$7.37 trillion in S&P 500 buybacks over a decade. CEO pay grew 1,094%; worker pay 26%. Germany proves codetermination works. We end the extraction.
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The American economy has been redesigned — over four decades — to extract wealth from workers, communities, and the productive economy and concentrate it in the hands of shareholders and executives. The numbers are not subtle. Between 2012 and 2022, S&P 500 companies spent $7.37 trillion buying back their own stock rather than raising wages, investing in research, or building new capacity.
This is not how capitalism is supposed to work. It is a specific form of shareholder primacy — the doctrine, popularized by Milton Friedman in 1970, that a corporation's only responsibility is to maximize returns for its shareholders. Under this model, workers are costs to be minimized, communities are externalities to be ignored, and long-term investment is sacrificed for quarterly earnings. The result is an economy where CEO pay has grown 1,094% since 1978 while worker pay has grown just 26%.
The wealth concentration is staggering. The top 10% of Americans own 80% of all stock. When a corporation spends billions on buybacks, it is transferring money from the productive economy — wages, R&D, capital investment — to the wealthiest Americans. This is not a side effect. It is the mechanism. Stock-based executive compensation creates a direct incentive for CEOs to inflate share prices through buybacks rather than build sustainable businesses. The average S&P 500 CEO now earns $16.7 million per year — a ratio of 344:1 relative to the median worker at the same company.
Meanwhile, corporate tax revenue has plummeted from 32% of federal revenue in 1952 to just 9% today. Corporations benefit enormously from public infrastructure, educated workers, a stable legal system, and consumer demand driven by government spending — yet they contribute a shrinking share of the costs. The taxation policy addresses this directly.
The hollowing out of American workers is not inevitable. It is a policy choice. Every other wealthy democracy — Germany, Japan, Denmark, Sweden, the Netherlands — has chosen differently. They have laws that require worker representation on corporate boards, restrict stock buybacks, mandate stakeholder governance, and ensure that the gains from economic growth are shared broadly. The Common Good corporate responsibility plan brings those reforms to the United States.
Stock buybacks are the primary mechanism through which corporate profits flow to shareholders and executives rather than workers and long-term investment. Understanding how they work is essential to understanding why the American economy is failing the people who power it.
The mechanics are straightforward. When a company buys back its own shares, it reduces the total number of shares outstanding. Fewer shares means each remaining share represents a larger slice of the company's earnings — so earnings per share (EPS) goes up even if total earnings stay flat or decline. Because stock prices are heavily influenced by EPS, buybacks inflate share prices without the company generating any new value, hiring any new workers, or building any new products.
Before 1982, this kind of share manipulation was effectively illegal. The SEC's Rule 10b-18, adopted under the Reagan administration, created a "safe harbor" that allowed companies to repurchase shares without facing charges of stock manipulation. The floodgates opened. In 2023 alone, S&P 500 companies spent over $800 billion on buybacks — more than they spent on capital investment, R&D, or worker wages combined.
The connection to executive compensation is the critical link. When CEOs are paid primarily in stock options and restricted stock units, they are personally enriched by anything that drives up the share price — even if it comes at the expense of the company's long-term health. A CEO who authorizes a $10 billion buyback program can boost the stock price, trigger their performance bonus, exercise their options, and walk away with hundreds of millions of dollars — while the company's workers see stagnant wages, the R&D budget shrinks, and the company's long-term competitive position erodes.
This is not hypothetical. It is the dominant pattern in American corporate behavior. Companies that engage in the largest buyback programs consistently underinvest in their workforce and underperform on long-term innovation metrics. The money that could have funded wage increases, new factories, job training, or research instead flows to the top — where 80% of stock is owned by the wealthiest 10% of Americans.
The Common Good plan does not seek to punish corporations. It seeks to realign corporate incentives with the long-term interests of workers, communities, and the broader economy — using reforms that have already been proven in every other wealthy democracy.
The plan is built on seven core provisions, each designed to address a specific failure in the current system of corporate governance. Together, they create an economy where corporate success and shared prosperity are no longer in opposition.
For the complete plan with legislative detail, cost projections, and sourcing, see the full corporate power issue page.
