Buybacks are the Symptom, Shareholder Power the Disease

Jeff Gordon –

People claim to be worried about stock buybacks. In fact, the buybacks are a stand-in for what we can all see: business in this country works for wealthy shareholders, not workers, customers, or communities.

Buybacks are in the news as policymakers contemplate a bailout of several major U.S. airlines, all of which have relatively little cash on hand to weather the current crisis. One reason the airlines have so little cash is that, as Bloomberg reports, they spent 96% of free cash flow buying back shares over the last decade. Senator Elizabeth Warren has proposed that no corporation receiving a government bailout should ever again be allowed to conduct buybacks. But the notion that, with fewer buybacks, the airlines would have saved enough to withstand a world-historic economic collapse is fanciful. To see this, we must recognize that the massive stock buybacks of the past decade are a symptom of heightened shareholder power. Efforts to limit or ban buybacks without addressing that power at its source would not lead to the higher wages, productive investments, or rainy-day savings that buyback critics hope for. Moreover, the narrow focus on buybacks distracts from the bigger opportunity presented by the crisis: to reclaim corporations for the public good.

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LPE on COVID (vol 2)

Today we’re reposting a letter from Professor Noah Zatz to his City Counsel regarding evictions during the pandemic:

Dear City Council — Thank you for all the hard work going into responding to the COVID-19 crisis locally, both by you and City staff. I hope you each are safe and secure. I wanted to write briefly about the eviction moratorium issue. Some of the specific questions raised by the moratorium are those that are central to my academic expertise in antipoverty & social insurance policy design (unlike housing in general, on which I speak merely as a well-informed resident). I hope this analysis drawing on that expertise is useful to the City. I am writing quickly, so apologies for any incompleteness or errors.

The bottom-line is this: Although it is well-intentioned and makes some sense in theory, the attempt to limit the moratorium to COVID-19-impacted individuals will likely make it almost completely useless in practice. I urge you to adopt an across-the-board eviction moratorium even if you are motivated only by ensuring protection for COVID-19-impacted households.

There are three key pieces of the restriction that work together to produce this result:

  1. a) the burden is placed on the tenant to establish the defense (“if the tenant is able to show”),
  2. b) the protection is limited to an “inability to pay rent,” and
  3. c) the protection is further limited to such an inability “due to circumstances related to the COVID-19 pandemic.”

First, remember that we are imagining someone who not only faces the restrictions, shutdowns, health, and social isolation imperatives that all of us are struggling with, but who also–by definition–is facing severe economic distress. This person now has to go to court to prove a defense, collect documentation, contact witness or sources of documentation, etc. When doing so, they cannot be working, caring for their family (kids home from school, etc.). What a nightmare.

Second, “inability to pay.” This concept is central to my decades of academic work on antipoverty policy. It is a morass, totally unsuited to first-time deployment during an emergency between litigants of unequal power. Is someone “unable to pay” if they have no present income but could exhaust retirement savings to pay one month of rent? What if they have to choose between paying rent and medical care? Food? Fixing their car? In some sense, one could say, “they have the money!” But is that what you mean? If not, what do you mean? Could anyone know in advance? How would a landlord litigate this? Is someone unable to pay if they could ask for money from someone who is not on the lease? What if they could close the gap by picking up some gigs with Task Rabbit?  Again, imagine the documentation/proof issues.

Third, “due to circumstances related to the COVID-19 pandemic.” Again, the kind of issue central to disaster relief programs, unemployment insurance, and the like. What if someone fell behind on their rent LAST month — not due to COVID-19 — but now THIS month is unable to make up the gap b/c COVID-19? Imagine all the proof and line-drawing issues with the concept of “due to.” Is every layoff in LA County Since March 1 due to COVID-19? If not, how are we to find out which ones are? Is it by industry? What if the industry is not severely affected, but the boss shut down the company voluntarily to protect the workers? If the boss’ mother got sick, and so the boss decided to shutdown? If the worker loses their job b/c they are caring for a child dismissed from school, is THAT due to COVID-19? What if it’s not their child, but their sister’s? Again, imagine the documentation/proof issues.

Note that all of these severe problems apply even if you focus narrowly just on the people intended to be protected by this moratorium. Obviously, there are also very serious broader questions about whether this is a time for ANYONE to be forced to try to fight an eviction and potentially need to find emergency housing during a crisis (especially no-fault evictions). But even if you are unmoved by those problems, in practice this moratorium is likely to fail to protect even those narrowly targeted by it. Under these circumstances, the only way to protect them is to protect everyone.

