Stock Buybacks and the Trillion Dollar Heist (with Senator Cory Booker)

Summary

Podcast Summary: Pitchfork Economics with Nick Hanauer

Episode: Stock Buybacks and the Trillion Dollar Heist (with Senator Cory Booker)
Date: November 4, 2025

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Main Theme & Purpose

This episode focuses on the role of stock buybacks in driving economic inequality and undermining the wellbeing of American workers. Host Nick Hanauer, with co-hosts David Goldstein and Paul Constant, explores why stock buybacks are so harmful, how they contribute to wealth concentration at the top, and what policy solutions could address these issues. The highlight is an in-depth conversation with Senator Cory Booker about his proposed Workers Dividend Act and the broader moral and economic implications of shareholder-first corporate governance.

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Key Discussion Points & Insights

1. Introduction to Stock Buybacks

• Comic Book Approach: Paul Constant introduces a free comic book, "Trillion Dollar Heist," made by Civic Ventures, to explain stock buybacks in accessible terms. The comic tells the story of a janitor, Marta, who interrupts a corporate board engaged in buyback plans. (01:41–03:09)
• Magnitude of Buybacks: By August, corporations had spent over $1 trillion on buybacks, projected to hit $1.3 trillion by year’s end—an enormous share of US GDP. (03:09)
• Historical Context: Stock buybacks were illegal until 1982. The Reagan era deregulated this activity, which many still mistake as illegal due to their manipulative nature. (04:18)

2. The Mechanics and Impact of Buybacks

• Wealth Concentration: Over 84% of stocks are owned by the top 10%, and about 40% by the top 1%—meaning buybacks heavily reward the already wealthy. (04:45, 07:57–08:05)
• Shift in Corporate Priorities: Companies now channel profits to buybacks instead of retaining earnings for investment in innovation, higher wages, and community support, a major shift from pre-1980s practices. (04:45)
• Cultural “Short-Termism”: Senator Booker describes how we’ve moved from building long-term prosperity for the middle class to incentivizing quick windfalls for shareholders and CEOs. (12:08)

3. Senator Cory Booker on Buybacks and Solutions

a) Current State & Moral Concerns

• Stock buybacks, previously illegal for being market manipulation, now artificially inflate stock prices to benefit CEOs (measured by stock performance) and shareholders. (12:08)
• This has created a system “shortchanging workers, adding to wealth disparities, and weakening democracy.” (08:28, 22:45)

b) Real-Life Example: American Airlines

• When American Airlines raised worker pay, Wall Street reacted negatively, with analysts complaining “labor is being paid first again, shareholders get leftovers.” (15:25)
• Morgan Stanley downgraded American’s shares, worrying it set a precedent for prioritizing workers. (15:31)
• This illustrates how corporate focus has shifted from communities and workers to pure shareholder returns. (15:31–17:17)

c) The Workers Dividend Act

• Policy Proposal: If companies execute stock buybacks, they must award an equivalent financial benefit to their employees. (19:32)
• Walmart Example: In 2017, Walmart made $9.8 billion in profits, spent $8.2 billion on buybacks. Under Booker’s plan, each worker would have received a $3,266 annual dividend instead. (21:23)

d) Debunking Neoliberal Critiques

• Critics claim such a bill would stifle investment, but Senator Booker and Nick Hanauer explain that raising worker compensation often stimulates broader economic growth (“multiplier effect”), as seen in Seattle’s minimum wage success. (24:21)
• A third of US corporate stock is owned by foreign investors: buybacks send wealth overseas instead of to US workers. (25:44)

4. Democrats, Neoliberalism, and the American Dream

• Booker admits some Democrats remain trapped in neoliberal thinking and calls for the party to return to its roots—championing ordinary Americans and “restoring dignity to work.” (26:07)
• The American Dream has faded for low-income families; now only about 50% of young adults outpace their parents, vs. 90% in prior generations. (26:07)
• Policy must rekindle a sense of “common purpose” and opportunity for all, rather than narrow, elite-focused gains. (28:38, 33:35)

5. Broader Legislative Agenda

• Booker’s agenda includes baby bonds, health care reform, lowering pharmaceutical prices, criminal justice reform (connecting economic empowerment to ending mass incarceration), and environmental justice—policies “about balancing the scales… de-rigging the system.” (29:18)

6. Redefining the Role of Corporations

• Nick Hanauer: There’s a critical difference between financial capital (trading paper assets) and productive capital (real investments). Financial engineering like buybacks often undermines real economic growth. (34:32)
• Citing management thinker Peter Drucker: “The only valid purpose of the firm is to create a customer”—contrasts with the shareholder-maximization mindset. (36:10)
• Citizens can and should collectively decide the purpose of corporations; if they don’t serve the public good, their charters should be revoked. (36:40)

7. Closing Reflections

• Hanauer describes economics as an arena of “social and moral preferences, often of elites,” and stresses the need to push back against trickle-down/neoliberal dogmas. (37:49)
• Pitchfork Economics aims to empower regular people to redefine the rules of the economy. (37:49–39:00)

