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Econintersect: Every day our editors collect the most interesting things they find from around the internet and present a summary "reading list" which will include very brief summaries (and sometimes longer ones) of why each item has gotten our attention. Suggestions from readers for "reading list" items are gratefully reviewed, although sometimes space limits the number included.
No gray area: Beliefs shape views of Brown killing (Jesse Washington, Associated Press, MSN News)
Ferguson Police Receive Body Camera Donation (Geetika Rudra, ABC News)
No hope for lasting Gaza ceasefire (Sharif Nashashibi, Middle East Eye)
Libyan parliament reappoints PM as government loses grip on ministries (Ayman Al-Warfalli and Ahmed Elumami, Reuters)
Macedonia detains more than 100 illegal immigrants from Syria, Iraq (Kole Casule, Reuters)
U.N. peacekeepers from Philippines successfully extracted in firefight (Reuters) Video and transcript.
Iraqi forces break militant siege of Shiite town (Sameer N. Yacoub, Associated Press, MSN News)
UN to send investigators to Iraq over Islamic State 'atrocities' (Ian Black, The Guardian)
Russia has 'severed' partnership with Europe, says Germany (AFP, MSN News)
Iranians play role in breaking IS siege of Iraqi town (Isabel Coles, Reuters)
Ukraine troops abandon airport 'in face of Russian assault' (AFP, MSN News)
Ukraine Suffers Harsh Defeat in Eastern Town (James Mason and Alan Cullison, The Wall Street Journal)
There are 13 articles discussed today 'behind the wall'.
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The corporate resource allocation process is America's source of economic security or insecurity, as the case may be. If Americans want an economy in which corporate profits result in shared prosperity, the buyback and executive compensation binges will have to end. As with any addiction, there will be withdrawal pains. But the best executives may actually get satisfaction out of being paid a reasonable salary for allocating resources in ways that sustain the enterprise, provide higher standards of living to the workers who make it succeed, and generate tax revenues for the governments that provide it with crucial inputs.
Since the early 1980s, when restrictions on open-market buybacks were greatly eased, distributions to shareholders have absorbed a huge portion of net income, leaving much less for reinvestment in companies. (Note: Data are for the 251 companies that were in the S&P 500 Index in January 2013 and were publicly listed from 1981 through 2012. If the companies that went public after 1981, such as Microsoft, Cisco, Amgen, Oracle, and Dell, were included, repurchases as a percentage of net income would be even higher.)
Josh Brown adds:
Econintersect: Do you remember when successful companies were the ones that invested for growth? If you are under 50 probably not because that was before you were old enough to graduate high school. But with the changes in tax brackets, especially for capital gains over periods as short as one year plus a day and for dividends, as well as for very high personal income top marginal brackets, a change occurred over the years in how finance made money with stocks: Extraction became tax advantaged over investment. For an illustration of this see the next article.
Econintersect: Don't fall into a ceteris paribus trap here. There is far too little information to establish cause and effect. Many other things have changed over the last half century, including the creation of many advanced economies that were much smaller relative to the U.S. in the years after the second world war and the demographics of the U.S. have changed, just to cite two big factors. The only statement that stands is that the tax codes have changed to increase the advantage of extraction from corporations relative to re-investing for growth. We can offer a counter argument to that assertion and that is that the "extraction" from one corporation might well be the starting capitalization for a new one.
This entire issue deserves a lot more attention to explore the ceteris non paribus aspects of the financial markets performance in the most recent decades.
Economies and economics (The Enlightened Economist)
Digital Labor & Rethinking Economics (Concurring Opinion)
Declining Costs Enhance Duvernay Shale Economics (Oil & Gas Journal) Subscription required.
Other Views: Economics support raising minimum wage (Janesville Gazette)
Agriculture equipment sales decline in 2014 (USA Today)
Reality Optional Economics (Business Insider)
Indonesia’s Economy Remains Fragile (The Wall Street Journal)
Week ahead in business and economics: September 1-5 (The Telegraph)
Economic Impact: Health care and construction jobs will be fastest growing in region (Richmond Times Dispatch)
Desperately Dry California Tries to Curb Private Drilling for Water (The New York Times)
Klerman on the Economics of Legal History (Legal History Blog)
Rodney Dangerfield's First Economics Class (Daily Paul)
Sergei Glaziev—Putin's economic brain (real economics)
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