I doubt that this is the time (if ever!) when you are interested in reading an academic law review article, but in case you are interested in seeing (or verifying) my work in this area, here is the link to my essay “Poverty Unmodified: Critical Reflections on the Deserving/Undeserving Distinction”:

I understand that there may have been limitations on what could be done by emergency order (though I do not know), but if a universal moratorium cannot be issued by emergency decree, I urge the Council to immediately pass a universal moratorium ordinance. Thank you again for all your efforts at an incredibly difficult time. I hope you find this analysis to be helpful to your deliberations.


Noah Zatz


Dear Readers,

We’re living in strange times. As we try to make sense of the moment, LPE Blog wants to offer some COVID 19 coverage from our regular contributors. We’re starting today with some work that Amy Kapczynski has done with various colleagues.

To our LPE community, please send us links to your own educational and mutual aid efforts at for these posts.

Above all, we hope you are well.

-LPE Blog

  • Five Ways public health officials should respond to coronavirus in the Philadelphia Inquirer, by Scott Burris, Amy Kapczynski, and Albert Ko.
    • Sneak peak: “Firstly, measures like contact tracing and quarantine will not work unless they are used in accordance with the law and accompanied by comprehensive social support measures and protections. Voluntary self-isolation measures are more likely to induce cooperation and protect public trust than coercive measures. If people expect hardship, they will avoid public health officials or not honestly report their contacts. Mandatory quarantine, regional lockdowns, and travel bans are difficult to implement, have large societal and economic costs, and disproportionately affect the most vulnerable. They should only be used if they are necessary, the least restrictive means needed to protect public health, justified by scientific evidence, and accompanied by strong support and legal protections.”
  • Alone Against the Virus in Boston Review, by Amy Kapczynski and Gregg Gonsalves.
    • Sneak peak: “Though we’ve had months to prepare, we have yet to reckon with the extraordinary risks that a pandemic like this poses in a country like ours. Those hardest hit will be the most vulnerable—the elderly and those with chronic diseases, particularly those in nursing homes, crowded homeless shelters, and prisons. We have no natural immunity to this new virus, and there is no vaccine. It will spread unchecked, from human to human and across our social gradients, unless we create social immunity, woven of the ways we interact and care for one another. But what kind of social immunity can we build in a body politic that has been ravaged for decades by neoliberal policies?”
  • Coronavirus and the Politics of Care here at LPE Blog, by Amy Kapczynski
  • This open letter by hundreds of public health experts on a fair and effective COVID 19 response.

Friday Roundup…

…on Thursday! Because time is just a social construct, man.

Plenty of action on the blog since we last rounded up.

We hosted symposia on money bail reform, on interdisciplinary methods in political economy, on Ganesh Sitaraman and Anne Alstott’s book on public options, and on Daniel Markovits’s book on meritocracy and inequality.

Amy Kapczynski also situated the law and political economy of care in the context of the accelerating global pandemic.


Guiding Innovation’s Hand: Industrial Policy Against Inequality

This is the second post in our series discussing The Meritocracy Trap by Daniel Markovits. Click here to read all posts in the series. 

Jeff Gordon – 

Most of the critical attention directed at Daniel Markovits’s The Meritocracy Trap has focused on its claim that well-off parents launder inequality through schooling. While Markovits brings masterfully comprehensive reams of data to bear on the concept of the “meritocratic inheritance,” the most original and provocative part of the book comes later, when Markovits offers his explanation of why educational sorting has come to matter so much: elite schooling leads to top jobs, and “[t]he top jobs pay so well because a raft of new technologies has fundamentally transformed work to make exceptional skills enormously more productive than they were at mid-century and ordinary skills relatively less productive.” This is provocative because it contradicts the pervasive myth that technological change is natural, self-directing, or inevitable. Few reviewers have remarked on this part of the book or reflected on what it suggests: that industrial policy will be vital to building a more equal economy.

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Liberate the Meritocrats—From Their Bosses

This week, we share two posts discussing The Meritocracy Trap by Professor Daniel Markovits. In his 2019 book, Professor Markovits argues that meritocracy is a straightforward mechanism of class reproduction and wealth concentration—and that it is making life worse for everyone, elites included. The Meritocracy Trap has generated productive conversations about the causes and implications of wealth inequality, and what this means about potential movements to upend the present hierarchy. Because the book centers the gap between elite and nonelite labor as today’s most salient class division, critics have been quick to push back. In particular, some have challenged the book’s downplaying of the role of capital in its class analysis, as well as its optimism about elite cooperation in any project aiming for economic justice. While these are crucial parts of the debate around the book, we want to avoid rehearsing those arguments here.

By examining the social and political valences of a seemingly neutral quantitative system, The Meritocracy Trap touches on several questions at the core of law and political economy. Today on the blog, Marshall Steinbaum and Andrew Hart argue that Professor Markovits omits capitalists from the story in part by relying too heavily on the flawed theory of human capital. Tomorrow, Jeff Gordon turns our attention to the book’s argument that industrial policy contributed to the technological innovations that over-reward elite workers at the expense of the poor and working class, and that industrial policy will be essential to build a fairer economy.

