholders in the corporation) lose power. Such is the case because the CEO becomes more powerful and if the CEO is part of the oligarchy controlling public policy the oligarchy becomes more powerful while the citizens of the nation become weaker.

[Zythryn]

Not in general.

 

Typically this is how a stock buy back works (this is from the link I posted earlier):

"In this example, each share equals .001% of ownership in the company.

 

Management is upset by the company's performance because it sold the exact same amount of candy this year as it did last year. That means the growth rate is 0%! The executives want to do something to make the shareholders money because of the disappointing performance this year, so one of them suggests a stock buyback program. The others immediately agree; the company will use the $1 million profit it made this year to buy stock in itself.

 

So the very next day, the CEO goes and takes the $1 million dollars out of the bank and buys 20,000 shares of stock in his company. (Remember it is trading at $50 a share according to the information above.) Immediately, he takes the shares to the Board of Directors, and they vote to destroy them so that they no longer exist. This means that now there are only 80,000 shares of Eggshell Candies in existence instead of the original 100,000. "

 

source link: http://beginnersinvest.about.com/cs/newinvestors/a/060401a.htm

 

Also, what if the company has nothing to do with policy (hires no lobbyists, doesn't contact or make requests of the government, etc).

 

Your claim is so general it ends up being meaningless. Now, if you have specific companies in mind (such as Halliburton) that may be different (still has nothing to do with stock buy backs though).

[coberst]

Zythryn says—“Your claim is so general it ends up being meaningless.”

 

I would like to see a argument that would support that conclusion.

 

My claim is that there is an oligarchy consisting of less than ten thousand individuals who exercise great control on public policy in the USA. The individuals making up this oligarchy are the leaders of the large corporations, banks, utilities, media, think tanks, universities,etc. (basically the major institutions).

[Zythryn]

No, your argument is that the public looses power when companies perform stock buy backs.

 

A. This is false as shown in the links and quotes provided above.

 

B. Your original argument claims the loss of power is to "Corporations". Most corporation are small businesses which have little if any affect on government policies.

 

C. For the large corporations, those can have a huge influence on government. However, a stock buy back does not give them additional power. Nor, I suspect, do ALL large corporations try to influence government unduly (although I suspect many/most do).

 

The stock buy back issue is a non-issue. It doesn't increase the power of the coorporation with the government, and the people don't loose any.

[coberst]

No, your argument is that the public looses power when companies perform stock buy backs.

 

A. This is false as shown in the links and quotes provided above.

 

B. Your original argument claims the loss of power is to "Corporations". Most corporation are small businesses which have little if any affect on government policies.

 

C. For the large corporations, those can have a huge influence on government. However, a stock buy back does not give them additional power. Nor, I suspect, do ALL large corporations try to influence government unduly (although I suspect many/most do).

 

The stock buy back issue is a non-issue. It doesn't increase the power of the coorporation with the government, and the people don't loose any.

 

Whoo! I don't get to make my own claims?! Talk about a strawman!

[Turtle]

My claim is that there is an oligarchy consisting of less than ten thousand individuals who exercise great control on public policy in the USA. The individuals making up this oligarchy are the leaders of the large corporations, banks, utilities, media, think tanks, universities,etc. (basically the major institutions).

:hyper: Yep; called the Bilderburgher(sp) group. Bohemia Grove anyone?

:cup: If the claim made is true, it's only one of many power plays made by these elite-anomi.

:doh: Who ya gonna call?

[coberst]

Turtle

 

can you clarify and explain. Why so cryptic? Do you have any reason for making your statement?