Strip Minimg

President Trump has promised to return manufacturing jobs to the United States. I would like to believe that is possible. The more I read the less likely it seems he will be able to do so. Even things I thought would work like refusing to buy products that were not made in the United States appear to be powerless to change the direction we are going. The strip mining mentioned in the title is financial strip mining.

Financial strip mining is a Wall Street practice of stripping a company of its wealth through stock buybacks. The article I read was about a company in Indianapolis, Indiana named Rexnord. They are a maker of bearings and ball bearings. They are moving 300 jobs to Monterrey, Mexico. Mexican workers will make about three dollars per hour. The workers in the United States made twenty five dollars per hour. Normally I would think this is the main reason for the move. It is just part of the picture. In 2015 Rexnord bought back three hundred million dollars of their own stock. Why would Wall Street like that? When there is a stock buyback the demand for the stock causes the share price to rise. So hedge fund investors get an immediate increase in the value of the shares they hold. Second, now the company's earnings are spread over fewer shares. President Trump is committed to a deregulation agenda. From the Great Depression until 1982, under President Reagan, stock buybacks were virtually outlawed as a form of stock manipulation. In 1980 only 2% of corporate profits went to stock buybacks. At the time of the crash of 2007-08 over 75% of corporate profits went toward buying back the company's own shares.Hedge fund managers aren't the only ones who profit from these buybacks. CEO's now receive a significant portion of their pay from stock incentives. Their goal does not become anything other than raising the price of the stock. They move jobs to low wage countries to raise the stock price and enrich the value of their stock incentives. The truth is that President Trump cannot bully Wall Street into keeping jobs in the United States. They are interested only in making money quickly and the stock buybacks are the tool that works for them. President Trump's administration is full of economic advisors from Wall Street. They have no interest in changing the law that allows them to strip money and jobs out of these companies. Until we are able to create a mass movement among the people to fight this it is likely to continue for decades. Since these same corporate interests control our mass media it is unlikely such a movement will gain traction in the near future.

So, the promise to return jobs and punish those companies who move jobs out of the United States, is just more Trump bluster and bullshit.