Our first look at the lease from new owner of Country Fair Apartments made it clear that they would ruin the place—a place we’d lived happily for 20 years—so we moved out. Even so, I’m a little surprised to see this just 8 years later:

Because the heat is not working, 9 out of 42 buildings are considered unlivable…. If the property owners don’t fix the issues in a timely manner, tearing down the buildings may be the next step.

https://foxillinois.com/news/local/tenants-living-without-heat-at-apartment-complex-court-steps-in

In happier times.

Thought it might be getting a little late for third coffee, but looked at the clock and it was barely after 9:00 AM! Maybe we should go back to standard time every day!

I would prefer local solar time, and had thought next best would be permanent standard time, but maybe setting the clocks back an hour every day would be even better!

Sun setting over a Winfield Village parking lot

The ancient Greeks were big on the idea that virtue lead to happiness and success, so this was kind of interesting:

I used to scoff at much of this, thoroughly convinced that institutions mattered more than virtue…. But the example of the past seven years… has pushed me in the opposite direction. Institutions matter, but so does virtue, especially among the nation’s leaders. —Attack on Paul Pelosi Has Unmasked the Republican Party

All through the 1990s I was waiting for the labor market to punish employers for their (then new) strategy of laying people off as soon as there was 15 minutes with no work to do, intending to hire them back (or hire somebody else) as soon as they had work again.

Capital markets forced employers to go that route. Any company that tried to resist—keeping on employees beyond the bare minimum—would see its stock price fall so much that it would be taken over in a leveraged buyout, and then the new owner would cut staff to the bone.

As I wrote for Wise Bread back in the day (in What’s an employee to do), it made me sad to watch. Surely, I thought, eventually the labor market would tighten up, and employers who had kept their employees on through a rough patch would have an advantage over employers who had to go out and recruit, hire, and train new employees.

But it never happened. Until, according to a recent article in the New York Times, now: Companies hording workers could be good news for the economy.

It’s a pretty good article.

Employers traumatized by not being able to hire enough people may not be quite so quick to lay them off:

“When the job market slows, employers will have recent, firsthand memories of how expensive it can be to recruit, and train, workers. Many employers may enter the slowdown still severely understaffed, particularly in industries like leisure and hospitality that have struggled to hire and retain workers since the start of the pandemic. Those factors may make them less likely to institute layoffs.”

Jeanna Smialek and Sydney Ember https://www.nytimes.com/2022/10/12/business/economy/companies-hoarding-workers.html

And, if employers do keep workers on as the economy slows, it will help the U.S. economy. As Federal Reserve Board Vice Chair Lael Brainard says:

“Slowing aggregate demand will lead to a smaller increase in unemployment than we have seen in previous recessions.”

https://www.federalreserve.gov/newsevents/speech/brainard20220907a.htm

Perhaps even more important than those things, it will make me happy.

After three decades in which the market was reinforcing exactly the wrong behavior, now maybe it will encourage the right behavior.

I’m generally unimpressed with Krysten Sinema, whose failure to support Democratic initiatives has generally been harmful. However, I kinda like the tax changes she’s forced into the climate package.

Fundamentally, I like dividends and I hate stock buybacks. So a tax on stock buybacks—even a small one—makes things better.

Now, most economists would have you believe that the two are equivalent. This is false.

Economists can gin up a model that suggests that owning a slightly larger share of a slightly smaller company is “equivalent” to getting paid a share of the company’s profits. Or that getting cashed out completely (by taking the buyback), and then finding a place to invest almost all of that cash in some new company is somehow equivalent. I don’t think either of those things is true even in an economic sense, but I think both are clearly false in a larger societal sense.

New York Stock Exchange

The way things used to work was that a company earned a profit, reinvested an appropriate amount of that profit in growing the business, and then paid out the balance to shareholders to do with as they pleased. (They could reinvest the money by buying more stock, they could spend it on luxuries—or necessities, they could invest it in some other company, they could donate it to charity—the possibilities are literally endless.)

This situation produces a sort of virtuous circle. A company that earns a reliable profit—and shares it with its stockholders—becomes more valuable, because people will pay more for a company that pays a reliable dividend. It’s good for the owners (their stock is worth more), it’s good for the employees (both line workers and managers), it’s good for the community (a profitable company pays taxes, their employees have money to spend, their shareholders have money to spend, etc.).

The non-dividend situation lacks all these dynamics. Instead of wanting to produce a profit, the company has all sorts of weird incentives—to maximize “growth” or “revenue” or “earnings” according to whatever weird metric appeals to Wall Street that week. Owners don’t get cash that they can spend. Instead they get the option to cash out at random intervals. The weird incentive structure encourages companies to make weird decisions regarding investing in growth (or dumping cash into buybacks). Shareholders who would otherwise be living on dividends are constantly having to make difficult decisions about selling small amounts of shares in this or that company for money to live on.

Maybe there’s some technical economic sense in which buybacks and dividends are equivalent, but they are very much not equivalent in a societal sense, producing very different results for ordinary investors and their communities.

The only reason any ordinary person would think a stock buyback was even close to equivalent is because capital gains have been tax-advantaged over dividends. So, something that reduces that tax advantage is all to the good.

Details: Krysten Sinema Agrees to Climate and Tax Deal – The New York Times