Meyerson summarizes Lazonick's research as essentially throwing open - and the beating to death - the notion of Trickle Down Economics, and draws a stark link to President Reagan's changes in Securities and Exchange Commission regulations on stock buy-backs as the culprit of today's Great Recession (which still very much lingers everywhere BUT Wall Street). I know that fact-impervious conservative pundits will no doubt shy away from the whole thing, but it should give real conservatives - and fiscal conservatives especially - pause that deregulation (i.e. LESS GOVERNMENT) in the early 1980's resulted in an economic crash in the late 2000's. Like it or not, as we get ready to "celebrate" American labor this week that the economic fortunes of that labor pool are no longer in their own hands - and all so we can inflate corporate CEO pay apparently.Like Thomas Piketty, Lazonick, a professor at the University of Massachusetts at Lowell, is that rare economist who actually performs empirical research. What he has uncovered is a shift in corporate conduct that transformed the U.S. economy — for the worse. From the end of World War II through the late 1970s, he writes, major U.S. corporations retained most of their earnings and reinvested them in business expansions, new or improved technologies, worker training and pay increases. Beginning in the early ’80s, however, they have devoted a steadily higher share of their profits to shareholders.How high? Lazonick looked at the 449 companies listed every year on the S&P 500 from 2003 to 2012. He found that they devoted 54 percent of their net earnings to buying back their stock on the open market — thereby reducing the number of outstanding shares, whose values rose accordingly. They devoted another 37 percent of those earnings to dividends. That’s a total of 91 percent of their profits that America’s leading corporations targeted to their shareholders, leaving a scant 9 percent for investments, research and development, expansions, cash reserves or, God forbid, raises.
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