No science, no startups: The innovation engine we're switching off • Hacker News Board

Re: No science, no startups: The innovation engine we're switching off

#231

Post by constantcrying » Mon, Oct 13, 2025, 7:38 PM UTC

_DeadFred_ wrote: post #206

constantcrying wrote: post #121

Earlier quoted context omitted.

It is a totally delusional argument. Companies always could reward their shareholders, stock buybacks aren't fundamentally different from paying dividends to shareholders. The idea that stock buybacks are what caused a decrease in company funded basic science is ridiculous. Only in very rare cases is doing basic science anything but a total waste of money, viewed from a commercial perspective. Companies should seek t…

Yes yes, companies used to compensate management with 'dividend options' so switching to stock options totally didn't pervert management's incentives. And management doesn't manipulate the stock using stock buybacks. Why would they? Their performance and compensation are only completely tied to stock price. But no, stock buybacks don't allow perverse incentives that lead to short term thinking different than dividend…

If you write something which is more than pure sarcasm it might become readable and form into a coherent argument.

Do you genuinely believe that the breakup of the Bell monopoly had a smaller effect on Bell Labs than stock buybacks?

Stock buybacks also are not stock manipulation and managers aren't rewarded because they buy back stocks. The board understand what a stock buyback is, they reward managers for being able to buy back stocks, in other words, they reward them for profits, which are then paid in buybacks or dividends. Stock buy backs are a tool corporations use to reward shareholders, they have no fundamental difference to dividends.

Dividends have the exact same short term incentives. Do you think that a manager can not be rewarded for his paying out dividends, which leads him to cut R&D spending to increase short term profits? It is just delusional to think that there is a difference and certainly in the scientific literature about corporate finance it would be a fringe belief to separate those two as you do.

To be honest it is a bit upsetting to read a comment with so little understanding of the subject and so little imagination. Do you truly believe that managers can not have short term dividend goals? How uninformed are you.

Re: No science, no startups: The innovation engine we're switching off

#232

Post by terminalshort » Mon, Oct 13, 2025, 7:40 PM UTC

TheOtherHobbes wrote: post #130

intalentive wrote: post #94

Earlier quoted context omitted.

I read "stock buybacks in 1982" as shorthand for "financialization and short-term thinking at the expense of long-term gains", which certainly happened across corporate America and Britain starting with Reagan and Thatcher.

In tech it was the switch from creative corporatism, which is focused on opportunities, invention, and infrastructure, to extractive corporatism and oligarchy, which are focused on scams, exploitation, and the creation of rigid hierarchies of privilege. We're now in the end stage of the latter in the US. The US still plays at invention - or rather a few of its oligarchs do - but it's far, far behind what's happening…

Honestly this sounds like a narrative in your head a lot more than something that is happening in actual reality.

Re: No science, no startups: The innovation engine we're switching off

#233

Post by nyeah » Mon, Oct 13, 2025, 7:41 PM UTC

badpun wrote: post #230

nyeah wrote: post #224

Earlier quoted context omitted.

That's only true if the company pays book value for the shares. I'm upvoting because you're advancing the discussion for sure.

You're right, I missed that! But, essentially this makes the case for buybacks even worse - paying over book value for shares means that the company is reducing its book value via the buyback. So, it's worth less after the buyback.

Yes. Book value is just one metric for value, but let's keep using it. I could also say that paying less than book value is increasing the book value, so the company is worth more after the buyback. As you say, it depends on the purchase price.

Re: No science, no startups: The innovation engine we're switching off

#234

Post by terminalshort » Mon, Oct 13, 2025, 7:49 PM UTC

nyeah wrote: post #202

triceratops wrote: post #193

Earlier quoted context omitted.

> It seems like your assumption is that a stock buyback is a short term gain. My argument is a stock buyback isn't a gain for a long-term, buy-and-hold investor. Unless a) they sell some of the stock or b) it pays dividends they don't see the benefit of a higher stock price or reduced share count. Qualified dividends and long term capital gains are taxed at the same rate. So anyone who says "buybacks are more tax-adv…

I think I'm mostly agreeing. Anyway here's my story. Buybacks can be good or bad for shareholders, depending on the buyback price. Example. I take $1000 and securitize it as 1000 shares. The company sells the shares for $1 each. This is a no-fee closed fund, whatever. I'm the "CEO". I personally buy 1 share. Anyway, one day the stock trades at $0.90 and the company buys back 500 shares at that price. (How $0.90? Mayb…

This is a nonsensical example because companies aren't just barrels of cash, stock buybacks do not occur above market price, and companies never spend themselves broke to buyback shares because that would be retarded. You might try learning how corporate finance actually works before posting like you are an expert on it.

Re: No science, no startups: The innovation engine we're switching off

#235

Post by nyeah » Mon, Oct 13, 2025, 7:52 PM UTC

terminalshort wrote: post #234

nyeah wrote: post #202

Earlier quoted context omitted.

