Better Offline - William Lazonick on How The Stock Market Killed Tech

Episode Date: November 13, 2024

Recorded live at Web Summit Lisbon, Ed Zitron is joined by William Lazonick, professor emeritus of economics at the University of Massachusetts, who is also the co-founder and president of the Academic-Industry Research Network, to talk about how the incentives of shareholder capitalism and stock buybacks are destroying innovation.  --- LINKS: https://www.tinyurl.com/betterofflinelinks Newsletter: https://www.wheresyoured.at/ Reddit: https://www.reddit.com/r/BetterOffline/  Discord: chat.wheresyoured.at Ed's Socials: https://twitter.com/edzitron https://www.instagram.com/edzitron https://bsky.app/profile/zitron.bsky.social https://www.threads.net/@edzitronSee omnystudio.com/listener for privacy information.

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Hello and welcome to Better Offline. I am, of course, your host, Ed Zittron. and no lot of people have been asking, hundreds of thousands of people. In fact, I will be submitting myself at the next DNC as the left is Joe Rogan. I am two or three inches taller as well. But today I'm joined by Professor William Lazzonic. He's a Professor Emeritus of Economics over at University of Massachusetts and the co-founder of the Academic Industry Research Network.

William, thank you so much for coming. Pleasure to be here. All right. So, if you look at the tech industry right now, it's definitely the most profitable it's ever been, and probably the worst. It feels like the furthest it's been from really innovating, and it's moved to value extraction, I think.

And you know a great deal about that. How did we get here? And I mean historically. How did we get here? Well, first of all, you have to understand that the United States has the most formidable developmental state in history. A lot of people think that Japan, in the 80s, invented the developmental state.

but actually the United States was Japan developmental state from the point of view of technology. So I won't go into the whole history of that, but it goes back to the 19th century, building of land-grant colleges, railroads, and going into aviation, the computer industry, etc. So tech was provided with all kinds of resources. Those resources were originally used by large corporations that actually gave people lifetime employment. So that's something else. When people discovered

Japanese competition in the 1980s, they said oh, a secret to Japan's success is they give people permanent employment, lifetime employment. U.S. companies were doing that, particularly post-World War II. Iconic company that did that, which became a totally

shareholder value company, and that's where I'm going, was IBM. You had a job for life. You had a defined benefit pension, you had all your medical expenses paid, etc. Those companies were highly innovative. A lot of them connected to what was called the military industrial complex. And in the early, late 50s, early 60s, some companies started setting off, spinning off of that,

companies that would have been like companies here today that were, and they went public and they were called glamour stocks. But they were thinly traded. So the Security and Exchange Commission, which was set up in the mid-30s, to get rid of manipulation and fraud on markets. They had what was called a special study that created NASDAQ, which you all know about.

But you probably don't know the origins of it. So NASDAQ was really backed by the U.S. government to create a liquid market in highly speculative stocks. And so the National Association Dealers automated quotation system came online in April 1971. And it wasn't actually a trading market. It was just a quotation system. So the security dealers were all working on their phones and Rolodexes in isolation and never

knowing what the price of a stock would be. All of a sudden, this is really the first use of internet working. Right. Because computers, mainframes have just come in in in the 60s. So you now have NASDAQ. One of the first companies that listed on NASDAQ was Intel. Three years after it was founded. That would never have been possible with the New York Stock Exchange.

They could have gone on the over-accounted market because the New York Stock Exchange had listing requirements in terms of capitalization, profitability. That would require 10, 15 years at least. Right. Okay. But now you could get companies going public. Didn't even have a product. That really was the thing that. brought venture capital into the picture. There was no well-defined venture capital industry until

1972 a year after NASDAQ was created and it came out of Silicon Valley, which by the way was dubbed Silicon Valley in 1971 by a journalist because there were so many startups producing silicon chips. Before this point going public required you to be a good company. You had to, yeah. So often you went over the counter and then graduated to what they call the big board, the New York Stock Exchange. By being a... And you have to have a lot of different shareholders, et cetera. Yeah. Well, thank God we got rid of that.

Well, those companies tended to pay dividends, but they didn't do something which I'm going to talk about today, which is the way the predatory value extraction is working in the U.S. economy, particularly in the tech sector, and that's the phenomenon of companies buying back their stock. Right. Okay. But before we get to that, we basically have to see that in the 1970s, there was a change in the institutions of the stock market,

particularly around NASDAQ and venture capital, that made it possible all of a sudden to get funding for startups that couldn't get funding before. Right. Now, a big change was, and it was really under the radar, was in 1979, July of 1979, when the Department of Labor in the U.S. U.S. said that pension funds could put some of their money into risky assets.

There had been some legislation earlier in the decade, which said that if pension fund managers put their money into companies like the companies on show here, they're trying to go public, that they could get into trouble or companies of the company. Immediately, from that point in time on, there was no shortage of money in the U.S. economy for venture capital, for new firms. It was really always since then, it's been a shortage of good firms and a lot of money chasing. Well, pushing back on that, well, actually agreeing, but isn't the problem also that venture capital no longer really works? It isn't really taking risks.

