It doesn't matter to me at all that Bill Gates has more money than God, because he's empathetic to people who aren't as rich and aren't as great as he is, and wants to continue to use his strength to lift people up instead of feathering his own nest even more.
It's when people get the idea that "I'm better, so I deserve better than Them!" that really raises my eyebrows. I have no problem with people having more money than me, it's when they make a new world for themselves (like the movie in the article) and cut themselves off from the world they served in order to get rich is when Really Bad Things Happen.
Given how easily manipulated people are, and us being people, you may be a little over optimistic in your evaluation of reality.
Adding another level of indirection nobody cares whats accomplished, just whats signaled.
So you're cool because he's got good PR that signals well, but assuming the world will be OK because he actually is doing stuff. That might not turn out so well.
Note I'm not interesting in arguing about Bill in particular, but as a general problem across the entire culture, because, after all, thats how inequality is measured.
On a foreign scale, defense contractors have a vested interest in keeping the Middle East unstable and have the political power to push congress towards putting more US forces there. Domestically, it's hard to find a more plausible explanation for so many state governors doing things like opting out of ACA, limiting unions, closing schools, or enabling the Flint water crisis.
Maybe French Revolution or Soviet Revolution of 1917? Here I mean that things before the revolutions were really bad and the revolutions were bad in themselves (as bloody).
Or the elites could convince the government to execute bad policy to protect themselves at the expense of society (like our awful patent system).
The benefit system in Britain demonstrates this very well. About 20 million families receive some kind of benefit (64% of all families), about 8.7 million of them pensioners. For nearly 10 million families, benefits make up more than half of their income (30% of all families), around 5.3 million of them pensioners. Isn't it much the same in the US? Is this really the way forward? It’s certainly got impetus because Peter will always vote for Paul to pay more in tax when it benefits Peter. A drastic rethink of the whole way we organize ourselves is needed. We need to get smart and focus on how to stem the natural condition for most people - which is poverty - as history tells us. Only in the last few years has this trend been reversed to a great degree. Global capitalism is lifting people out of poverty at the fastest rate in human history because people are increasingly being enabled to dig their own way out of misery.
That was my thinking for quite a while.
However, the one thing that happens here in the US is that the wealthy have more representation and power in the legal system. Be it federal or local, the systems tend to get slanted against the not-wealthy because the wealthy take over the communications channel to the movers & shakers.
It's in many ways becoming the new "taxation without representation".
Abstract: http://www.pnas.org/content/109/11/4086
PDF: http://www.pnas.org/content/early/2012/02/21/1118373109.full...
And yes, there are some hints to causation in there, where a participant was made "wealthier" (in a game context) and then differences were observed.
Neither group is more honest than the other.
tl;dr: "Abtract: Seven studies using experimental and naturalistic methods reveal that upper-class individuals behave more unethically than lower-class individuals. In studies 1 and 2, upper-class individuals were more likely to break the law while driving, relative to lower-class individuals. In follow-up laboratory studies, upper-class individuals were more likely to exhibit unethical decision-making tendencies (study 3), take valued goods from others (study 4), lie in a negotiation (study 5), cheat to increase their chances of winning a prize (study 6), and endorse unethical behavior at work (study 7) than were lower-class individuals. Mediator and moderator data demonstrated that upper-class individuals’ unethical tendencies are accounted for, in part, by their more favorable attitudes toward greed."
http://www.pnas.org/content/109/11/4086.short
One weird thing- these and some other studies I have read support poorer people have more empathy/make more eye contact in conversation and pay more attention to conversation partners/etc. Why then does that group seem on the whole to have more antagonism towards wealthier people (than vice versa)?
Could be because they have reasons to be angry at the wealthier class as a whole, but do not necessarily apply this on an interpersonal level. It reminds me of the experiments done where a wallet left on the streets is returned more often in poorer areas of town than in richer areas.
I suppose it makes sense. The poorer you are, the more dependent you are on the people around you, and the worse your experiences, the easier it might be to empathize with others (as you 'know' what it is like). On the other hand, the richer you are, the easier it is to get what you want or need without relying on others, and the more difficult it is to empathize with the plight of the 'common man'.
