CHIPS Ahoy for Stock Buybacks R Us!

By Les Leopold / Substack

Intel, the largest chip maker in America, with 2023 revenues of $54 billion, has just been awarded an $8.5 billion grant from the federal CHIPS and Science Act, plus $11 billion in favorable loans. 

In addition to badly needed microchips, Intel produces totally useless stock buybacks. On its website the company proudly proclaims to have spent $152 billion on stock buybacks since 1990. That’s not a typo — $152,000,000,000. Which is why I call it Stock Buybacks Я Us.   

Intel took $152 billion of its revenues, some portion of which could have been used for R&D and building new microchip facilities in the U.S. as well as paying workers more, and instead funneled it to its largest Wall Street stockholders and corporate executives, enriching the top fraction of the top one percent. 

A company repurchasing its own shares sees earnings per share rise because there are fewer shares in circulation. Share prices rise, though nothing new is made, and the largest stockholders, including top Intel executives, cash out with eye-popping profits. Intel CEO Pat Gelsinger hauled in $179 million in 2021, most of it coming from stock-related compensation.  

Stock buybacks are a form of stock manipulation, which is why they were outlawed by the Securities and Exchange Commission after the Great Depression, up until deregulation in 1982, that limited buybacks to two percent of profits. Now it’s all the buybacks your corporation can eat, with nearly 70 percent of all corporate profits going to this form of stock manipulation.  

So, why are we giving Intel another $8 billion? 

National security is at risk, we are told. Semi-conductors are far too important to our defense and to our economy to be produced overseas, especially in or anywhere near China, our communist enemy de jure.  If we don’t bribe Intel to build here, the argument goes, they just might go elsewhere. They are in business to produce profits (and stock buybacks) not national security.

But the biggest selling point, as always, from politicians of both parties, is Jobs! Jobs! Jobs! The White House calculates that Intel will generate 20,000 temporary construction jobs and 10,000 more permanent manufacturing jobs because of this grant. 

But what’s to stop Intel from shoveling taxpayer grants into more stock buybacks?

Not much. Sen. Chris Van Hollen (D-Md.) writes: 

“While the legislation specifically prohibits the use of CHIPS funds for stock buybacks and dividend payments, these restrictions do not explicitly prohibit award recipients from using CHIPS funds to free up their own funds, which they can then use for those purposes.”

Sen. Elizabeth Warren (D-Mass.) is already worried that BAE Systems, a much smaller CHIPS recipient, but also a buyback recidivist, has not said it would refrain from stock buybacks for the duration of its CHIPS money.  

Intel hasn’t made that pledge either. In fact, Intel’s website states it still has authorization to conduct another $7.24 billion in stock buybacks.  

How can you tell if such a large company is using CHIPS money or other money to conduct its buybacks? You can’t.

Doesn’t the CHIPS Act prohibit Intel from conducting mass layoffs?

Not a chance. 

Intel could very well increase jobs in some locations while cutting jobs in other locations. And there is evidence that they are doing that right now. 

As the CHIPS Act was moving through Congress in 2022—strongly lobbied for by CEO Gelsinger—Intel laid off approximately 2,000 employees in California. Now, the company says, it “is working to accelerate its strategy while reducing costs through multiple initiatives, including some business and function-specific workforce reductions in areas across the company.” 

What that word salad means is that by the time Intel creates 10,000 new manufacturing jobs, it will have laid off more workers than that. And they know there’s nothing the government will do about it.

Why are most politicians so gutless about preventing mass layoffs?

That’s a longer story that I cover in Wall Street’s War on Workers. Simply put, our political system refuses to acknowledge that mass layoffs are the ruination of working people.  

More than 30 million working people have suffered through mass layoffs since 1996. Last year there were more than 260,000 jobs lost in the highly prosperous tech sector, with another 50,000 so far this year. In January 2024, there were 82,000 layoffs across the economy. Many of those workers will suffer greatly both from financial loss and deterioration of their health.   (For those worried about the catastrophic impact of artificial intelligence, the Challenger Report claims AI killed only 381 jobs in January 2024.)

It should be a no-brainer for the government to make a simple regulation:

If you are supping at the taxpayer trough, you can’t conduct compulsory layoffs of taxpayers. All your layoffs must be voluntary. That is, you have to buy workers out. No forced layoffs!