It's just doing more value extraction. Now, venture capital at that point, it was really dominated by people who came out of the industries in which they were invested. Right. So there were individuals who decided to be like Don Valentine's. who backed Cisco and other companies. He came out of National Semiconductor, had been in the semiconductor industry. There were a whole number of them.

And so they understood the industries in which they were investing. Some of them were better, some of the worst. But really what put in venture capital made it something that people would now say, hey, let's go after this stuff. We're two IPOs in 1980. One was Apple, and the other was Genente. one in tech and one of biotech. Right.

And from then on, there was, well, in the early 80s, there was a whole bunch of investing in venture capital. Here's your point, comes up. There was a very good book written in 1985 by Business Week, journalist, I think the name of John Wilson, called The New Ventures. It was the first real good book out there on venture capital. And the last chapter was Vulture Capital. So it was basically,

the bad venture capital is coming in and just hyping companies and the whole thing falling apart. So you have these cycles of good venture capital and then in the dot-com period you have the boom and bust, etc. Well, I think what I'm not thinking is the way venture capital is today is strange because after 2021 that collapsed at the zero interest-free era, you're kind of seeing that a lot of venture capitalists did not exactly know how to invest. in companies at all. They knew how to invest in concepts, in things that they could take public or things that they could flog to another company. And that's venture capital is falling off quite a lot now. Is that something that reflects the larger market conditions of the tech industry? Because it feels like the same problem in the meta makes their, Facebook sucks now.

I'm sure you all use Instagram and Facebook. If you don't think it's bad, please go on the app, take a look. It feels like they're all following the same thing of they have all fallen into Jack Welch's shareholder value system of bigger, more money, as much as we can squeeze from our users as possible, which only appears to work in the public market. So how did we really get here, though? Like, how do we get to the shareholder super? Okay. So now what you had with venture capital, with NASDAQ being part of it, with a shift actually of Wall Street, itself from investing in these older companies and doing their bond issues to trading in stocks. That also occurred in the 1970.

When the stock market actually was not doing very well. But you then had a whole situation where you had, I mean, this really did unleash innovation. The older economy companies, they were good at doing some things, but a lot of them became conglomeratized, became sclerotic, etc. There was a demand coming out of basically conservative economics led by a guy named Michael Jensen to disgorge the free cash flow, as they called it. It actually invented the term free cash flow, which every company used. Now, free cash flow, by the way, means that if you got to lay off 5,000 workers to create free cash flow, well, that's fine. You know, as long as anything that isn't nailed down is free cash flow. and this prioritized shareholder value ideology.

That I witnessed firsthand when I was at Harvard Business School in the mid-1980s, and they hired this guy Michael Jensen. I'm not sure if you've heard of him, but he died recently the guru of maximizing shareholder value. And once he did that, you start getting hits in the Wall Street Journal of Financial Times Center, shareholder value. Okay, then they start with executive people. pay, stock-based pay. That was already, it's a longer history of that, but that comes in in the

1980s. That's aligning the top executives with shareholder value. And then how do you create, and I use create in quotes, value for shareholders. Not only do you pay dividends, but you buy back the company's stock, the stock buyback. You tell your broker, go into the market, buy back our stock, you're giving their money away to get the stock price up. And you're actually not benefiting shareholders who get dividends. You're benefiting share sellers who are using the opportunity to sell their shares, including the top executives who pay is stock-based, stock options. Now it's more stock awards.

But also corporate raiders who want to come in and say get the stock price up, do the buybacks, then we'll sell the share. So this becomes a massive phenomenon. Now, this was enabled by, in 1982, again, the Security Exchange Commission, which I've said was set up to get rid of manipulation and fraud in the market. It went from being a regulator of the stock market to being a promoter of the stock market. And to this day, that's what the Security Exchange Commission is. It is not a regulator of the stock market.

market, a promoter of the stock market. Right. And what they did is it was really under the radar. Usually in the U.S., you have public comment on these issues. They said any company on any single trading day can buy back 25% of their average daily trading volume over the previous four weeks without being charged with manipulation. It was a safe harbor. So it didn't say if you went over that, you would be charged.

it just said if you want to be sure that you won't be charged manipulation, that's how much you can do in buybacks. So how does this lead to where we are today, which is a death of innovation, in my opinion? Okay. So what that means is that a company like Apple, I looked at the figures, they change a bit from year to year, or sometimes quite a bit. They could do about $4 billion a day in buybacks, day after day after day after day. Apple just came up with his 2024 annual report. They did $95 billion in buybacks. They had $94 billion of profits, hugely profitable, but $95 billion in buybacks. Apple has done $726 billion in stock buybacks over the previous 12 years, plus about $200 billion in dividends.

Right. The buybacks are about 93% of its profits. Now, Apple is hugely profitable, but there are costs to doing that. Now, by the way, if you look on Apple's website, they call this program of paying out dividends and doing buybacks, which really only got going. There's a longer history to this. When Steve Jobs left in 1985, or was pushed out of Apple, the executives there started doing dividend and buyback almost drove the company into bankruptcy. Jobs came back in 1997, said, we're not doing that.