My position is that it isn't even the wealth gap that is the issue. The wealth gap is itself just one way in which the distribution and flow of capital organizes social relations. I think it is short-sighted to focus on particular rich people and their exorbitant wealth even though it is a grotesque experience: gawking at the rich has a visceral appeal like watching a horror movie or reading a Kafka novel.
Nobody talks about the 'wealth gap' between governments and people. Nobody talks about the 'wealth gap' between banks and people. They talk about the relationships i mentioned, they just don't frame it as a 'wealth gap'. Nobody talks about the 'wealth gap' when the police harass homeless people. Ultimately though, the relation between government and people and financial institutions and people and police/army and people is as much a consequence of the dynamics of capital as rich people being inconsiderate assholes.
And of course it's a self-referential non-linear system. Governments and financial institutions and individual capitalists and armies shape the rules and command the forces that make capital a thing. Even so, governments, banks, capitalists, and armies may each in turn fall as the wheel of fortune turns, but Government, Bank, Capitalist, Army in the abstract are part and parcel of capitalism.
I think that's the point isn't it? The rest of the post talks about how you don't have empathy with a wealth gap, but the examples given are really showing how it is hard to empathize with those in poverty and that's where the the problem is. It is hard for someone who even was in poverty in the past to empathize with people currently in poverty because you aren't going through it every day.
(And to address a comment I read about inequality being a reflection of ability and efficiency: I think we're better off with some inneficiency if it means more people have control over their lives. No, farm lands should not go to the most efficient farmers. It should be spread to distribute the most well-being to the most people.)
I am by no means rich, but I am comfortable. I also have a pretty flexible schedule and I bought a nice house a couple of years ago.
I've pretty much stopped telling people that I have a business because there is an automatic assumption that I am rich and either should pay more for something or don't understand what it's like to be poor.
I've seen so many friends that barely scrape by, but choose to spend tons of cash every month on booze, weed, entertainment, new electronics, concerts, and all sorts of other non-essentials.
I sacrificed all of this for years (I never get the latest and greatest phone and get the cheapest plan from Walmart), in exchange for a comfortable life now.
Should I now somehow feel bad about this? Frankly, I'm tired of the people that wasted so much of their own money through poor life choices telling me why I should be giving more of the money I earned to pay for their lifestyle.
With the attitudes I see online and in the media about anyone that has money, it's really not hard to see why the rich seem like they have lost any kind of empathy for the poor...I know I have.
I buy other's drinks all the time. Never a whole round. That's ridiculous. Why he felt obligated to do that was left unsaid, but I doubt his reasons would convince me that he was actually forced to do that.
More generally, as you rise up the social ranks, you have to get more and more comfortable with gross differences in wealth and learn to be able to be comfortable with and accommodate socially those with so much more or so much less than you. This guy never seemed to learn that trick.
Were I buying a round of drinks and everyone else got $5 drinks and this one guy wanted a $20 drink, I'd have been like, "Ooh dude, can't really swing that, mind getting something cheaper?" If he does mind, just don't buy his drink. He's not going to get mad if you can't afford to buy him a drink.
Buying rounds at all, though, that's just insane if you need to keep a strict budget. It smacks of irresponsibility. If people are taking turns buying rounds, just opt out and pay for what you drink.
I am struggling with this as my income increases. My friends are looking at me like I am Bill Gates. Any advice?
The main thing to keep in mind is to not take it personally. Also try to be more generous than you're used to being. It is a good thing to spread your wealth around, so long as you can keep it within the bounds of reason. It makes your life better in more ways than you can keep track of.
Another thing you might do is playfully adopt the alpha role. If they ask you to buy another round, you could sit back and be like, "sorry boys, daddy's all out of money, maybe you kids could go make your own," and have a good laugh about it.
This is what makes Trump and Sanders so scary for America.
However, peaceful uprisings have shown to be far less problematic. Think about the revolutionary movements led by Gandhi and MLK.