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Notable Quotes & Memorable Moments

• Senator Cory Booker on buybacks’ legalization:

  "Stock buybacks were illegal. It was considered market manipulation before 1982... These are things that were illegal before 1982. But also we've changed how CEOs are measured for their success... that's created a very dramatic shift in the American economy." [12:08]

• On American Airlines and Wall Street’s reaction:

  “Labor is being paid first again, shareholders get leftovers.” (Citigroup analyst, via Booker) [15:25]
  “…that establishes a worrying precedent in our view, both for American and the industry.” (Morgan Stanley, via Booker) [15:31]

• Nick Hanauer’s critique of Wall Street:

  “From the point of view of Wall Street, we could literally enslave those people. And if the profits went up, that would be righteous for everyone.” [17:07]

• Cory Booker on The Workers Dividend Act:

  “If you do go for stock buybacks, then your workers have to see a benefit from it. It has to benefit the whole community constellation of interests that are part of the corporation.” [19:39]

• Booker on trickle-down:

  “…if you just create more and more wealth at the top reaches of our society, that somehow that’s going to trickle down and benefit us all. It’s just a failed economic theory that doesn’t hold water.” [24:21]

• Booker on the purpose of policy:

  “We need to have a purpose to get this country back to the dignity of work and pathways to prosperity, where everybody has a fair shot. If you labor and work hard, America will work for you.” [28:38]

• Booker on the American Dream:

  "Remember, 90% of baby boomers did better than their parents. We're now down to about 50%." [26:07]

• Hanauer on corporate purpose:

  "As I've said many times, capitalism: a good system, but good systems are robust to high standards, and we should raise the standards and force companies to do a better job." [36:40]

• Final Booker comment—a call for unity:

  “Please don’t let yourself cast yourselves as radicalism. Where you stand is at the bedrock of what people’s idea is of... America...” [31:35]

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Timestamps for Important Segments

• Intro & comic book launch: 00:00–07:47
• Kickoff of Buyback/Wealth Inequality discussion: 03:09–04:45
• Senator Booker joins, introduction: 10:42–12:08
• Explanation of buybacks’ history and harm: 12:08–14:53
• American Airlines real-world example: 14:53–17:17
• The Workers Dividend Act description: 19:39–22:08
• Seattle minimum wage and neoliberal critiques: 24:21–25:49
• Democrats & mindset change: 26:07–28:38
• Redefining corporation’s purpose: 34:32–36:40
• Closing: Pitchfork Economics’ mission: 37:49–39:00

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Episode Flow & Tone

The dialogue is brisk, energized, and serious but also humorous at times. Hanauer, Constant, and Goldstein use accessible language, pop culture references, and sharp analogies. Senator Booker is passionate, drawing on personal experience, real-life stories, and policy details to make complex issues tangible and urgent. The episode uses real-world numbers and lived examples to illuminate abstract economics and closes with a strong call to civic engagement and solidarity.

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For Listeners: Why This Episode Matters

If you want to understand why stock buybacks are at the heart of today’s inequality crisis—and what practical steps might restore balance and justice to the economy—this episode gives you a clear, compelling roadmap. Senator Booker’s Workers Dividend Act emerges as a pragmatic, moral response to decades of rules written for the few at the expense of the many.

Transcript

[Paul Constant]

Paul Constant.

[Paul (Comic Book Writer)]

Hi.

[Paul Constant]

Read any good comic books lately?

[Paul (Comic Book Writer)]

I do. I read lots of good comic books all the time. But I think you mean to ask.

[Paul Constant]

That's right. The more pertinent question. Hey, Paul Constant, written any good comic books lately?

[Paul (Comic Book Writer)]

Well, I have written a comic book and it is something that I am pretty proud of. I will leave it up to others to decide if it's good or not. But it is free and that counts for something.

[Paul Constant]

Right. And to be clear, you are amongst your many talents, you are an experienced comic book author. What do you call the person who writes the book? Part of the comic book?

[Paul (Comic Book Writer)]

Yeah. Comic book writer. I have written many comic books, including one which is called Planet of the Nerds, which was optioned by Paramount for a film adaptation that sadly didn't happen, but is now optioned by another company. So it might eventually become a movie one day. And I've always enjoyed comic books. Comics are how I learned how to read. I think they're a really important and sort of underserved medium for communication. I think that you can get a lot of information across on a comics page in a way that you can't on a page of prose.

[Paul Constant]

Right. And also aimed at general audiences as opposed to with economics. One of the things that I think defines Pitchfork economics is that Nick and I are a couple of non economists trying to explain to a non expert crowd how the economy actually works. And in fact, you have written a comic book about economics.

[Paul (Comic Book Writer)]

Exactly that. That's right. There is an issue that I've talked about here on this podcast in the past that I think is really important. And I also think that it's alarming that more people don't know about it. And that is stock buybacks.

