Authors: Aleksandar Adzic & Gemini

Aleksandar Adzic:

Does the current situation with lobbying and stock buyback ultimately lead to stagnation in development, declining living standards of the majority of the population and a decline in social fabric

Google Gemini:

To answer your question directly: many economists and social scientists argue that yes. The current feedback loop between lobbying and stock buybacks creates a “triple threat” to the stability of a nation.

When companies prioritize the stock market over the labor market, they shift focus. They essentially stop being engines of growth. Instead, they become engines of extraction. This process has measurable impacts on innovation, living standards, and the social fabric

1. Stagnation in Development (The Innovation Trap)

When a corporation focuses on stock buybacks, it is choosing to “liquidate” its future to pay for its present. This creates a cycle of stagnation:

• The “Short-Termism” Bias: CEOs are often incentivized to hit quarterly Earnings Per Share (EPS) targets to trigger their bonuses. Building a new factory or inventing a new drug takes 10 years; a buyback takes 10 minutes.
• Underinvestment in R&D: Research shows that firms heavily engaged in buybacks often “skimp” on long-term capital expenditures. This is why some former industrial giants, like Boeing or Intel, have struggled with safety or technical leadership. They spent decades funneling cash to shareholders that should have gone to engineering.
• Hollowing Out: Companies lobby for rules that allow them to keep more cash through tax cuts. They spend that cash on buybacks. As a result, companies stop growing “wider” by hiring more people. Instead, they only grow “taller” by increasing their stock price.

2. Declining Living Standards (The Wage Gap)

The rise of the “Buyback Economy” is a primary driver of the widening gap between productivity and pay.

• Decoupling: Between 1948 and 1979, productivity and worker pay grew together. Since the 1980s, buybacks were legalized, and lobbying surged. In this period, productivity has continued to rise. However, worker pay has largely flattened.
• Capital vs. Labor: Money spent on buybacks is money not spent on employee health coverage, childcare, or raises. For example, analysis of major retailers has shown significant findings. The money spent on buybacks in a single year could have often provided a $5/hour raise to every hourly worker.
• The Wealth Effect for the Few: Since the top 10% of households own nearly 90% of the stock market, buybacks function as a massive transfer of wealth from the “value-creators” (workers) to the “value-extractors” (shareholders)

3. Decline in Social Fabric (The Erosion of Trust)

This economic shift has a profound “invisible” cost: the breakdown of the social contract.

• Erosion of Community: In the mid-20th century, a company was an “anchor institution” in its town. Today, through lobbying for deregulation and outsourcing, companies have become “footloose.” When a CEO guts a local factory to fund a buyback, it causes the town’s middle class to collapse. This leads to “deaths of despair” such as opioid crises and rising suicide rates.
• Political Cynicism: When citizens see corporations lobby for tax breaks, they become disillusioned. These corporations immediately use the tax breaks to enrich executives. Meanwhile, local infrastructure crumbles. This sequence destroys faith in democracy. This creates the “social fabric” tear—a sense that the system is “rigged.”
• Social Polarization: Wealth is concentrating at the very top, driven by stock-based pay. As a result, the physical and social worlds of the “elite” and the “majority” diverge. They no longer use the same schools, hospitals, or public spaces. This divergence leads to a loss of the shared empathy required for a functioning society.

Summary: The “Vicious Cycle”

Phase	Action	Result
Lobbying	Buying political influence.	Policies that favor capital over labor (tax cuts, deregulation).
Buybacks	Using the “savings” to pump stocks.	Immediate wealth for CEOs; cash leaves the company.
Stagnation	No money left for R&D/Training.	Companies become “Zombie Firms” that don’t innovate.
Social Decay	Stagnant wages & political anger.	Breakdown of trust, polarization, and declining health.

The “Fake Success” Reality

You previously noted that financialized success is “fake.” This is exactly why: a company can have a record-breaking stock price (Success!) while simultaneously being less innovative, less safe, and employing a more precarious, stressed workforce than it did 20 years ago.