We're doing what I call retaining and reinvesting. And we know the history of that. They have the iPod, iPhone, iPad, etc. Steve Jobs died in 2011 shortly before he did. He died. He gave the CEO position to Tim Cook, who was claimed to fame there was outsourcing their manufacturing to China. And virtually everything to China.

Operations guy. Yeah, Operation guy. he got pressured by the hedge fund activists starting in 2012, 2013, including Carl Icon, and they started doing the buybacks. And once they started doing them, they just kept doing more and more of them, as I say, an average of $60 billion a year over the last 12 years. Now, they call it their capital return program. But the only time Apple ever got money from the stock market was in 1980 and its IPO.

so who is it returning capital to? I understand this is bad because it's basically just money going into the corporation's mouth from its hands, but how does this fuck up the innovation economy? How does this stop people actually building more cool stuff or useful things, I guess? Or at least how does it enable the bad habits? Yeah, okay. So first of all, again, sticking with a company like Apple, they could be paying people in the Apple stores, maybe 20% more,

maybe 25% more, making those, even though they can, might be able to substitute a lot of those people fairly easily, but they could have made those the best jobs

that anybody could have in the economy. It wouldn't just be in the U.S. all over the way. And that would have pulled up wages for the kinds of people who work in the Apple stores by other competitors.

Right. You know, and this is not just Apple. There's a whole, all the big companies are doing this stuff. Okay. They could have invested in innovation

that was not immediately profitable or commercially profitable, but for public good, like for disabilities, things like this. They did hardly any of that. This is over $90 billion. When they did try to move into new technology, and I use all the Apple products out there, but the ones they didn't produce, you know, AI, self-driving cars, etc., they spent billions and failed.

But it's worse than that. The U.S. is now engaged in what some people call the chip war with Samsung and TSM. Intel turned down the contract for Apple's processors after the iPhone was launched in 2007. That's because Intel was doing massive buybacks at the time, and they had a financial guy running the company. but then they gave the contract to Samsung. Samsung became a high-end producer, fabricator, of chips, the highest end, by doing the products for Apple. Then they became a competitor, so they switched to TSMC. Right.

And so basically, the U.S., this is from a U.S. point of view, does not have a leading-edge producer, fabricator of chips now because in fact it was outsourced by one of the leading companies that could have actually $60 billion would build a state of the art plant

that's what TSM is spending in Arizona now and that's just the one year what Apple's spent on average Another podcast from some SNL late night comedy guide Not quite on humor me with Robert Smygel and friends

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this is right where you need to be. Listen to the Clifford show on the IHeard radio app, Apple Podcast, or wherever you get your podcast. And for more behind the scenes, Follow at Clifford and a TikTok podcast network on TikTok. Maybe I want to take a step further out because while stock buy bags are a major problem, there is a much larger one as well with the growth at all cost raw economy, as I call it. The idea that every single company, I mentioned meta earlier,

the reason I bag on meta is because the average Instagram Facebook experience is horrible, interfered with it's full of AI slop. In fact, Mark Zuckerberg literally just said he wants to have a channel just for AI slop. Makes me want a channel a gun in my mouth. the thing is we are seeing tech getting worse and it's not just these buybacks it's if they had that money to spend they probably wouldn't spend it on innovation if we're honest they're not incentivized yeah to innovate so how do we change this how do we actually unfuck this system because right now if you look at google you look at Microsoft these products are getting worse as they get more profitable how do you write this and what can be done to them to change them okay well yeah so first uh companies that prioritize getting their stock price up over investing in innovation. And by the way, that doesn't mean just spending money on R&D. It means employing people, integrating them, getting the learning going,

and actually maintaining a stable labor force so that you can actually produce those products, serve as those products once in the market. But companies that prioritize shareholder value get involved in other kinds, of all kinds of misbehavior. It feels like every takeover. They price gouge, they tax, avoid taxes. They'll lay off lots of workers when they're profitable. They'll basically,

shareholder value takes over everything. Okay, so how do you deal with that? Yes. Okay. Here's part of the problem that the people, a lot of people understand that this is a problem, at least the work I've done on this, on stock buybacks.

I had an article in Harvard Business Review 10 years ago, which was just an article I wrote, but because of where it appeared, and because it had, it was called Profits Without Prosperity, the subtitle was the best part, how stock buybacks manipulate the market, and at least most Americans worse off. It shocked me that Harvard Business Review actually published that article. Yeah, they usually broke cheerleaders. Yeah, okay. So, but the fact is that it did get a lot of attention.