I see no evidence that a Sanders presidency (or a Trump presidency, for that matter) would lead to a violent uprising, so I'd suggest it's fine to calm down a bit, you're unlikely to see America fall apart (or at least, you're unlikely to see it fall apart because of a new president).
Not that it would affect your superior meritocratic status or anything...
We as humans are social creatures. We have evolved feelings of empathy and jealousy because it was effective for the survival of the social group.
The caveat is we've also evolved feelings that promote survival of the individual at the expense of the group. The task is to identify which feelings are aligned to self interest and which promote the survival of the group.
I would argue that feelings of jealousy, envy and vengeance do not promote survival of the individual. These feelings actually harm the individual when he acts alone. Instead I would say these feelings exist to promote more fair social behavior in big groups.
When wealth inequality becomes too extreme, poor people begin revolting.
Whether you are rich or poor, you can have empathy. If you're interested in empathy, I suggest you watch this brenee brown video. The video may seem anecdotal but she has done a lot of research about shame and vulnerability and... having read her books, money is not something that comes up in the research.
We got into this journey for humble reasons: So that we don’t have to worry about surviving. So that we could take care of things once and for all.
What does it mean then, if that is what’s really disconnecting? This cheap sense of comfort, and not having to care about unfairness?
https://medium.com/@pierre.flying.squirrel/on-inequality-1e7...
Fairness implies that the wealth you generate as an individual is equivalent to the wealth you earn and own.
Right now 1% of the population owns 50% of the worlds wealth.
For 1% of the world to own 50% of the worlds wealth implies that 1% of the world generated 50% of the worlds' wealth.
It is not physically possible for a fraction of the human population to generate half the worlds' wealth. There is no reality where this makes sense. Thus for 1% of the population to own 50% of the worlds wealth, the 1% must obtain wealth generated by other people.
A common example of how this happens is through the ownership of a corporation. As an owner you own all the wealth generated by people who work for you. As owner you can do zero work, yet extract the wealth generated by hundreds of employees.
Owners essentially pay people less wealth than the wealth they generate. There is no circumstance where people will explicitly agree to such a transaction when given other choices.
It is fundamentally immoral and unfair to own wealth you did not produce or generate. This is not a question of empathy, it is a question of fundamental human rights.
"If the most successful people are becoming more effective and the least successful remain consistently ineffectual then you get a divergence in wealth. If the baseline is zero and the top line goes up then the two of them diverge."
The author's mistake here is to assume "being more effective" has any real bearing on who is the most successful; random chance providing a substantial push in the right direction and then post-facto narratives denying chance are far more likely. Environmental factors increase exposure to upside of chance while minimizing the downside risk. Therefore, rich white people are typically thought of as the "most successful" people because they were born to a similar demographic which ensured they would land in an okay spot.
"Is it really such an issue if a few people get rich so a lot of people can wealthy?"
The "lot of people" aren't get wealthy. Most people are getting less wealthy while the very richest are getting substantially more wealthy. By and large, nobody is "getting rich" so much as "getting richer". As someone else said, "a rising tide lifts all boats, but most people can't afford a boat, so they drown."
"I’ve never met a wealthy person that hates the poor but I’m shocked by the number of poor(er) people I know who hate the wealthy. I never really understand why since they’ve never obviously suffered at the rich’s hands. But then it something doesn’t have to be obviously bad to add up. It just has to be occasional, careless or callous and over time it accumulates."
Ah, an out-of-touch comment by a rich man; the poor "hate" the rich because they frequently seem as though they are from a different and better planet, and they really think that it would be much better if all the poors could just move to that planet gracefully, like they did. After all, "I did it so anyone can do it." Completely and self-servingly ignoring the reality of wildly different starting conditions while subtly implying that their final superiority is some sort of inherent Aryan guarantee.
Additionally, the poor do obviously suffer at the rich's hands, though perhaps they don't see it this way: bank overdraft charges, paychecks on prepaid cards, more scrutiny and arrests for trivial offenses from law enforcement, increasing rents, outrageously expensive and ineffective health insurance, etc.
