This is the market's "invisible hand": elevating the people with proven track records to positions of power over their neighbors and their society, on the basis that they have shown themselves capable of enriching us all, because (the theory goes), capitalism rewards people whose greed translates into a common benefit.

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As Adam Smith wrote:

> It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.

Wash trading creates misallocations of capital. It makes stupid people rich, and lets them allocate capital to projects that make us all worse off.

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The whole theory of markets - the reason we're all supposed to leave money that we could all use to make ourselves better off in the hands of the wealthy - is that wealth is the payoff for efficiency, and we are all better off when the most efficient allocators make investment decisions.

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Modern theorists of capitalism tell us that this isn't alchemy, it's *computing*. The market is a giant "information-processing" system that incorporates trillions of "price signals" (how much we are willing to spend and how much we are willing to accept, for goods, services and labor).

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The market processes all these signals to direct allocation and production, ensuring that shortages are met with increases in supply, and that overproduction is tamped down by falling prices, and that inefficiencies provoke investment in process improvements.

Which brings me back to stock buybacks. Stock buybacks are a way to make a company's shares *more* valuable, even as the company itself becomes *less* valuable.

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Think of it this way: imagine you've got a company with 1,000 shares, worth $1,000 each, and this company has $500,000 in the bank. The company is valued at $1,000,000 (1,000 x $1,000), and half of that valuation is based on its cash reserves ($500,000 in the bank), which means the other half must be reflected in the company's physical plant and "intangibles" (knowledge, contracts, efficient team structures, copyrights, patents, etc).

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The company announces a stock buyback: they will withdraw the $500,000 from its bank account and buy half the shares. The company is now $500,000 poorer, which means that its shares should go *down* in value. After all, that $500,000 is capital that could have been mobilized to make the company more profitable: it could have been spent to hire new people, do R&D, or buy machines that lower the price of making the company's products.

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That $500,000 represented the company's future growth potential, and the company has just pissed away that potential.

This is a company whose future growth has gotten *much* more expensive, because it will have to borrow in order to fund any expansion. Its shares should be worth *less* than before.

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By zeroing out its cash reserves, the company has actually reduced its value by *more* than the value of those reserves, because it is now stuck in place, forced to fund expansion with debt rather than capital. It is at risk from "shocks" like higher rents or higher energy prices. It's a brittle, hollow vessel for the intangibles that made up the other $500,000 in valuation before the buyback. It will be *worse* at turning those intangibles into profits in the future.

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But the buyback hasn't reduced the price of the shares: it has *doubled* the price. The company made its shares *more* valuable while making itself *less* valuable. If you think markets are a computer that calculates efficient allocation based on prices, this should freak you the fuck out, because as we all know, the iron law of computing is "garbage in, garbage out." The company is feeding an objectively - and grossly - false price signal into the computer's input hopper.

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That's why stock buybacks were illegal until 1982, when Ronald Reagan's SEC changed its Rule 10-b to legitimize this form of stock manipulation and turn stock swindlers into billionaires:

pluralistic.net/2024/09/09/low…

At root, stock buybacks are just wash-trading, the company buying its own shares to move their price, without doing anything to justify that price movement. Before Reagan legalized stock buybacks, companies returned capital to their investors through dividends.

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Why would companies prefer buybacks to dividends? Because corporate executives hold *tons* of shares in their employer's company, and it's *much* better for them to push those share prices higher even as they gut the company's ability to function.

So why should you care about this? After all, statistically you own either very little or no stock. The richest 10% of US households own more than 93% of all stocks held by Americans:

inequality.org/article/stock-o…

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The Richest 1 Percent Own a Greater Share of the Stock Market Than Ever Before - Inequality.org

Baby bonds are one effective strategy for addressing the fact that only 1 percent of stock market wealth is owned by the bottom half of households.

^{Inequality.org}

Your 401(k) account might see a small boost from this stock swindle, but again, statistically, that 401(k) is unmeasurably infinitesimal compared to the holdings of America's oligarchs.

Stock buybacks are a way of making the stock owning class *much* richer, by swindling everyday investors - who don't understand that companies who drain their cash reserves are *less* valuable - into buying shares in the companies they loot.

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And that's why you should care: in the first 8 months of 2025, Trump has allowed America's oligarchs to get *$1.1 trillion richer*. That's money that *you* don't have - you won't get the lower prices and higher wages and superior goods that $1.1t would have paid for if companies had spent it on process improvements. It's money *they* have, which they can spend on things that make you worse off - buying everything from Twitter to the presidency.

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There's a lot to be furious about right now, like the masked fascist goons kidnapping our neighbors off the street, and the upside-down health system that is reviving the vaccine-controlled deadly pandemics of yesteryear. But the reason those fascist goons and antivaxers are able to decide how we all live our lives is that a very small number of very rich people converted their stolen wealth to illegitimate power, which they wield over us.

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Anyone who lived through the 2008 crisis knows that finance is a deadly weapon. Let the finance sector run your economy and they will steal everything and leave you jobless, homeless and hungry. Trump is a casino guy, and he knows that the only guy making money in a casino is the owner, who gets to set the odds at the machines and tables.

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By opening the floodgates to trillions in stock buybacks, Trump is turning us all into the suckers at the table, and turning his oligarch investors into little autocrats, with the power to degrade our lives and steal our future.

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The most enshittification-proof way to get the Enshittification audiobook, ebook and hardcover is to pre-order them on my Kickstarter! Help me do an end-run around the Amazon/Audible audiobook monopoly and disenshittify your audiobook experience in the process:

disenshittification.org

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