Right. But if you are in power, as the Democrats were for the last four years, they gave it a lot of attention when Trump was in power. I got to push back on that. I'm sorry, did they? Because... Oh, no. Yeah, they did. How? Okay, around the Trump tax cuts, they had what was called hashtag GOP tax scam. It was all about stock buybacks. I know, but here's the thing. Okay. The larger economic conditions of the problem here, the tax thing, sure, it's a part of it,

but the problem is that the incentive is that your company grows and continues providing shareholder value, which, as my listeners will know into the audience here, literally just means what will increase stock price and increase dividends, very basic Jack Welch bullshit. How do you change those incentives? Because I don't think the, and this is not even a political statement, I don't think there's any movement to stop that other than maybe Lena Khan and RIP very soon, probably sadly, an attempt to move away from the monopolies. How do you actually break this machine? Because the machine is breaking everything else. There is actually legislation, influenced by the work, first introduced by Senator Tammy Baldwin, who won by a whisker in Wisconsin was re-elected, called the Reward Work Act. And it would ban

by-backs. It would get rid of this rule from 1980. that allows companies to do them without being charged with manipulation. So in effect, it would say that if you do buybacks on the scale that you're doing them now, the man. It also, the other side of it, which is that you would put worker representatives on boards. I think you have to put representatives on boards. I think they actually, I want to be as a taxpayer represented on boards if they're using my money. If Elon Musk is using my money of apples.

You just have a random low-level worker out there. I mean, boards are a joke. I mean, the notion of independent board members, and given the money that board members are making from shareholder value, we just wrote an article on Elon Musk's 2018 pay package. The so-called independent directors have made hundreds of millions of dollars on giving him that pay-pass or being around and staying on the board. Interestingly enough, there was one board member, her name was Linda Johnson-Rice,

who actually made $135,000 from her stock-based pay because they didn't renew her board seat after 2019, and we calculated $173 million of options on the table. So that's what happened. Then it came out that she had spoken out, against Musk. Anyway, that's part of the problem is you have a totally corrupt governance system. It's that, but it's also bigger. The market is incentivized for growth. These are pieces of the puzzle, but I realize that what I am suggesting would destroy the markets, which is the markets are focused on growth.

Buybacks are just one part of this machine. And as long as that happens, innovation is going to be stymied. because if you're just trying to make more money and not even more profit, just trying to grow the stock value, you're not trying to make better things. A company is successful by producing a higher quality, lower cost product. No, they're not.

I'm sorry, look at Meta. I hate to disagree there. Look at Meta. Look at Microsoft. Microsoft 365 is a product that really isn't going to little niche here. It's become a worse product. Oh, no, I'm not saying that it,

I said it becomes, it gets into that position. Now, what you call a higher quality product, you know, different people can have... Oh, do you mean as in a higher quality selling product that makes more money? It's one that can get customers, okay? Ah, all right.

All right. And now, there is a problem. I call it... Okay, companies retain and reinvest when they are doing this. They retain their money, they reinvest in the company. The other side of that is they... What I call downsize and distribute. They downsize the labor force and distribute cash sharehold.

Right. Most tech that are doing the big bypass are in between. I call them dominate and distribute. That's where Microsoft comes in. Yes. So they have a dominant product. No one can get in there now. That's where there's an element of monopoly there.

And but basically they're pulling in the cash from that product, from their software suite. And they're using it to pump up the stock price. Right. And crushing all competition. Yeah, yeah. And so, and not investing in things like Apple not investing in FAB. Apple outsourced all its rechargeable batteries to China. Which is so ironic because Apple, one of their best moves was when they invested in their own silicon. It's probably been one of the smartest moves.

Well, of course, they put Tim Cook, that was the guy they put in charge. He outsourced the Foxcon, et cetera. And, okay. Now, but I think the bigger issue may be that you're getting at. is where did this whole idea of shareholder value come from? Right. And, you know, people often cite an article by Milton Friedman, a Chicago economist, who in 1970 wrote an article in the New York Times called The Only Responsibility or Social Responsibility

of a company is to increase its profits. This man is one of the most evil people alone. Well, he's dead. Now, he's burning in hell. But just to be clear, he is like, dictates are great. Now, okay, what's interesting about that and often overlooked when people read the article is two things. One is he wrote that in the context of a what was called campaign GM, again, General Motors, to put three public interest people on the board. Right. Okay.

they wanted one person to be, they wanted to deal with pollution, they wanted to deal with safety, and they wanted an African American on the board. Okay. That came out of the consumer movement that was launched in 1965 by Ralph Nader's book, Unsafe at any speed.

Ralph Nader's still around with this podcast. Still going. Yeah. Okay. That, actually, many corporate executives, top level, they wanted to do some of those things. But people like Milton Friedman came along

and said, what he called it, is pure to know unadulterated socialism. Okay, to put those people on the board. Now, we know the history of what's happened in the auto industry since then. Right. Okay, if you didn't produce safer cars, you lost market share. If you didn't

produce more fuel efficient cars, you lost market share. Actually, what happened in the U.S. automobile industry, that African Americans became a very important source of semi-skilled and skilled blue-collar workers during the 60s and 70s when immigration was low. So that was important for them in terms of being competitive, having a blue-collar labor force. They should have put those people on the board. Absolutely.

And they might have done better. So you get back to this notion that it's shareholders who basically own the company, all those profits belong to them. And that was what shareholder value kind of legitimized. And it came out of academia. I mean, Milton Friedman won this so-called Nobel Prize in Economics. It's really a Swedish Central Bank Prize in economics. But basically, and it was also, in many ways, that whole movement was racist, sexist, et cetera.