[Paul Constant]

Right.

[Paul (Comic Book Writer)]

I believe that they are one of the leading mechanisms to transfer wealth away from working Americans and into the pockets of the super rich CEOs, the elite shareholder class. We were talking one day at a Civic Ventures meeting and I. I believe it was Nick who suggested that we should make a comic book about stock buybacks. That had never occurred to me before, but it seemed like a really fun idea. So we brought on some people who I've worked with on other comics in the past. Editor Sarah Star Litt, this amazing artist named Alan Robinson who has drawn Deadpool for Marvel. He also drew the Planet of the Nerds comic with me. He's just a wonderful artist. Pippa Boland did the colors and. And World Design did the lettering and infographics by Civic Ventures own Mary Traverse. So it's a comic book that tries to explain stock buybacks in really simple and accessible language. And it's a story of a janitor who interrupts a wealthy corporation's board meeting just as they're planning to embark on campaign of stock buybacks. And so it's, it's illustrative and it's fun. And I think I mentioned it's free.

[Paul Constant]

You know, we've been talking about stock buybacks almost the entire decade. Plus, I've been working with Nick even before Civic Ventures was fully Civic Ventures. And, you know, when I talk to people, they kind of sort of get the mechanism of what I'm talking about when I explain it, what's difficult is expressing why it's such a bad thing. And I think some of the numbers are kind of startling. Already, by August of this year, corporations have done more than $1 trillion in stock buybacks. And based on what they've already announced, It'll be about 1.3 trillion by the end of the year. And keep that in context. That's 1.3 trillion out of a $25 trillion economy. That is a huge chunk of US GDP where they're just sucking money out of the market and putting it back into inflating stock prices, which is exactly what stock buybacks do. They inflate stock prices.

[Paul (Comic Book Writer)]

Yeah. And, you know, I think most people are surprised when they find out that buybacks were completely illegal until the 1980s when the Reagan administration. And it's one of those things where it seems like the idea of buying back your own stock in order to inflate the value of it and enrich yourself, especially if you're a CEO who gets paid largely in stock options, it feels illegal. I think a lot of people are surprised that it isn't still illegal.

[Paul Constant]

And the other thing that of course, makes this really harmful part of the economy is that when you look at inequality in the US the reason why the top 10%, more particularly the top 1% and the top.01%, people like Nick, the reason why they benefit from this is that most of these stocks, most of the capital returns go to the people at the very top, 90% go to people in the top 10%, and most of that is going to people at the very, very tippy top. And so this asset price inflation, that stock buybacks don't just fuel, but intentionally fuel, that is the sole purpose of it. You're reducing the number of shares outstanding so as to decrease supply so as to force up the price. That is the logic behind it. This is money. These are Profits that could go to investing in expanding production, investing in innovation and research and development, in raising wages, in increasing working standards, in investing in your community, the things that retained earnings used to do in our economy. And be clear, most of our economy was grown through retained earnings, not through borrowing or issuing stocks. Most of the investment that corporate America used to make before around 1982 when they changed that rule, that's not happening anymore because there are no retained earnings. They're all going back to shareholders in stock buybacks and to a lesser extent, in dividends.

[Paul (Comic Book Writer)]

Yeah. So this week we are rerunning a great conversation you had with Senator Cory Booker about stock buybacks that really gets into the nitty gritty of the process and also explains a solution that he's put forth to resolving the problem of stock buybacks. But I also just wanted to mention to our readers that if they were interested in reading our comic, which is called the Trillion Dollar Heist, it is available for free. We'll have a link in the show notes. And I've been really excited by the response that we've gotten to this. We crunched the numbers. We figured out that more people have read this comic than read the Captain America comic book in a month and Iron man and other Avengers. So the response has been great. People are excited about the comic. It's a nice way to share economic with people who might not otherwise even know that this stuff pertains to them and affects them.

[Paul Constant]

Yeah. It turns out our hero Marta. Is that her name?

[Paul (Comic Book Writer)]

Marta is the janitor in the book's name.

[Paul Constant]

Yes, that's right. Our hero Marta might not be a superhero, but we have a really compelling super villain.

[Paul (Comic Book Writer)]

Absolutely. Yeah. I encourage you to listen to this episode. It's one of my favorite, I think, Pitchfork Economics episodes. And I hope that you will enjoy it and share it. And also check out comic book and share that if they think it's something that people might like.

[Paul Constant]

I second Paul's recommendation. And Paul, thank you for your service.

[Nick Hanauer]

IBM authorizes $4 billion for a stock repurchase.

[Senator Cory Booker]

84% of all stocks are owned by the top 10% of households. And the top 1% of households own about roughly 40% of stocks.

[Nick Hanauer]

Investors are sweeping up shares in Mastercard today. That comes after the credit card company approved a $1 billion stock buyback. From the point of view of Wall street, we could literally enslave those people. And if the profits went up, that would be righteous for everyone. Huntington bank shares announcing a $1.07 billion buyback.