I think I'm mostly agreeing. Anyway here's my story. Buybacks can be good or bad for shareholders, depending on the buyback price. Example. I take $1000 and securitize it as 1000 shares. The company sells the shares for $1 each. This is a no-fee closed fund, whatever. I'm the "CEO". I personally buy 1 share. Anyway, one day the stock trades at $0.90 and the company buys back 500 shares at that price. (How $0.90? Mayb…

This is a nonsensical example because companies aren't just barrels of cash, stock buybacks do not occur above market price, and companies never spend themselves broke to buyback shares because that would be retarded. You might try learning how corporate finance actually works before posting like you are an expert on it.

[flagged]

Re: No science, no startups: The innovation engine we're switching off

#236

Post by terminalshort » Mon, Oct 13, 2025, 7:55 PM UTC

triceratops wrote: post #187

RandomLensman wrote: post #114

Earlier quoted context omitted.

What is your definition of "benefit"? Assuming a buyback increases share prices, why would shareholders in general be indifferent?

Because if I don't intend to sell right now, and the company is otherwise a healthy, going concern that can pay sustainable dividends, the actual share price is irrelevant to me. If anything, given my belief in the company, a lower share price is better. I can buy more shares!

But you now own a larger percentage of the company because you own the same number of a smaller total number of shares outstanding, so you benefit whether you are a seller or a holder. If you intend to buy more it is neutral because the price per share goes up, but each share represents proportionally more.

Re: No science, no startups: The innovation engine we're switching off

#237

Post by terminalshort » Mon, Oct 13, 2025, 8:07 PM UTC

treis wrote: post #186

echelon wrote: post #131

Earlier quoted context omitted.

> I read or heard someplace that at many universities tuition paid by students in the social sciences is effectively subsidizing the STEM fields Diploma mill universities in my state are consolidating the smaller STEM universities and trade schools to build football and sports programs, gyms, and "lifestyle" amenities. This university in particular [1] mints basket weaving degrees and has used consolidation to build…

This is absurd. These universities aren't diploma mills. They're solid institutions in the "directional state U" tier.

Georgia State has an average SAT score of 1070. Nobody with a brain goes there. Just a societally sanctioned diploma scam for people who would be much better served by starting work right out of HS.

Re: No science, no startups: The innovation engine we're switching off

#238

Post by cameldrv » Mon, Oct 13, 2025, 8:08 PM UTC

terminalshort wrote: post #3

> In the 20th century, U.S. companies put their excess profits into corporate research labs. Basic research in the U.S. was done in at Dupont, Bell Labs, IBM, AT&T, Xerox, Kodak, GE, et al. This changed in 1982, when the Securities and Exchange Commission ruled that it was legal for companies to buy their own stock (reducing the number of shares available to the public and inflating their stock price.) Very quickly B…

At least for AT&T, Kodak, and IBM, what was funding their research divisions was monopoly profits. When those dried up, the research dried up as well. The modern equivalent to AT&T is Google.

Re: No science, no startups: The innovation engine we're switching off

#239

Post by terminalshort » Mon, Oct 13, 2025, 8:14 PM UTC

ModernMech wrote: post #152

intalentive wrote: post #102

"Government funding is the engine of economic innovation" is a tacit admission we have a planned economy.

That would depend on how the funding is controlled. If funding approvals had to go through partisan bureaucrats in the White House for approval, yes, that's a planned economy. Historically it's been disparate groups of scientists who decide how block grants from Congress get divided. I've had colleagues who go and work at the NSF just for that role. I wouldn't say that guy making decisions about what kind of programm…

Funding approvals do have to go through partisan bureaucrats. Until recently when the Trump administration killed it, NIH grant proposals had to contain a "diversity statement."

Re: No science, no startups: The innovation engine we're switching off

#240

Post by Tuna-Fish » Mon, Oct 13, 2025, 8:14 PM UTC

triceratops wrote: post #189

Tuna-Fish wrote: post #156

Earlier quoted context omitted.

4. Those who intend to re-invest all returns in to the stock, who avoid a taxable event when their ownership of the company goes up without having to first pay tax for the dividend. A stock buyback rewards all stockholders equally . Those who sell, get their reward in cash. Those who do not sell, get their reward in the proportion of their ownership of the company going up.

> Those who intend to re-invest all returns in to the stock Sell the stock then use the gains to buy the stock? I'm very confused by this. > without having to first pay tax for the dividend Long term capital gains and dividends are taxed at the same rate. The only tax-free way to benefit from a higher share price (that I know of) is to borrow against it. > get their reward in the proportion of their ownership of the…

The company has some money. They choose to return it to shareholders. There are two legal ways to do so: Buy back some stock, or issue a dividend.

Now assume I am a long-term investor, who invested money into a company, and wants to keep all that money in the company, instead of taking money out.

If the company pays a dividend, I can put the money they paid me back into the company, but I have to pay capital income tax on the money in between. If they buy back some stock, I have essentially fully reinvested my money to grow my share of ownership in that company, but I have not paid any tax on this, and will only have to do so at the end. As I get to grow compound interest on my money, I will come out much better in the long term.