Why? because the world that I described of secure employment that existed up to that time and I think this had a lot to do with it was a white man's world yeah and what happened is the labor force was changing women were getting into the labor force African Americans both because of demand and equal opportunity yes okay and this was a backlash against it it was a backlash against Nader and a backlash against the civil rights movement So it has to be seen in that context, although it was often disguised as, you know, mainstream economics, legitimate economics.

Yes, it's just racist. And by the way, you know, of course, it's called liberal and conservative in the U.S. You know, the liberal counterpart of that was a guy named Paul Samuelson. There was no difference really ultimately between Paul Samuelson and Milton Freeman in terms of their fundamental economics. They thought, just let the market work and everything will be fine. if it fails, then Paul Samuel said, okay, the government should intervene a little bit. But basically

what they missed was the role of the corporation for better or for worse in the economy. I mean, basically right now, there's about 2,000 companies in the U.S. that employ 5,000 or more people, it's an average about

22,000, that account for about 35% of total business sector employment in the U.S. And those are the most profitable companies, they pay higher wages, the investment decisions that they make drive the economy. They determine what kind of jobs

are available in the economy. They determine what kind of education we get. They determine what kind of resources go to the government. So if they decided to not be evil. And so, yeah. And so once those companies changed their purpose,

they became a big problem. And so Friedman was successful in influencing. Yeah, it took time, but he was successful. And he was successful. Now, here's where the tech industry comes in. Right. Because

the tech industry was much more dependent on the stock market than those old economy companies. Okay, the old economy companies, there's five functions of the stock market for a company. What I call creation, which is

inducing venture capital to come in. You create companies because you can exit on the stock market. There's control that is separating ownership and control, which a lot of the shareholder value people see is the original sin of American industry, but it's actually necessary

because once you have owner entrepreneurs who want to pass on the company, what they did in the United States, they passed on onto professional managers. Yes. And this actually opened up the growth of the company. And when did that start happening? When did the managers come into power? That was already by the 1920s.

And how do we get rid of them is the thing Because if you look at most major tech companies, Apple included, MBAs, these people are everywhere now. Yeah, but that's the problem. That's the way MBAs are educated now. Basically, the people who are running companies in the 20s and 30s were basically engineers. The 30s, even though the Great Depression, that was incredibly important. But the value multipliers were so much smaller, though. Yeah, yeah. But these companies, for the U.S., and this is true globally,

these large companies and critical industries dominated, and they had to be run professionally. And basically, you got the separation. So that's the second thing, control. The third is what I call combination. You can use your stock to acquire other companies. Right. The fourth is compensation.

You can use your stock to pay people. And the fifth is cash. Most people think that the role of the stock market is raised cash for companies. That is not necessarily true. certainly wasn't true historically. Okay. Now, what happened with the rise of what I call the new economy companies coming up basically out of Silicon Valley is they started using cash, the stock market to induce venture capital. They started using it to acquire other companies. They started using it to compensate

people deep down in terms of stock options. And particularly in the biotech industry where companies go public without a product. They raised tons of money on the stockwork. So they effectively tied everything to stock value down to how they paid people and bought things. So once they start within that model, you basically are looking at your stock price all the time. And so it's hard to resist the shareholder value arguments, particularly when they're self-serving. And once those companies became big, they all started saying, oh, we've got to keep our stock price up. So I can trace when companies like Intel, Apple, Microsoft, etc., started going from just saying all that money we're bringing in, we've got to just put it back in the company to, oh, no, that money can go out and just boost our stock price.

And then you get a whole system of what I call results in predatory value extraction, which have to do with corporate raiders, institutional shareholders, pension funds. everybody's trying to get their yields out of companies and basically support this. And this is basic, for the economy as a whole, this means a huge increase in income inequality. Driven by the stock market, making money in the stock market, and then looking for other ways to make that money through private equity, etc. one figure. The top one-tenth of one percent of households in terms of net worth in the United States, about 15 percent of their assets were in the stock market in 1990. Now it's about 45 percent of their assets.

So their wealth is very much tied up with the stock market. The stock market is very hard to crash now because there's so many people are making so much money under money that they have to put it somewhere. and actually this number of this stock companies are shrinking. And through buybacks, the shares out there are shrink. At some point this has to fall apart, though, because surely if everything is based on the value of the stock, every single large company is effectively at the will of the stock market,

which will mean that the companies will eventually stop making things with the purpose of doing anything other than raising shareholder value, does this not lead to the death of innovation? Yeah, okay, yes, it does. But it doesn't happen overnight. We're watching it happen. Yeah, and so you start seeing China has a different model. They start out competing in the United States, and you try to block China.

Right. This is a big problem for the United States because tech companies are so... They just can't help their monopolies. They're so integrally related with trade with China and manufacturing and importing from China. This is a total disaster. And, but basically what has happened is companies, and I can name a whole bunch of them, have fallen behind. global competitors in the U.S. because they stock with this

shareholder value model. So the U.S. is falling behind in a whole range of critical technologies. The reason there's no major EV battery produced in the United States, the problem of FABs, which I already mentioned. The problem of Boeing,

they did $43 billion in buybacks from 2013 to the week before the second crack. Jack Welch poison that. Yeah. And And they had Boeing's Boeing stock price was at a record level in March 1st, 2019, 10 days before the second crash. And there was no doubt. I wrote an article on this in May of 2019 that the Boeing crashes were the result of top management, ignoring issues of safety because it would hurt the stock price.

