Stock buybacks aren't destroying the economy

The Democrats' accusation illustrates a basic misunderstanding of why worker wages rise over the long term

Stock traders.
(Image credit: Illustrated | REUTERS/Brendan McDermid, gonin/iStock, Idris Guluzade/iStock)

Here's an option for Democrats who dislike being called "socialist": Stop working with socialists to push policies that radiate both deep skepticism of market capitalism and undeserved confidence in government planning. Oh, and make sure your solution addresses an actual problem.

Sens. Bernie Sanders, a self-described "democratic socialist" independent from Vermont, and Chuck Schumer, a New York Democrat and Senate minority leader, want Washington to tell Corporate America how exactly to spend its money. In a jointly written New York Times op-ed, Sanders and Schumer tout their new bill that would prohibit corporations from buying back stock — there were some $1 trillion in repurchases last year — unless they "invest in workers and communities first." And by "invest," they mean higher pay, including a $15 minimum wage and more health and retirement benefits.

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James Pethokoukis

James Pethokoukis is the DeWitt Wallace Fellow at the American Enterprise Institute where he runs the AEIdeas blog. He has also written for The New York Times, National Review, Commentary, The Weekly Standard, and other places.