A lot of very serious people are becoming very concerned about the rate in which public companies are engaged in stock buy-backs. They are concerned that executives are using stock buy-backs to enrich themselves and weaken their companies in the long-run.
The scheme goes like this: Executives issue themselves a huge number of shares or make their compensation based on share price. Next, they initiate a stock buy-back program for their company instead of paying dividends or investing in R&D. The share price rises and the executives benefit disproportionately.
There is never a good public policy solution for a business management trend. There can only be mitigation strategies. Executives need the power to do what they think is right even if it proves to be wrong. According to the US Tax Code, an organization isn’t a business unless there is a potential for failure.
Charging a fee for stock buy-backs is probably the best way to address the threat posed by the buy-back risk to the United States Economy. Shareholder activism should be enough to change internal business practices. In case it isn’t, the fees can be used for makerspace development.
Buy-Back fees could also be used to fund micro-loan programs in lesser industrialized communities. Makerspace Development requires commitment from community leaders and a willingness to take on some risk. The community shouldn’t be on the hook for the cost of materials used in prototypes.
The Small Business Administration already has a micro-loan program in place. However, it could be swamped by the deployment of new makerspaces. The Stock Buy-Back fees along with a Trans-Pacific Partnership Fund could be all that stands between the creative class and poverty.