How the pursuit of shareholder value weakened the economy

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Meanwhile, one needs to qualify CEO Cook’s last bullet point from his 2013 Senate testimony, where he says that Apple doesn’t “borrow money from our foreign subsidiaries to fund our U.S. business in order to skirt the repatriation tax.”

Apple has not borrowed money from foreign subsidiaries. But beginning in 2013, and ramping up just as Cook was speaking to the Subcommittee, Apple started spending tens of billions of dollars per year buying back its own stock, for a total of $127 billion through the third quarter of 2016. Over this period, Apple – possibly the most cash-rich company in the world – took on debt from external sources of $66 billion to finance stock buybacks rather than repatriate foreign profits and pay U.S. taxes on them.

With Apple’s corporate executives incentivized by stock-based pay and with corporate predators such as David Einhorn and Carl Icahn looking for the best opportunity to cash in on their holdings of Apple’s shares, the only purpose of these buybacks has been to give manipulative boosts to Apple’s stock price.

As demonstrated by my colleagues and I at the Academic-industry Research Network (with funding support from INET), whether at Apple or other companies, stock buybacks contribute to unstable employment, inequitable income distribution, and stifled innovation – and should be banned. 

European Ruling Highlights Apple's Corrupted Business Model