[Senator Cory Booker]

We make moral and value decisions with how we structure our tax code. And this is yet another example where we're shortchanging workers, where we're adding to the wealth display disparities in our country and ultimately weakening the strength of our democracy as a whole. You know, it's a big year for buybacks as well. Now, Goldman Sachs estimates that buybacks could hit a record $1 trillion this year. This is Pitchfork Economics with Nick Hanauer, a podcast about how to build the economy from the middle out. Welcome to the show.

[David Goldstein]

So, Nick, in the last episode, we started a conversation about the purpose of the corporation. We talked about stock buybacks, about shareholder maximization, and about corporate governance. In this episode, we're going to move on a little bit to policy solutions. And you've got a friend who can help us in that area.

[Nick Hanauer]

That's right. Super excited today to get to talk to my friend, Senator Cory Booker, a headline grabbing former mayor with a love of social media who says he's the only vegan in Senate history.

[Senator Cory Booker]

So he has a story to tell of how he fought from the bottom and kept going. He knows the people on the ground. On Friday, another Democrat entered the race. New Jersey senator and man trying to pass universal health care with his mind. Cory Booker.

[Nick Hanauer]

Who has done a lot of thinking and work on these topics and in fact has just dropped a bill that he calls the Workers Dividend act that attempts to address some of these issues. So it should be really fun to talk to Corey about those things.

[Paul Constant]

Hold on.

[David Goldstein]

This is the second part of a two parter on the purpose of the corporation and stock buybacks. So if you haven't already listened to the previous episode, stop, go back, download.

[Paul Constant]

It, listen, then come back. Ready?

[David Goldstein]

Okay.

[Paul Constant]

On to Cory Booker.

[Nick Hanauer]

Hey, Corey, it's Nick. How are you, buddy?

[Senator Cory Booker]

Hey, man, I'm really psyched that you're doing a podcast. More than you know. That's just great news.

[Nick Hanauer]

Thank you. Thank you. And I know you do one too.

[Senator Cory Booker]

You were one of my initial professors when it came to economic justice issue from a perspective of somebody who actually has been a captain of industry. So I continue to savor you. But still, your greatest contribution to my development as a leader was a true patriot.

[Nick Hanauer]

Oh, thank you so much. That's so kind of you to say so, Corey.

[David Goldstein]

Well, let me just start and interject so you know the other voice. I'm David Goldstein. I may interject with a question. We'll see how this goes.

[Senator Cory Booker]

Yeah, David, how is it having to work with Nick there?

[David Goldstein]

We'll have a private conversation about this.

[Senator Cory Booker]

Okay. I offer counseling sessions. I used to be a crisis counselor.

[Nick Hanauer]

Tell the Senator how you refer to.

[David Goldstein]

Me as my plutocratic overlord.

[Nick Hanauer]

Yes, benevolent.

[Paul Constant]

Benevolent overlord.

[Paul (Comic Book Writer)]

That's very important.

[Senator Cory Booker]

If you're going to be stuck with a plutocratic overlord. Thank God they're benevolent.

[Nick Hanauer]

So we're super excited today to talk to you about one of our favorite subjects covering one of the worst excess of modern capitalism, which is stock buybacks. And you have been at the center of that fight. And we wanted to talk to you about your bill, the Workers Dividend Act. So can you tell us about it and why you did it?

[Senator Cory Booker]

Well, can I just take a step back because this is you and I have talked about for over 10 years, the economy of my dad's generation that built out the largest expansion of the middle class on the planet Earth. We have seen a massive warping of the economy my father grew up in that has resulted in the largest stratification of income we have ever seen historically in this country. And a shift towards what I call sort of a pernicious short termism, as opposed to a long term view of creating real growth and opportunity, expanded to expanding pathways of prosperity for most Americans. And so this is a massive shift and it's shifted because we've changed the rules and have created what I think are incentives that work against a fair, just economy. And buybacks is just one way. Stock buybacks were illegal. It was considered market manipulation before 1982. And what a stock buyback is, is a corporation using its profits to buy back their stock, thus making the cost of the price of the stocks to jump up. Because you're creating more scarcity, more demand, causes the cost to go up as a basic economic principle. And so that raises the stock price and benefits, the corporation's short term benefits. And remember, these are things that were illegal before 1982. But also we've changed how CEOs are measured for their success. One of the things we now look at CEOs are often benefited from is the price of their stock, what their quarterly earnings are. And so now that's by doing that, what was once market manipulation is now also benefiting that CEO who is like most of us, we are incentivized by what our incentives are. And their pay is often pegged towards their stock price. And that's created a very dramatic shift in the American economy. So, for example, between 2003 and 2012, companies on the S&P 500 dedicated 91% of their total earnings to stock buybacks. And Corporate dividends, which left us 9% for investing in things like, hey, raises for their workers. But before the 1970s, remember when these things were illegal, this kind of market manipulation, the split was like 50, 50 between dividends for stockholders and things like increasing worker pay. And remember, stock buybacks driving up the cost of stocks. It's a part of that shifting wealth in our society because 84% of all stocks are owned by the top 10% of households. And the top 1% of households own about roughly 40% of stocks. And so if I could give you just one real life example of this.

