Thursday, May 16, 2019

Well, It's Clear AOC Hasn't Read Fritz Machlup

In the above video, it is clear that
the socialist Congresswoman Alexandria Ocasio Cortez understands nothing about capital investment, liquidation and incentives. She has an extremely shallow view of what stock buybacks do and doesn't understand the importance of stock buybacks as a mechanism by which shareholders can experience capital appreciation which provides incentive for others to invest in the stock market, since they will know that one way profits may be used is to buyback stock to put upward pressure on stocks.

As Fritz Machlup wrote in his 1931 book, The Stock Market, Credit, and Capital Formation:
The rise in security prices in turn gives an impetus to new issues. It's obvious that the best time for corporations to raise new capital is at a time when the stock market is firm, thus showing at there is likely to be a ready sale for new securities.
Of course, this would also require AOC to understand the value of new issues and the value of raising capital in an economy, which she appears not to understand given her statement/questioning.

On top of all this, there is no indication she understands wage and benefit competition with her comment about healthcare benefits. Not to mention that healthcare benefits developed in the first place because of socialist wage controls during World War II.

The healthcare market was entirely different before that and it didn't require corporate health benefits any more than it required corporations buying toothbrushes for employees (SEE: How Did We Actually Get Into the Current Healthcare Mess?).

It is stunning the amount of understanding AOC lacks. Even more stunning is that she fails to grasp her failure and proudly retweets the videos which display her lack of understanding.

-RW


5 comments:

  1. Her first sentence exposes how shallow she is in her thinking. Even if CEO's were ruthlessly driven... it would be to increase their MARKET CAPITALIZATION, not their stock prices.

    I am so amazed this girl couldn't find a job outside the service industry after college with such an intellect.

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  2. It's almost like she forgot everything that she learned at Mises U.

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  3. I'd never guessed she can read.

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