Anyways, just to put this topic directly to bed, the wealth gap is actually bad, and the lack of empathy that the rich have for the poor is a historical fact rather than an issue itself. The IMF is against wealth inequality and has detailed how and why in depth: https://www.imf.org/external/pubs/ft/sdn/2015/sdn1513.pdf and to be blunt, they know better than any of us here. The bottom line is that, as the report says, "Societies with greater income inequality experience slower and less stable economic growth." Even the capitalists have to get on board with solving the problem of inequality when it's framed that way.
Is it really a good idea to get rid of the "meritocracy myth"? Even if it's 100% true, there is something to the idea that if you put in effort and work hard, you have a better chance of being rewarded. The meritocracy myth encourages hard work.
If we lived in a society where people truly believed that that hard work, intelligence and effort had no correlation to success, then.... how does one plan their ambitions? How does one even go about trying to earn more money?
The belief is that even if you have bad luck, eventually your good work and talent will get you in the position you deserve. Even in the cases where that works out, we sort of overlook decades of toil in obscurity in poverty.
The reality is that the relative success of people in the first world is almost completely dependent upon the fact that they were born into the first world.
For example, some significant percent graduate from college and enter into office jobs, which then enables them to have a home, washing machine, car, wife/husband, etc. Owning these things and marrying does determine success in a real way. The percentage is significantly greater in some countries than others. Does that mean that some countries have significantly more talented, hard workers? Or is it because overall the other country is much less wealthy, there are fewer good-paying jobs, and fewer student aid options?
This is where you run into another related issue: racism. If you pick certain browner countries and compare them to whiter countries, a large percentage of people will just say "Yup, those brown people aren't as talented and don't work as hard".
I'm glad he learned empathy in his old age; but keep in mind that he was ruthless, manipulative, exploitative, and caused a lot of long-term damage throughout most of his working life.
That's the problem I have with the "rich" - our system (and lack of government oversight/enforcement) enables and encourages evil, as long as it makes profit.
Examples?
> evil
My small business has competed against Microsoft since the 80s. While they are tough competitors, I don't see anything they've done as evil.
Check out the book "In Search of Stupidity" by Chapman.
Internet Explorer. .doc format. Viruses.
> evil
They abused their monopoly to sell crap software and destroy competitors. At least, that's what the courts say.
The political system is dominated by the 1%, but if you can really piss off 50% of voters you can cause a crisis. I think ordinary people in the U.S. are experiencing "future shock" and that is what drives them to Sanders and Trump -- no conventional politician can put together a story that makes sense at all.
Standard of living increases have come almost exclusively through technological progress. Access to basic survival needs like food (Google "food desert") and shelter (look at rent prices for the past year) is primarily driven by capital speculation by the upper classes.
The repeal of much of the commercial anti-trust regulation in the United States (http://www.theatlantic.com/business/archive/2015/11/cities-e...) enabled capital-consolidating retailers like Walmart to come to a position where they can drive out competitors through predatory pricing (not always noticeable from Walmart's own books because sometimes it is passed down the supply chain). After driving local retailers out of business in some places, as expected some of the speculative expansion does not pay off and Walmart stores have to be closed. Now some regions in the USA are left without access to food: http://time.com/money/4192512/walmart-stores-closing-small-t...
Similarly, anti-development NIMBY policies lobbied for by the upper classes (artificial limit on supply of building sites) combined with the REITs they invest in (impossible for REITs to generate decent returns on B-class housing due to shortage of sites and the huge amount of capital needing to be invested) are the causes responsible for the huge increase in rent prices in major US metropolitan areas.
By far the biggest harm that comes from the wealth gap are the austerity policies pushed by the upper classes to prevent people from having access to education and healthcare. I now need both hands to count the number of acquaintances that have resorted to being sugar babies on Seeking Arrangements or just plain prostitution to help them pay their way through college.