[Nick Hanauer]

Yeah, I love it.

[Senator Cory Booker]

Which just puts things into perspective. And that's what happened with American Airlines, where this was all done without apology, with sort of shamelessness. So you basically saw last year, American Airlines had a great quarter. They pulled in about $234 million in earnings. Bravo for an American airline for doing that. And they announced to do the right thing, that they were going to give long overdue pay raises to its pilots and its flight attendants. It's a long overdue wage increase that.

[Nick Hanauer]

Brings us up to slightly above the industry, comparable to Delta and United.

[Senator Cory Booker]

But America's decision, which was basically acknowledgment that, hey, we want to fairly pay our workers and that's important to our long term success, we made a prudent decision. Unfortunately, it was immediately derided by Wall street and by financial analysts. One analyst for Citigroup literally complained, and I'm going to quote the analysts that said, quote, labor is being paid first again, shareholders get leftovers. Yeah, and Morgan Stanley literally downgraded American Airlines shares. And they went as far as to argue that it, quote, establishes a worrying precedent in our view, both for American and the industry. So we know, and we remember, corporations were formed by American law. They were seen to have to be loyal to their constituencies, such as the towns and the cities, which they were. They're workers. But we've seen a perversion of corporate ideals and corporate ethics to now their sole loyalty, according to Wall street, which is actually providing the incentives of those CEOs. Those CEOs are now looking to their quarterly earnings and to their stock prices. It's perverted the system now away from those ethics of old where corporations were formed. And by the way, they're given that status, certain tax status by Americans, by American government. It's now perverted their focus from communities, from the common good, from their employees now, to just those short term stock reports and quarterly earnings. And that's why we've tried to Find a fix for that to balance out the incentives to get the focus back to those people that are increasingly. We've seen 60 years of stagnant wages while corporate profits now have been driven up to a over 80 year high.

[Nick Hanauer]

Yeah, that was just a terrific explanation of where the country has gone wrong. You know, there was not one thing that you just said that I thought I disagreed with. I think you're dead on. And I also observed the Wall street reaction to American Airlines and was just appalled by the naked greed of it all. And in particular the lack of self awareness. Right. Just the astonishing assumption that the only thing that mattered was making rich people richer and that the employees actually didn't count at all in the equation. That there was no social or political or economic utility created by fairly compensating them. And that from the point of view of Wall street, we could literally enslave those people. And if the profits went up, that would be righteous for everyone. It's just a remarkable expression of this sort of super concentrated form of neoliberalism that permeates our culture and our politics.

[David Goldstein]

I don't know how you get through life, Nick, when labor is always being paid first.

[Nick Hanauer]

I don't know. I don't know.

[Senator Cory Booker]

But it's also misguided. It actually doesn't. Better companies. No, it hurts the well being of that corporation.

[Nick Hanauer]

That's right.

[Senator Cory Booker]

And we know, we have countless examples of if you focus on people, if you invest in folks, if you pay them fair wages, not only does your corporation do better, but the society in which that corporation operates thrives. And right now we are choking our democracy by shifting away the balance of power in this country that focuses on people, broad middle class. And we're actually creating a dangerous system where the system itself is being delegitimized. And I see that by the rise of corporate power in America by things like Citizens United, you see a concentration of power, a rise of economic power, a rise of political power that then they come down and double down on that momentum that is turning and turning our society more and more away from workers and working people. Literally stripping the dignity away from work, which ultimately undermines the security of our society as a whole.

[Nick Hanauer]

Yeah.

[David Goldstein]

So let's turn to solutions. Senator, how would the Workers Dividend act address this?

[Senator Cory Booker]

Well, the Workers Dividend act basically says, look, if you are going to buy back stocks, what was just a matter of decades ago, something that was market manipulation, if you're going to engage in those practices, when you make those stock buybacks, you have to give A commensurate share of that profit to your employees themselves. So if you don't buy back stock, you can continue to pay your employees what they are. But if you do go for stock buybacks, then your workers have to see a benefit from it. It has to benefit the whole community constellation of interests that are part of the corporation. The best thing I can do again is give you a real life example with the company that we often talk about for what it pays its workers, which is our nation's biggest, a corporate employer, which is Walmart. They have over 1.5 million employees. And so this is the example of what our bill would do. Walmart's starting wage is just $11 an hour, which is $19,448 a year for a full time worker. By the way, I'm a New Jersey senator. You can't live in like, let's say the New York metropolitan area and raise a family of four like my grandfather did, who raised his family, my mom, on a factory worker salary.

[Nick Hanauer]

You can't even afford an apartment for $19,000 a year.