The United States is an extreme outlier among wealthy democracies in how little it regulates corporate behavior and how much power it grants to shareholders over workers and communities.
| Country | Worker Board Seats | Buyback Rules | Exec Pay Ratio | Stakeholder Law | ESG Mandate | Union Density |
|---|---|---|---|---|---|---|
| United States | None | 1% tax only | 344:1 | No | Voluntary | 10% |
| Germany | 50% (2,000+ emp.) | Restricted | ~50:1 | Yes | Mandatory | 17% |
| Sweden | 2-3 per board | Regulated | ~40:1 | Yes | Mandatory | 65% |
| Japan | Advisory role | Regulated | ~30:1 | Cultural norm | Mandatory | 16% |
| Denmark | 1/3 of board | Regulated | ~35:1 | Yes | Mandatory | 67% |
| Netherlands | Works councils | Regulated | ~45:1 | Yes | Mandatory | 15% |
The pattern is clear. The United States has no worker board representation, the weakest buyback restrictions among wealthy democracies, the highest executive pay ratios, no stakeholder governance law, voluntary ESG reporting, and the lowest union density. This is not coincidence — it is the predictable outcome of forty years of policy choices that prioritized shareholder returns over shared prosperity.
For a detailed side-by-side comparison of party positions, see the Compare Parties page.
Codetermination is the legal requirement that workers elect representatives to a company's board of directors — giving them a direct voice in the decisions that shape their wages, working conditions, and job security. It is the single most effective structural reform for reducing corporate extraction.
Germany's codetermination law — the Mitbestimmungsgesetz — has been in place since 1976. Companies with more than 2,000 employees must reserve half of their supervisory board seats for worker-elected representatives. Companies with 500-2,000 employees must reserve one-third. This is not advisory. Worker directors have full voting rights on executive appointments, strategic direction, major investments, mergers, and restructuring decisions.
The outcomes speak for themselves. German companies with codetermination have lower income inequality between executives and workers, higher labor productivity on average, more stable employment during economic downturns (German companies were far less likely to engage in mass layoffs during the 2008 financial crisis and the 2020 pandemic), and stronger long-term performance as measured by return on assets and market valuation over multi-decade periods.
Codetermination works because it changes who is in the room when decisions are made. When a board considers a $10 billion buyback program, worker representatives can ask: why not invest $5 billion in worker wages and $5 billion in new facilities? When a board considers offshoring 10,000 jobs, worker representatives can present alternatives. The decisions are not always different — but they are always better informed, and the outcomes are consistently more equitable.
Critics of codetermination argue it would be incompatible with American corporate culture. But American companies already operate under codetermination laws in Germany — every US multinational with German operations has worker directors on its German board. They do not report that the system is unworkable. They report that it works. The labor policy and corporate power policy detail the implementation plan.
The corporate lobbying industry spends billions of dollars each year ensuring that Americans believe reforms proven to work in every other wealthy democracy are radical, dangerous, or impossible. Here are the four most persistent myths — and what the evidence actually shows.
Myth: "A corporation's only duty is to its shareholders."
Reality: This is a political argument dressed up as a legal principle. Milton Friedman's 1970 essay asserting shareholder primacy was an opinion piece in the New York Times, not a legal ruling. In fact, corporate law in most US states gives boards broad discretion to consider the interests of stakeholders beyond shareholders. The Business Roundtable — representing the CEOs of America's largest companies — formally abandoned shareholder primacy in 2019, acknowledging that corporations have obligations to workers, customers, communities, and society. Every other wealthy democracy legally requires some form of stakeholder consideration.
Myth: "Regulation kills innovation."
Reality: Germany, Sweden, Denmark, and the Netherlands — countries with codetermination, strong ESG requirements, and robust worker protections — rank among the most innovative economies in the world by every major index. Germany leads the world in manufacturing innovation. Sweden produces more billion-dollar startups per capita than any country except the US and Israel. The countries with the strongest corporate governance regulations consistently outperform those with the weakest. Innovation thrives on long-term investment — exactly what buyback-driven short-termism undermines.
Myth: "Codetermination is socialism."
Reality: Codetermination was introduced in Germany specifically as an alternative to socialism. It preserves private ownership, private markets, and profit-driven enterprise — but ensures that workers have a voice in how profits are distributed and how the company is run. Germany is one of the world's most successful capitalist economies, with a robust private sector, a strong export economy, and some of the most globally competitive companies in the world. Calling codetermination "socialism" is either ignorant or deliberately misleading.
Myth: "The market will self-correct."
Reality: It has been forty years since the shareholder primacy revolution. In that time, CEO pay has grown 1,094% while worker pay has grown 26%. Stock buybacks have consumed $7.37 trillion that could have gone to wages and investment. Corporate tax contributions have collapsed from 32% to 9% of federal revenue. The market did not self-correct. It is operating exactly as the rules allow it to operate. Changing the outcomes requires changing the rules — as every other wealthy democracy has done. See the full corporate power plan for details.
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$7.37 trillion in buybacks. CEO pay up 1,094%. Worker pay up 26%. Every other wealthy democracy has fixed this. Read the full plan and see exactly how we do the same.