This graph shows that corporations have been returning a lot of their profits to shareholders. Growth in buybacks by corporations rose dramatically during the real estate bubble, and it has picked up during our recovery. Stock buybacks remove shares from the market. This increases the value of shares outstanding in the market. This is what shareholder capitalism is all about. Executive compensation is heavily weighted with stock options. They have a powerful incentive to increase the value of their stock options. Stock buybacks serve that purpose very well.
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