Wealth isn't created in a vacuum. Wealth can only be created in places with a high level of social order. That social order isn't created by exceptional individuals, it's created by the behavior and attitudes of ordinary people. Given that, why should societies not structure themselves to maximize the prosperity of the majority?
This is a brilliantly-succinct summary of something that conservative politicians should shout from the house tops. It's reminiscent of Elizabeth Warren's famous remarks on fairness during the 2012 campaign. [1] Rayiner, I continue to be bowled over by your socio-political acumen.
Certainly there is no economic rule, however, I think that most people generally believe that for most of human history it has been the case that at least in the medium-to-long-term, top line growth does accrue pretty cleanly to the middle 50%.
There are certainly some people that are starting to wonder if this is no longer the case but personally I'm always pretty skeptical of "this time it's different!" arguments so am unconvinced by the evidence to date. Who knows what the future will hold though!
Most venture capital is private:
http://si.wsj.net/public/resources/images/MK-CQ161_KEYWOR_16...
http://www.wsj.com/articles/humanitys-last-great-hope-ventur...
High corporate tax rates create an economic incentive for companies to move factories and offices overseas through 'inversions' to get a lower tax rate:
http://www.economist.com/blogs/economist-explains/2015/08/ec...
Relative to most developed countries, America has a very high corporate tax rate:
It’s a rock-solid fact that the U.S. corporate statutory tax rate is the highest among developed nations and is significantly higher than the average. According to 2014 data from the OECD, the combined federal and state statutory corporate tax rate for the United States is 39.1 percent. The average of the other 33 members of the OECD is 24.8 percent — 14.3 percentage points lower than the U.S. rate. Weighted by country GDP, the average for these 33 countries is 28.3 percent — 10.8 percentage points lower than the U.S. rate.
This chucklehead thinks that the solution to dealing with folks who have to work two full-time jobs at minimum wage salaries to make ends meet is to eat at McDonalds when he goes out with his less-fortunate friends and save the caviar and 16-year-old scotch for when he’s home or out with his investment buddies. It’s goddamned nonsense and, ironically, shows an unbelievable blindness to the very thing he’s trying to embrace — empathy.
Wealth isn't a zero-sum game, but power/influence is.
Let's stay your wealth/income remains static, but most people around you see a great increase in their own wealth/income. You are certainly less better off now because all this extra wealth in your area will increase demand for goods and thus prices. See Bay Area housing market for an example.
Take a very abstract product... something we assume to be unlimited in nature and examine it.... let's say a poem. A poet produces poems and sells a book of poems. We assume that the poet has created wealth out of thin air and that wealth is therefore not a zero sum game.
But in order to produce the poem, the poet needs energy. Energy for sustenance, comes to all humans in the form of food. Food is either meat or vegetables. Meat comes from animals that usually eat vegetables. Vegetables gain their energy from the sun. The wealth (poems included) that humans produce is limited by the energy we extract from the sun and material we can extract from the earth. All abstraction comes from physical primitives which are limited by physical laws, thus all abstract products such as poems, literature and art are all limited and thus part of a zero sum game.
Actually if you follow the energy chain of everything to the root, all things end at the sun (nuclear power is an exception). You could say that the sun is basically an unlimited source of energy... but commerce is directly affected by the rate in which we can extract energy from the sun. Since it is physically impossible to extract energy from the sun at an unlimited rate, the rate must therefore be limited and all commerce, products and abstract ideas that arise from usage of this energy must also be, in turn, limited.
Capitalism succeeds only when capitalism fails - when monopolies (global or local) appear that permit high-friction (and thus high profit) transactions. This can be old-school abusive monopolies that we regulate against, or it can be monopolies of craftsmanship - products so superior to the competition that they're peerless.
At any rate, capitalism where everyone has similar information and resources works quite poorly.
Generally in economic theory companies in perfectly competitive industries have zero "economic profit" which means they earn enough profit to compensate the owners for capital invested. Effectively the owners are getting fairly compensated for the risk of investing their capital.
In a monopoly the owner is getting compensated not based on risk of investment but rather how much can be extracted from the customers. This is clearly good for the owner and not so good for everyone else.