[Senator Cory Booker]

This is how much America has changed again in one generation where jobs had dignity, jobs had security, and we've now taken that away. That's why I live in an airport town in Newark and I see people who work full time jobs, catch extra shifts and still need to live on food stamps and subsidized housing because a lot of these corporations outsource their labor costs onto society and worse than that onto the children of those families who now have more economic insecurity, which often translates to them doing worse in school, them doing worse in terms of their economic life outcomes. But let's get back to the bill. It's less than $20,000 for a full time worker. Now. Walmart saw in 2017 $9.8 billion in profits, which again is revenue minus expenses. Walmart's board decided that they were going to use out of that $9.8 billion in profits, they were going to use $8.2 billion of it in stock buybacks in 2017, again driving up their stock prices. But if my bill was there, if a Worker Dividend act, if it was law, every worker would have seen a dividend of $3,266 added to their annual pay. So they too would have had to benefit from that use of that money for a stock buyback.

[Nick Hanauer]

And Corey, if I could just interject, the way in which you just framed this is both accurate but very conservative because that 9.8 billion in profit was after Tax profit. Yes, right. That was the profit after tax. So to be clear, if they had used some of this money to pay their workers, they would have increased their expenses, lowered their pre tax profits and therefore lowered their tax bill. So the net impact would really be lower. So it's actually cheaper for them in a way to pay people.

[Senator Cory Booker]

Exactly. Absolutely. I talk to folks all the time who won't want to call themselves free market people and I give countless examples. And we've all had these arguments with folks about how our tax system as we know it right now has changed dramatically and is constantly shifting the collective resources of this country, we call them here in Washington, tax expenditures, is shifting those tax expenditures to the wealthiest of people and creates decisions like why is it that we as a Society, a 55 year old public school teacher and we know these teachers who reach in their own pockets and spend on kids school supplies, I know teachers in Newark that spend for food and for sanitary products for their teenage kids and they have a very paltry tax break to be able to write off those expenses that they're doing, but they do it anyway. Yet for a 25 year old kid that works in a hedge fund, we give them better tax treatment and in fact they're paying less in taxes because of carried interest than their secretaries are. And so we make moral and value decisions with how we structure our tax code. And this is yet another example where we're shortchanging workers, where we're adding to the wealth disparities in our country and ultimately weakening the strength of our democracy as a whole.

[David Goldstein]

So let me just play devil's advocate for a moment. Wouldn't your bill just take money out of the pockets of shareholders and thus reduce investment in the economy and slow economic growth? You know it's going to hurt the people it's intended to help, right?

[Senator Cory Booker]

Well, I love this because I know Nick and I have had these conversations for over a decade. I remember that same argument was against raising the minimum wage. So how are you going to weaken these companies if you pay people more? And I know that Nick is out there in Seattle and as a result of raising people's minimum wage, putting more money in the pockets of working people, it has actually a multiplier effect in the economy where you have folks who are getting those resources and actually spending more, working people who are often living paycheck to paycheck, we'll be spending that money more and it'll create a multiplier effect that ultimately helps businesses as a whole. As you said, Nick, to me, when you started fighting the minimum wage battle, you predicted that that's what was going to happen. It's actually going to help restaurants in the community. And that's what had happened. I just get very frustrated when people seem to have this misguided view, which I saw with the last Republican tax bill, which is if you just create more and more wealth at the top reaches of our society, that somehow that's going to trickle down and benefit us all. It's just a failed economic theory that doesn't hold water. I just want to add one thing sort of insult to injury. When you buy back stocks, please understand that foreign investors, people outside of our country, one third of all of our corporate stock is owned by foreign investors. So as opposed to paying American workers more, if you're shifting your investments to stock buybacks, you're benefiting significantly people outside of our country, making them more wealthy as well.

[Nick Hanauer]

You know, I never considered that. That's a fascinating point. That's just a fascinating point.

[David Goldstein]

So, Senator, I have maybe a difficult question to ask. Why haven't Democrats done more? I mean, your proposal sounds great, but are Democrats stuck in this neoliberal mindset as well? Why haven't your colleagues done more to address this issue?

[Senator Cory Booker]

