At the corporate level, the exhaustion of productive investment opportunities prompts executives to either return funds to shareholders through dividends or to use that cash flow (sometimes augmented by cheap debt), to speculate on the company’s share price. Hillary Clinton has made political hay about corporations buying their own shares instead of making productive investments. The world is glutted with raw materials, intermediate goods, finished goods, and consumer goods, the visible manifestation of return on investment equilibrating to the artificially low cost of funds. Glutted markets and falling asset prices are screaming, “No more!” In what would Ms. Clinton have corporations invest? Undoubtedly there are elements of self-enrichment and bull market crowd psychology at play when executives authorize share buybacks. However, returning capital to shareholders is also an admission that they don’t have any better ideas of what to do with the money. Ms. Clinton doesn’t either.

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