Most elected leaders believe that regulating corporations about how they can and can’t destroy jobs is blasphemy, an attack on sacred capitalist freedoms, something that only the Communists would do! In addition to the ideological blowback, the political establishment actually buys the corporate line that halting mass layoffs would make corporations uncompetitive, which is total nonsense.

Here’s a telling piece of evidence.

In 2021, Siemens Energy, the German-based company with 90,000 employees globally, decided to stop making equipment used in oil extraction and fracking. In Germany, 3,000 workers were to lose their jobs, and another 1,700 in the U.S.

In Germany, companies must live within a legislated system of codetermination, meaning that half the seats on a company’s board of directors are held by worker representatives, and labor-management committees run the day-to-day operations of each facility. (BTW, this system was urged upon German businesses by the U.S. after WWII, because we believed unionized workers were less likely than their bosses to cozy up to fascists.)  

In Germany, the workers used their power to persuade Siemens management to agree to no forced layoffs. On top of that, Siemens agreed not to shut down six facilities and instead put other production lines in them.In the U.S.? All 1,700 workers lost their jobs AND the president of Siemens USA was invited to the infrastructure bill signing ceremony. In honor of the legislation she had the gall to say,

“This is a historic moment in America – one that sets the stage for decarbonizing the economy, boosting U.S. manufacturing, creating jobs, and increasing equity.”

Moral of the story: In addition to fabricating hypocritical public statements, global corporations have incredible flexibility and resources to modify production, employment, wages and working conditions. “No forced layoffs” would not put Siemens or Intel or any other global corporation out of business. Instead, there might be a microscopic dip in stock buybacks!

Every single company that is getting a CHIPS grant has the capacity to modify its operations to avoid forced layoffs, just as Siemens has done in Germany. In fact, every company that gets a federal contract should agree to do the same, as well as forswearing stock buybacks. 

The second moral of the story: Wall Street and corporate America are so accustomed to getting their way that they will only pursue national goals when they are bribed. No matter how rich, no matter how large their stock buyback scams, they want our tax dollars with no strings attached. And very few politicians have the nerve to resist. 

There’s only one way out of this non-stop shakedown: expand labor unions and build a powerful mass movement. Until we, the people, rise up and demand it, no one will derail the Wall Street gravy train that runs from our pockets to theirs via stock buybacks and pink slips. 

And we wonder why so many Americans think the system is rigged and that democracy isn’t working for us.

By Zehra Imam / Mondoweiss

As Palestinians are slaughtered by the thousands in Gaza and violently attacked during night prayers in the al-Aqsa Mosque by Israel, the West Bank endures massacres that at times go unnoticed during this holy month. I have spent my Ramadan in conversation with a friend from Jenin. 

Much has changed since I visited Aseel (not her real name) in August 2023. There are things I saw in Jenin that no longer exist. One of them is my friend’s smile and her spark.

Usually, they say Jenin is a small Gaza. During Ramadan, because the attacks generally happen at night, people are an easy target because they are on the streets late at night. In the past, it was rare for the IOF to enter during the day. Now, they attack during the day; their special forces enter, and after people discover them, their soldiers come within minutes. 

Every 2-3 days, there is a new attack in Jenin. In our minds, there is a constant ringing that the IOF may come. We don’t know at what time we will be targeted or when they will enter. There is no stability in our lives.

Even when we plan for something, we hedge it with our inshallahs and laugh. There are a lot of ifs. If they don’t enter the camp. If there are no martyrs. If there is no strike.

On the second day of Ramadan, they attacked my neighborhood again. We thought it was a bombing because it started with an explosion, but the house was shaking. We were praying fajr, and everyone was screaming outside. The sound of the drone was in our ears. “No, these are missiles,” we realized.

There was panic in the streets. Women fainted. People had been walking back from praying at the mosque, and some were still in the street. Alhamdulillah, no one was hurt, we say.

The balcony to the room at my uncle’s house where we slept had fallen. It no longer had any glass, and a bullet entered my uncle’s bedroom and reached the kitchen. The drone hit the trees in front of our house. The missiles destroyed the ceiling, and the rockets reached my neighbor’s house on the first floor, exactly in front of our house.

Since October 7, Jenin has become a target. There is a clear escalation in the camp and the city. The IOF has used many different weapons to kill us here. They have even been aggressive toward the infrastructure, as though every inch of our city was resisting them.