Well, one is I want to give Tammy Baldwin some credit, who has a bill that she's trying to ban them all outright, go back to pre1982 and just get rid of stock buybacks. So I'm the only United States senator that lives in a low income. I think the median income according to the last census of where I live is about $14,000 per household. And these are conversations I have in my community all the time about. I consider the boiling of the frog, where we have not been paying attention to all the things that the temperatures being turned up on working Americans and creating a lot of understandable resentment and anger. Remember, 90% of baby boomers did better than their parents. We're now down to about 50%. And there's a lot of demagogues coming along trying to say that this is Muslims, Mexicans, Chinese and so on, as opposed to things that are fundamentally changing in our economy, shifting it towards what I call a short term economy. And so I just want my party to be the party that starts standing up for and calling out these new practices in our economy and offering up substantive solutions to bring dignity back to work and to bring pathways back to work. I always say that my father, if you were in heaven around the time my father was born, even if you were a Black guy like my dad. And you were going to pick a country to be born in, the United States would be at the top of your list because we had. We were expanding middle class at a rate that. That there was creating opportunity. But now, if you're going to be born poor on the planet Earth, the United States of America is not going to be necessarily. If you're just looking to get out of poverty, if that's your only metric, this is not necessarily the top country. If you're going to be born poor, to get out. And that's actually an assault on the very idea of the American dream. So I think we need to be the party of reclaiming the dream. We need to be party of reimagining this nation to create great pathways of prosperity. And this is just one of those bills that my team and I are sitting down and saying, okay, how is this being rigged? How are the rules changed? How can we address those changes?

[Nick Hanauer]

Yeah, I think that the best thing the Democratic Party could do for itself, could do for the nation, is to redefine for people what's possible to assert with confidence and clarity, you know, a bunch of policies that will make a giant difference in the lives of ordinary Americans and by so doing, stand for something that's meaningful and useful.

[Senator Cory Booker]

I now see a country where working Americans, whether they're working on farms, working in airports, like in my community, we have all of this common pain, but we've lost our sense of common purpose.

[Nick Hanauer]

Right.

[Senator Cory Booker]

We need to have a purpose to get this country back to the dignity of work and pathways to prosperity, where everybody has a fair shot. If you labor and work hard, America will work for you. And that's where I think that we, as a party have to go to, because there's a lot of folks in America that don't think our party speaks to them anymore. And they're either checking out of the system or being pulled in by a lot of the, I think, lies that President Trump tried to feed factory workers or coal miners. A lot of lies that he told them because they, look, hey, no other party's working for me, but at least this guy is telling me that he feels my pain and going to try to address the hurt of my family.

[Nick Hanauer]

That's right. So, Senator Booker, what's next? What else?

[Senator Cory Booker]

We have a bold legislative agenda. We're coming out to this new Congress just swinging. And by the way, for me, it's not just. This is not just thought pieces that are just being thrown out for messaging. We have a lot of policies that we think are about balancing the scales in this country, de rigging the system. And so that we're doing everything from baby bonds to attacking the cost of health care in this country with pharmaceutical array of things, focusing on pharmaceutical prices. I'm really, really focused on we'd have 20% less poverty in America, 20% less poverty in America if our incarceration rates were the same as our industrial peers. So people don't often link economic empowerment to the criminal justice system. So we're going after hard after the things that have rigged the system, that have made low income people have a harder time being successful working people having a harder time making a living. And that includes everything from housing to other economic justice bills like the Workers Dividend Act. And it includes definitely things that are often not talked about enough which really hurt low income communities. Because this is what motivated me into politics in the first place. Where your soil is toxic, your air is toxic, where you have a criminal justice system that is savagely unfair, where you have a school system that's that could be failing your genius, and where the jobs that are available to you don't even pay a living wage. We need to start having policies in this country that speak to the economic pain of people, restore dignity to work and make sure that no matter where you're born in America, that we're still a country. That no matter what your zip code, no matter what your race, no matter what your background, this is the nation that the American dream is real. Where you can, if you work hard, America will work for you and you can find prosperity. And so we're going to continue to push, push legislation addressing these things, even the things aren't popular, the things that folks aren't talking about. Because I still believe that in one generation we can correct for how off course we've gotten from where my grandparents generation was.

[Nick Hanauer]

I love it. I love it. Well Corey, you have been with us for longer than you promised you would be and we are so grateful that you took the time to do it. And I must say I was very impressed with the force of logic and the command of detail that you have around these subjects. Very, very impressive I must say.

[Senator Cory Booker]

Well, can I just say to you guys, you guys cast yourselves as radicals in the language of pitchforks. The reality is the kind of things you're talking about, FDR talked about, the kind of things you talked about, Martin Luther King talked about, it's not radical to say somebody who works a full time job in America should be able to have a decent wage, be able to raise a family, should be able to retire with dignity. Please don't let yourself cast yourselves as radicalism. Where you stand is at the bedrock of what people's idea is of. It is America. And by the way, that's what conservatives want to say. I can't tell you how many times I read about myself or hear myself on Fox News trying to be painted as an angry radical when the reality is, no, we represent right or left. If people call themselves Republican or Democrat, the kind of things you guys are talking about are common sense, bedrock, American value. Yes, we have a crossroads as a Democratic Party. We can take on the darkness and the hate kind of rhetoric and vilifying individuals, or we can try to have it a message that is really inclusive, that speaks to those farmers in the Midwest. I've talked to about those factory workers, those coal miners. We have the message for those folks. The Democratic Party was that party because this was a party of working people. We are the party of security, Social Security, Medicare. We are the party of equality and inclusion, women's rights, civil rights. We've got to get back to those basic things that show that this is a country where we're all in this together and we need to create a fair system that empowers human potential. That's what we stood for. We spoke to all working people across the spectrum. Now I'm tired of hearing people try to slice and dice us and talk about, you know, white Midwestern men versus Latina inner city. We all have the same ambitions and same desires. And what you all are talking about in this podcast cuts down those illusions of separateness and shows that we are in this together. We have common pain. Let's come back in America to that sense of common purpose again.