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Imagine an Olympics where doping is not only legal but encouraged. It's the enhanced games. Some call it grotesque. Others say it's unleashing human potential. Either way, the podcast's Superhuman documented it all, embedded in the games and with the athletes for a full year. Within probably 10 days, I put on 10 pounds. I was having trouble stopping the muscle growth.

Listen to Superhuman on the I-Hard radio app, Apple Podcasts, or wherever you get your podcasts. A win is a win. A win is a win. I don't care what I'm saying. Yep, that's me, Cliver Taylor the 4th. You might have seen the skits, the reactions, my journey from basketball to college football,

or my career in sports media. Well, somewhere along the way, this platform became bigger than I ever imagined. And now I'm bringing all of that excitement to my brand new podcast, the Clifford Show. This is a place for raw, unfiltered conversations with some of your favorite athletes, creators, and voices that not only deserve to be heard, but celebrated. One week, I'll take you behind the scenes of the biggest moments in sports and entertainment, and the next we'll talk about life, mental health, purpose, and even music. The Clifford Show isn't just a podcast, it's a space for honest conversations, stories that don't always get told, and for people who

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It's called the Rockcom bubble. Right now, I think the tech industry is reckoning with the fact that there are no big ideas. Sure, the audience will love this. I do not think generally if AI is the future. I think it is a jinnied-up software product based on desperation. what happens if the tech industry stops coming up with hypergrowth markets? Because they haven't had one for a while.

What happens? Like what happens to these companies stop having new things? Well, first of all, we're reliant on these things still. Yes. So even though they're not new things, we're still using the whole ecosystem. You know, again, I use Apple products until Apple's going to make money off of me because I'm stuck in. And I buy every iPhone. and I'm just saying, what if this is,

I have the new iPhone with me, because I'm a little pig and I owing for Apple every time, what happens if this is about as good as it gets? If each version is just more and more incremental, if it's faster, but not that faster, because we're hitting a wall on CPUs as well. Morse law is falling apart.

Well, we don't really have to. I mean, it's easy to answer that question. We get Donald Trump. I mean, basically... Well, we have Donald Trump. But what happens after that? Okay, well, that was. find out because, you know, this, you know.

Wait, sorry, perhaps let me wheel back. Are you saying that the death of innovation led to Trump? No, I'm saying the financialization of the economy. Oh. Yeah. So, so. Oh, yeah, also corporate authoritarian. See, so even, here's the problem, even when I put more stress on even when there is innovation, the wrong people are going to grab it. Right. And the economy is going to become more financialized. Uh, sure. You know, the people who actually should be sharing in the first instance, the employees of those companies, they can be laid off in an incident. Elon Musk, 140,000 people at Tesla the end of last year, just like that laid off 20,000 people. Yeah, he doesn't care.

Yeah. But my point is, if they have no other vehicles for growth, because you look at Microsoft, for example, they are able to, they've had, I think, year-over-year growth of low 10%, these companies are slowing down. Well, yeah, well, first of all, I don't think that the companies themselves don't need to grow bigger and bigger. They could spin off other companies. Okay. And I think that that's a model that works very well because you create incentives for people in those companies to become their own bosses to become the head of other companies. What if that's not their culture though? The reason I'm pushing on this is I'm thinking Microsoft. I'm thinking meta especially. I'm thinking I mean Cisco as well and even Oracle.

I mean these companies don't have new innovations. Oracle's doing a right because Microsoft became the largest customer. They make data centers. Fine. But what if they stop being? being able to grow revenue every year. Like that is the real question. What happens?

Well, they'll lay off some of their workers. You know, that's the first thing. What if that is not enough? Well, then they might, you know, they might go out of existence. I mean, this has happened to some companies. Some microsystems. Right. Yeah.

Okay. So, you know, there are companies that just don't make it. And, you know, but once you have made it, it's very hard to disappear in 10 years or 20 years. Of course. Because you have that demand base and you have the capabilities, you have basically the barriers to entry, you have a whole lot of advantages that allow you to dominate. And the question is, you know, and then if you take the global competitors, and you try to just shut them out, then you have a problem. I mean, they...

I think my bigger point is that in the last 10 years, the tech industry has categorically failed to find any hypergrowth movement that matches smartphones, that matches cloud software. They've not had any of them that create the level of value that those did, and they are squeezing everything. And my concern is what happens if they don't have anything left to squeeze. because they're all Microsoft, Meta, all these companies, they've laid off tens of thousands of people. They've tried that and they could lay off more.