They destroyed much of the camp, and there is no entrance now. The arch is gone, and there is no sign reminding us that Jenin refugee camp is a temporary place. There is no horse. Only the street is left. You have the photographs. You were lucky. They changed the shape of the camp, and everything has been destroyed.”Aseel

The first time Aseel and I met in person was in Nablus at the Martyrs Roundabout. As we caught up, we ate a delicious concoction of ice cream, milk, nuts, and fresh fruit that was a perfect balm to the heat. She took me to some of her favorite places nestled within the old city of Nablus. A 150-year-old barber’s shop that felt like you had entered an antique store where plants reached the ceiling and where the barber was a massive fan of Angelina Jolie. A centuries-old house now called Tree House Cafe looked like a hobbit home from Lord of the Rings, where we hid away as she sipped her coffee and I drank a mint lemonade. We visited one of the oldest soap factories in the world with ingredients such as goat’s milk and olive oil, jasmine and pomegranates, even dates and Dead Sea mud.

We happened to chance upon a Sufi zawiya as we walked through a beautiful archway decorated with lanterns, light bulbs, and an assortment of potted plants, after which we saw a cobalt blue door on our left and an azul blue door with symmetrical red designs, and Quranic ayat like incantations on our right as doors upon doors greeted us.

The air was welcoming yet mingled with the memory of martyrs whose memorials took over the landscape, sometimes in the form of larger-than-life portraits surrounded by complex four-leafed magenta-white flowers; posters above a water spout next to a heart-shaped leaf; a melted motorcycle that, too, was targeted in the neighborhood that hosted the Lions’ Den. We stopped to pray at a masjid, quiet and carpeted.

After a bus ride from Nablus to Jenin, on our walk before entering Jenin camp, Aseel showed me the hospital right outside the camp. She pointed out the barricades created to keep the occupation forces from entering specific streets. This is the same hospital that the occupation forces blocked during the July 2023 attack, which now seems like a lifetime ago. 

What caught my eyes again and again were the two Keys of Return on top of the entrance of Jenin Camp that symbolized so much for Palestinians.

“This is a temporary station,” Aseel read out loud to me. “That’s what it says. We are supposed to return to our homes.”

“Netanyahu said he is planning another big attack, so the resistance fighters are preparing because it can happen any day,” she had told me that evening as we shared Jenin-style knafeh, baked to perfection. Then she stopped, looked at the sky, and said humorously, “Ya Allah, hopefully not today!” And we both laughed because of its potential reality. 

Dinner on the terrace at her uncle’s home was a delicious spread of hummus, laban, fries, cucumbers pickled by her aunt, and arayes — fried bread stuffed with meat. Then we moved the furniture to sleep on mattresses in a room that extended to the rooftop terrace with a breeze, overlooking Jenin Camp and the rest of Jenin City. We could hear gunshots in the distance. The drones were commonplace, and the heat did not relent. Temperatures soared, and the electricity was out when we woke up at 5 a.m. I heard her pray, and later, as we sipped on coffee and had wafters in the early morning at her home, my eyes went to a piece of tatreez, or embroidery, of a bird in flight framed on the wall. Her eyes followed mine and when I said I loved it.

“It used to be my grandfather’s,” she told me. “Of course it’s beautiful — the bird is free.” 

Unexpectedly, Aseel’s mother gifted me a Sprite bottle full of olive oil beholding the sweet hues of its intact health, which I would later ship secretly from Bethlehem all the way to Boston. And then Aseel came to me with a gift, too: a necklace that spoke succinctly about the right to return and live on this earth. Mahmoud Darwish’s poetry was held together with intricate calligraphy carved in the shape of Palestine’s landscape, and I was completely overwhelmed. 

“You are in Palestine, my dear,” she had smiled. “And you are now my family. This is your country, this is your second home, really.”

When I ask her about what brings her hope these days, Aseel tells me about her eight-year-old nephew.

He wanted to eat two meals. I told him that in Gaza they don’t have food. He was complaining about the food, and I told him, they don’t have water. And he heard me because he said, “today, we will only have one meal.” 

I’m amazed at how mature he is. He even said, “We won’t make a special cake on Eid because of the Gazans.” For me, this is a lesson to be learned. He is only eight years old, but he knows. 

We have lost a lot of people in Gaza, but here in the West Bank, we are succeeding because our new generation knows a lot. Ben Gurion would not be happy. He said of Palestinians, “the old will die and the young will forget.” No, the young ask even more questions. The new generation brings us hope. Hope is the new generation.

/sp

You can also make a donation to our PayPal or subscribe to our Patreon.