[Nick Hanauer]

Love it. Love it. All right, sir.

[Senator Cory Booker]

Well, thank you.

[Nick Hanauer]

Thank you so much. And more to follow. We gotta get some stuff done, dude.

[Senator Cory Booker]

Amen.

[Nick Hanauer]

Rock and roll.

[Senator Cory Booker]

Thank you.

[Nick Hanauer]

I love it. Okay, Corey, thank you so much.

[David Goldstein]

Thank you. Thank you.

[Nick Hanauer]

Talk to you.

[Senator Cory Booker]

Thank you.

[Nick Hanauer]

Bye. Bye.

[David Goldstein]

Bye. So, Nick, one of the takeaways I got is that there seems to be some confusion about the definition of capital. That when people talk about stock buybacks being good for the economy, they're looking at all that financial capital that is sloshing about the financial markets. But you and I, when we talk about capital, we're thinking more in terms of its productive use in factories and equipment, investment in worker training.

[Nick Hanauer]

Correct. And there's a really big difference between the capital in the sense of owning some shares in an existing public company and the paper value of those assets and selling or buying those, and the capital that one might take to actually dig a hole in the ground and build a factory, to build something that would be of use in human societies. And, you know, the truth is that the financial markets and much of the way in which modern capitalism is oriented has nothing to do with the latter and everything to do with the former. We allocate in our society very little capital to actually building new things or producing things. And a huge amount of what we think of as capital is this are paper assets that are simply speculated on or traded between institutions or people. And I think it's really important to remember that these two things are distinct, have distinct roles in the economy, and it's bad to confuse them. But I think that this discussion over the purpose of the corporation and stock buybacks in general teaches us some really interesting lessons. As the investor James Montier points out, the first problem with shareholder value maximization, the idea that the only person the corporation is 200 shareholders, is that when you actually compare how the companies that are run that way perform relative to companies that are run to benefit their customers and their workers, they actually underperform. So as a way to return more money to shareholders, it's a terrible way to return more money to shareholders. In fact, that when you focus on your customers, you tend to make a lot of money. And when you focus on making money, you tend not to make a lot of money because you're thinking only in the short term. And, you know, almost certainly Peter Drucker was right in some way, shape or form when he said in 1973 that the only valid purpose of the firm is to create a customer, which is true. Right? That's what the purpose of the company is. To go solve someone's problem. And finally, you know, I think the lesson that citizens need to take away is that we get to define collectively what the purpose of the corporation is. We grant corporations limited liability. You know, and if corporations aren't run in the service of the public good, then we should eliminate them. We should take away the charter of corporations that don't serve the public good. And, you know, as I've said many times, you know, capitalism, a good system, but good systems are robust to high standards, and we should raise the standards and force companies to do a better job.

[David Goldstein]

Are you telling me that corporations aren't people?

[Nick Hanauer]

Corporations are not people. They're institutions run by people. And we need to hold those people to a very high standard.

[Paul Constant]

So, hey, Nick, we're already getting a.

[David Goldstein]

Lot of great feedback about the podcast. Mostly really positive stuff. If there's some people who would like.

[Paul Constant]

To know, who the hell are you.

[David Goldstein]

To take on Nobel Prize winning economists like James Buchanan?

[Nick Hanauer]

Yes, no, it's super interesting how strongly people feel about this stuff. And that's because economics is mostly an expression of social and moral preferences, often of elites, and is used as a way to make sure that everybody does what they're supposed to do. And the purpose of this podcast, Pitchfork Economics, is to push back on that is to let people know that a lot of the things that they have been told are the natural order are in fact the preferences of wealthy people. That neoliberalism, trickle down economics, these neoclassical economics in many ways is best understood as a protection racket. It's a way for rich people to keep being rich. And that not only do people like me and our listeners have a right to push back against those ideas, in fact, we have a responsibility to push back on those ideas. Because the economy is ours, the economy is people. And we get to define the terms of the debate. We get to collectively decide who gets what and why.

[Pitchfork Economics Producer]

Pitchfork Economics is produced by Civic Ventures. If you like the show, make sure to follow, rate and review us. Wherever you get your podcasts, find us on other platforms like Twitter, Facebook, Instagram and threads. Pitchfork Economics Nick's on Twitter and Facebook as well. Ickhanhauer for more content from us, you can subscribe to our weekly newsletter, the Pitch over on subscribe Stack. And for links to everything we just mentioned, plus transcripts and more, visit our website, pitchforkeconomics. Com. As always, from our team at Civic Ventures, thanks for listening. See you next week.