And now they're putting $200 billion into that to lose money. I just feel like we're in a corporate psychosis. Well, see, another way to answer this question is ultimately what is the economy run for. The economy actually, this is normative. in my view should be run to provide services to people that are not profitable like health care education you know caring for old people whatever there's a that's what a prosperous economy should do now these these goods producing companies these innovative companies have a lot of capability produced through those markets but that means the government becomes a big source or it's either governments

or your well-paid employees become sources of demand for those products. And that's the opportunity that's been missed. Now we have the literal inverse, I argue. And what you have now is with all this financialization

of the whole economy, with all this money being funneled out of these highly successful good producing companies, successful in the terms of profits, you have money looking looking to make more money and you have the whole, which has been

written about a lot recently, private equity moving into healthcare, for example, moving into areas which would not be for profit at all. Buying up doctor's office, Densens's office, you know, basically nursing labor supply, what have you.

A lot of stuff being written about that. Now, and a lot of it is kind of under the radar because you don't even know who owns these various companies, the corporate structures are so opaque. But basically, what should have been happening all along was that when you became prosperous, this was really taking some of those profits, not just paying your workers better, create more stable employment, upward socioeconomic ability.

We have downward socioeconomic ability for a lot of, a big proportion of the population, into more education, into more producing things that people need but aren't necessarily the next big, profitable product. Actually, some of those would become profitable products if, in fact, you have enough government demand for them and you're the companies as in

the military. So, that's what should have been happening. That's what's not been happening. So how do we make it happen? How do we force them? Well, okay, so you have to change the whole way in which companies allocate resources. So how do you do that? Well,

so I'm, I, if you wanted to talk practically, you say, you cannot do buybacks anymore. manipulating the market. It should be a need to, this is a phenomenon. Byback surpassed dividends as a source of distribution of shareholders in 1997. They're much more volatile, but way bigger than dividends. But it's bigger than just bybics as well. Well, okay, but that's a start. Right. Okay. You stop tying executive pay to the stock market. You tie executive pay to the success of the company in terms of employing people, keeping people employed, innovative products.

Yes. You change corporate boards. Okay, you put people on corporate boards who have a real interest in that company's position in the economy. Right. Okay, you change the tax system. The tax system rewards value extraction rather than value creation. And you basically, and this I think is the most important thing, you figure out how to mobilize all the resources in the economy, the human resources in particular,

for what I call collective and cumulative learning. When you get down to it, innovation is about people getting together collectively and learning cumulatively. That is, what you learned yesterday determines what you can learn today. And what happens is when these companies stop retaining and reinvesting, you just have all kinds of people with capabilities who are not living up using those capabilities or in the end never even get those capabilities

because money doesn't go back through the education system. I mean, the U.S. at a point in time in the 1980s, when it was necessary to everybody knew you had to really up the educational system. And the U.S. was absolutely and still is, ideally situated for that because of the history of higher education in the United States, which goes back to something called the Land Grant Colleges, which really came out in the late 19th century and were the bedrock of innovation in the U.S. economy.

At that point in time, the huge investments that should have been made were not made. Public education was virtually in every state free before then. It became expensive. Student loans, the interest rates are extortioned it. in the U.S. from the government. Basically, it was white people not wanting to fund other people for upward mobility. Well, thankfully, that's definitely, change. Yeah, and that's when you, now, how was that resolved?

It was resolved through the fact that Asia, in particular in the tech industry, was educating people. And those people were invited in the United States, and I think to the benefit of them and the benefit of the United States, so I'm not saying that Asians in some case took any jobs away from anybody, but they became an available labor supply through what's called L1 visas, H-1B visas, permanent visas, employee and preference visas. I've got all the data on this. This was all encapsulated in the Immigration Act of 1990.

And for the tech industry, they were now off the hook. in terms of the U.S. economy for saying, oh, we have to ensure that higher education is available for African Americans, available for white families who are coming out of low income, that we have to be sure that this system is available for upward mobility. They took a walk on that, and they were able to take a walk on that because they were part of the global system. It's very ironic now that United States is in this

conflict with... Kind of feels like we've gone socially regressive. Absolutely, absolutely. And what you see is concentration of the top, downward socioeconomic mobility for people particularly who have no more than high school educations. And that's why I say. That's why it leaves

to Trump, basically. It's no big mystery once you understand the concentration on the top, the money that will go. And I imagine to some extent, even if you don't understand it, you look at the system, you look at the current political apparatus, why would you trust

authority? Even if Trump is a he's obviously not going to do a whole bunch of stuff and he's going to do much worse, it's almost like I feel like people need to realize everything you've discussed today is just describing how the system fucks regular people, how the system

has, somehow we were more progressive in America in the seven And he's corporate-wise, it's just, it's very worrying. So I'm going to end on a nice note. What actually should give people hope? Where can people find it right now, in your opinion? Well, that's hard to say right now. I mean, it's because, I mean, there was a notion that with all the opposition

before the election, before Biden had that, disaster's debate, okay, you know, he had tried to push policies in a much more progressive way, and I think it's true. Yeah. They were trying. They couldn't get any of the family stuff passed, but they were trying to do it. They got the infrastructure bills passed, et cetera. The Inflation Reduction Act, starting finally to try to negotiate health care prices, basically.

