What is Capitalism?

[TLK Valentine]

Tomatos tomatoes.

It's the difference between what's ideal for them and what's ideal for the rest of us.

Yes ultimately they get the same choice as everyone else, that being not much.

To be expected -- by the time we weigh in; only two people are left applying.

 

[TagliatelliMonster]

Put simply, capitalism allows - indeed, encourages - private owners of the means of production, distribution and exchange, to profit from the labour of others. If I invest money in an enterprise, with the intention of taking out more than I put in, where does the take-out come from? It comes from someone else’s hard work.

And that someone else was paid for that hard work. Usually, before it brought in any money.
And if the business fails, the investor / employer loses his investment, while the someone else was still paid for his work.

Sure, there needs to be (and in most civilized countries, there are) regulations in place to prevent abuse in this system.
But if we just focus on that basic concept as outlined above, I don't see a problem.

 

[9-10ths_Penguin]

If they are buying back the stock they are spending money to do so.

And removing money (i.e. shareholder equity) from the economy at the same time.

Lots of reasons a company might do so but how does spending money/losing wealth make them more wealthy.

It works like this:

- a large shareholder pushes for the company to do a stock buyback.

- the company uses its cash to buy up some of its own shares.

- the cash stays in the economy (with the share sellers), but the shareholder equity (also a form of wealth) just disappears.

- the value of the company stays the same (or goes down a bit, if the shares had to be bought at a premium).

- the large shareholder's personal wealth increases, since there are now fewer slices (shares) of the pie, so their slices are worth more.

 

[Kfox]

And removing money (i.e. shareholder equity) from the economy at the same time.



It works like this:

- a large shareholder pushes for the company to do a stock buyback.

- the company uses its cash to buy up some of its own shares.

- the cash stays in the economy (with the share sellers), but the shareholder equity (also a form of wealth) just disappears.

- the value of the company stays the same (or goes down a bit, if the shares had to be bought at a premium).

- the large shareholder's personal wealth increases, since there are now fewer slices (shares) of the pie, so their slices are worth more.

Your 4th and 5th point seems to contradict each other. If the value of the company goes down, the large shareholder’s personal wealth goes down as well because his wealth is tied into the share price of the company.
Also per #3, if shareholder equity just disappears, the large shareholder’s equity; (a form of wealth) will just disappear as well. The more likely result of a buyback would be the same as if anyone else purchased shares of the company; it would cause the share price to increase (due to fewer available shares), causing the value of the company to increase as well as the wealth of all share holders including the one who initiated the buyback.