Socially useless Economists?

Starting a discussion about which economic activities are or are not 'socially' useful opens a can of worms. Is Opera - or Music in general - socially useful? or hairdressing beyond simply chopping off surplus hair? Opinions will differ widely and the last thing we want is to leave the answer to this question to authorities, be they religious (we had enough of that for 2000+ years), political or - academics. The discussion about the merits (or lack thereof) of High Frequency Trading (HFT) illustrates this very well. While I have often argued that the rules of the stock exchange should be adjusted so that the rules of 'priority and precedence' are brought up-to-date for the internet age it is means overkill when economists or regulators attack the activity per-se claiming that it is socially useless. That may well be the case. Participants may see it as just another form of gambling (Casinos are also a negative sum game for the punters) and should be free to enjoy their game...as long as they are collectively willing to accept the net negative costs associated with this activity. And I am gentleman enough not to question Mr. Stiglitz' social usefulness.

Stock Buy-backs - Poison for the Economy?

There were times and places where companies were not allowed to buy their own shares. This was principally meant to prevent share price manipulation. But 'Modern' Financial Theory has induced company managements, investors and their hired guns in banks to make buy-backs an enormous (and largely unsupervised) activity. One is even left with the impression that share price manipulation has become the main focus of the top echelon of company managements. This should be no surprise as this narrow 'elite' benefits directly from a rising share price. Compensation schemes are also designed to make share speculation a one-way bet for these executives. Any drop in share prices is quickly 'compensated' by a fresh shower of (free) share options and re-priced 'long-term' incentive plans (strictly to the few at the top of course). No wonder that economic commentators wonder why companies do not invest and contribute to economic growth (let alone benefit the other 99.9 percent of the population). Apart from the economic and societal negative effect of unchecked share price manipulation these buy-backs not-too-rarely lead to outright value destruction as many transactions are conducted at price levels that later turn out to have been much too expensive (maybe even due to the fact that the market was expecting managements to perform the role of the 'greater fool', the sucker who buys at the top of the market).