They were trying to do some things. That got a resounding no from the electorate. And in fact, that part of the regressive policy was not part of the campaign. And you certainly, Joe Biden was a big fan of this stuff on mind on buybacks back when he was vice president. Right. I'll tell you a little story about that. We can end on this. Basically, in 2016, when he was still vice president, he wrote an op-ed in the New York, in the Wall Street Journal about stock buybacks, executive pay, said we have to rein all this stuff in. This is really screwing up the economy.

The future of the economy depends on it. In that article, he named one person that was me. It said, according to economist, William was on it, comma, and then he had data from the article I mentioned in 2014. I looked at it a couple years ago when journalists contacted me, and I said, oh, Biden, when he was vice president, was really thought this was a problem. Now he's not saying anything about it.

it and I said, look at the article. I looked at the article again. It said, according to economists, blank space, comma. Someone had actually hacked out my name. Oh, well, that's the, yes. But it feels like we need a populist movement then. Yeah. No, but basically,

basically, the, when the Democrats got into power, and this happened under Obama, it's happened, it was happened under Clinton. They have just cozied up to Wall Street,

cozied up to rich people, basically, they do not have a critique of shareholder value. There is nothing coming out from the Democrats when they are in power in particular, and that is confronting this. And I think it's now basically come full circle in terms of people being affected by the lack of upward mobility, the lack of job security, people living paycheck to paycheck, while other people are getting richer and richer, finding, okay, we'll just take someone who, you know, with a hope

that they're going to do something different. Of course, they're not. So, yeah, so what's the, where's the optimism? Of course, we need a progressive movement. But it's, yeah. I feel like you can find hope in that the fact these ideas will become more prevalent because at some point, we need to review these systems.

We need to also realize that worker power will make cooler shit. will make more innovation. William, thank you so much for joining me. And everyone, thank you so much for joining us today for the first live episode of Better Offline from the beautiful country of Portugal Web Summit. Thank you, everyone.

Thanks. Thank you for listening to Better Offline. The editor and composer of the Better Offline theme song is Mattersowski. You can check out more of his music and audio projects at Mattisowski.com. M-A-T-O-S-K-I.com. You can email me at EZ at Better Offline.com or visit Better Offline.com to find more podcast links and, of course, my newsletter. I also really recommend you go to chat. Where's YourEd.orgat to visit the Discord and go to R-slash Better Offline to check out our Reddit.

Thank you so much for listening. Better Offline is a production of Cool Zone Media. For more from Cool Zone Media, visit our website, Coolzonemedia.com or check us out on the IHeartRadio app, Apple Podcasts, or wherever you get your podcasts. podcast from some SNL late night comedy guy, not quite. Unhumor me with Robert Smygel and friends. Me and hilarious guests from Bob Odenkirk to David Letterman help make you funnier. This week, my guest, SNL's Mikey Day and head writer Streeter Seidel, help an a cappella band with their between songs banter.

Where does your group perform? We do some retirement homes. Those people are starving for banter. Listen to humor me with Robert Smigel and Friends on the IHeart Radio app, Apple podcasts, or wherever you get your podcasts. Wife is full of hurdles. So how do you keep going? On Hurtle with Emily Abadi, we're talking with the most inspiring women in sports and wellness from professional athletes, coaches, and Olympic champions about the challenges that shape them and the mindset that keeps them moving forward. At our level, at this scale, being able to fail in front of the entire world. Like, I can do anything. I can do anything. Listen to Hurtle with Emily Abadi on the IHeart Radio app, Apple Podcasts, or wherever you get your podcasts. Presented by Capital One, founding partner of IHart Women's Sports.

I'm Michelle McPhee, and I've been unraveling the strangest criminal alliance I've ever reported on. A Mormon polygamist and an Armenian businessman. Multi-million dollar house, Ferraris and Lamborghinis, private jets, a billion dollar fraud. But how long can this alliance last? Tell me what you know. Is somebody coming after me? Listen to Kingdom of Fraud on the IHeart Radio app, Apple Podcasts, or wherever you get your podcasts. Imagine an Olympics where doping is not only legal but encouraged.

It's the enhanced games. Some call it grotesque. Others say it's unleashing human potential. Either way, the podcast's Superhuman documented it all, embedded in the games and with the athletes for a full year. Within probably 10 days, I'd put on 10 pounds. I was having trouble stopping the muscle growth. Listen to Superhuman on the I-Hard radio app, Apple Podcasts, or wherever you get your podcasts.

A win is a win. A win is a win. I don't care which I'm saying. Yep, that's me, Clifford Taylor the 4th. You might have seen the skits, my basketball and college football journey, or my career in sports media. Well, now I'm bringing all of that excitement to my brand new podcast, The Clifers Show.

This is a place for raw, unfiltered conversations with athletes, creators and voices that not only deserve to be heard, but celebrated. So let's get to it. Listen to the Clifford show on the IHeart Radio app, Apple Podcast, or wherever you get your podcast. And for more behind the scenes, follow at Clifford and at TikTok's podcast network on TikTok. This is an IHeart podcast. Guaranteed human.