This is the first post in our series discussing The Meritocracy Trap by Daniel Markovits. Click here to read all posts in the series. 

Andrew Hart and Marshall Steinbaum

There’s a big difference between the first Gilded Age and the second. Historically, rich people earned income from their capital and everyone else earned income from their labor, under the direction and control of the capitalists. This time around, the rich don’t just own capital; they also work. Daniel Markovits’s book The Meritocracy Trap is about just how hard they work, and what it says about them.

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The Case for Universal Labor and Employment Rights

This week we’re featuring two discussions of Anne Alstott & Ganesh Sitaraman’s The Public Option:

Amanda Jaret & Sandeep Vaheesan – 

Working people in the United States are fragmented by race, gender, ethnicity, religion, and status. We are also stratified by the law itself—specifically the extent to which we are entitled to labor and employment rights. Some workers have the right to take a new job when and where they want, to organize their workplaces, and to earn overtime pay. Others, due to their income, occupation, or location, have none of these rights. We live in a society in which, all too often, decent working conditions are treated as special dispensations, not fundamental rights.

Labor used to look different. In The Public Option: How to Expand Freedom, Increase Opportunity, and Promote Equality, Ganesh Sitaraman and Anne L. Alstott identify the Treaty of Detroit as the milestone in the development of more equitable political economy at midcentury. The Treaty of Detroit – a monumental 1950 agreement between the United Auto Workers and General Motors – established the postwar suite of workplace protections and employer-sponsored health and retirement benefits that would define unionized workplaces for most of the next three decades. Sitaraman and Alstott argue that the Treaty of Detroit stalled the development of what they term “public options” for, among other things, health care, childcare, and retirement benefits.

We wish to provide some additional context for the intertwined historical and legal developments that produced and perpetuated the postwar settlement. We agree that expanding public options is a worthy goal and share Sitaraman and Alstott’s skepticism about both the viability and desirability of reviving the Treaty of Detroit. However, the transformative social vision Sitaraman and Alstott articulate will neither be achievable nor effective without the enactment of basic labor and employment rights for all workers. Universal rights would foster broad solidarity among working people—a precondition for establishing and sustaining public provisioning of an array of goods and services and for preventing public options from merely entrenching existing inequalities.

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Enriching the Narrative Economics of Public Options

This week we’re featuring two discussions of Anne Alstott & Ganesh Sitaraman’s The Public Option:

Frank Pasquale – 

While promises of a “universal basic income” generate a lot of excitement, we should also also consider the benefits of “universal basic services.” As we do so, Sitaraman and Alstott’s The Public Option: How to Expand Freedom, Increase Opportunity, and Promote Equality will be a vital resource. The book combines a crisply written history of government service provision with compelling policy arguments for establishing or extending it in numerous areas. These areas include:


Broadband access



Credit reporting


Retirement saving



Public libraries

Child Care

Primary and secondary education

Higher education


Basic needs:


Health Care


As they address each sector, Sitaraman and Alstott offer a clear accounting of the values at stake. They domesticate progressive policy as an adjunct to (and not a replacement of) markets: public options serve as benchmarks for private services, rather than substitutes for them. They develop a competition-focused narrative about the need for public options: namely, that markets often fail consumers. However, another narrative—of cooperation—may be just as important to securing political support for their goals. Economic rhetoric has consequences, and a more balanced narrative of public options, as enhancing both competition and cooperation, may help ensure they transcend the consumerist bias that has marred so many projects of economic reform over the past few decades.

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Coronavirus and the Politics of Care

Amy Kapczynski – 

It is now clear that we are entering a new phase of the global COVID-19 pandemic. The virus appears in new countries around the world each day. New cases are now regularly reported in the United States, and as testing is scaled up, that number will increase, probably substantially. It is clear now that the virus will spread in a sustained way in the community here. The estimated mortality rate derived from the data from China resembles that of the 1919 flu, which killed 50-100 million people around the world. As we are better able to track mild cases, we may find that it is substantially, even an order of magnitude, less deadly. Under every plausible scenario, however, this outbreak is likely to be extraordinarily disruptive. It will surprise no reader of this blog that the US is ill-prepared for this, and that the harms of this pandemic will not be equally visited on all. Yesterday, I worked with a group of more than 450 law and public health experts to put out a public letter addressed to federal, state, and local leaders, to identify essential aspects of an effective and fair response. It may be worth a read for those thinking about the political economy of pandemics. It illustrates some familiar LPE themes, and shows how features of our socio-legal context that drive injustice and inequality will undermine the COVID-19 response.

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