Creating a monopoly based on a superior product is a good thing for everyone since you are innovating and creating something that was not there before. You should be able to hold this monopoly if no one can effectively reproduce it. However, any kind of regulation to maintain your monopoly is likely bad for everyone except yourself. In theory, without regulation you would expect most monopolies to fall or have reduced power as other players come into the market.
I think Peter Thiel has a very good way of thinking about the motivation for innovation in a capitalistic market. However, outside of brand new innovations, monopolies are likely bad for a society as a whole.
Correct, assuming no extra wealth is created e.g. innovation
> At any rate, capitalism where everyone has similar information and resources works quite poorly.
For capitalists. I think parent meant it works best for the rest.
The reason people don't think about a "wealth gap" with their government is multifaceted:
1. The government provides goods and services that they use and since most people gain benefit from it, they don't question the outcome or source. 2. A government as an entity usually doesn't run a surplus, so while they may have a $1T budget, they're running at a deficit, if they were a human, we'd question their spending habit, not be angry or envious. Wealth, by most people's standards is a positive P&L. 3. Since a government runs at a net loss, and provides a net gain to society there isn't a loss of emotional capital towards the government in most people's minds.
Banks, while they make a tidy profit (especially the large banks) don't have what you would consider large amounts of fluid capital either. They take and store your money for later, at some rate; they will also give out loans based on criterion that allow them to make a small sum off of the interest due to the assumption that most people will make regular payments (that's why you have to apply and just don't get the money). The large majority of banking in the USA is actually done through local banking corporation than big box groups, so getting angry at all banks because the folks at Lehman Brothers wear hats on their asses is a gross over generalization.
A standing army, much like the government that runs it, is removed from the capital equation since they are an entity that resides out of the normal checks and balances of a capitalist style society; this is why you see both military and governmental entities under any system that isn't fully Anarchistic. Police don't harass people due to the fact that they are funded, those that harass people do so because they're assholes, we care about people being assholes.
Your definition of capital is even too broad; capital generally implies all physical goods, whether that is money or product is rather immaterial, these things are there no matter the system, even Anarchistic systems have capital. Capitalism on the other hand is an economic system codified generally by the supply & demand curve that most people see in Economics 101; this can be contrasted with Communalism, Agrarianism, Communism, Bazaar/Barter, and various other economic structures. These are inherently separate from governmental systems that the lay-man usually associates with them, such as: Socialism, Democracy, Republics, Anarchism, Oligarchies, and the like.
It comes down to this; people care about others being jerks, it doesn't matter if you have money or not. If you aren't sensitive to the motives of those around you, whether you're doing it out of spite or ignorance, it will be taken like you don't care and spite/anger is a result. The article is pretty darn good at pointing that out, and I would tend to agree. I would also tend towards most people seeing someone with a wealth level that they only see from Powerball and the Lottery, complaining about getting taxed to be the most abhorrent form of pedant whining that could be imagined; or even worse, completely writing off the fact that the system is set up to exponentially reward people with enough capital to take advantage of it. Paul's expose is along those lines, he's defending a system that encourages the top 1% of 1% of our society to expand exponentially while the rest ride the wave and accept the scrap.
Are CEO's really doing 1000x the work as an engineer? Are Angel investors really doing 100x the work of a founder? Should someone playing the stock market really be taxed at a nominal rate nearly half that of someone earning a wage as an engineer, scientist, or even a burger flipper?
Nobody made you or anyone else use a free browser.
> .doc format.
Geez, it's a file format.
> Viruses.
Microsoft did not unleash any viruses on the world.
> They abused their monopoly to sell crap software and destroy competitors. At least, that's what the courts say.
Yeah, I'm familiar with what the Jackson court said. If you read "In Search of Stupidity", Microsoft's competitors did a fine job of destroying themselves. And Linux and Apple computers were always available for anyone to buy.
Hyperbolic comparisons to slavery intended to evoke some emotional connection between wealth and evil definitely won't change that.
Beware of simplistic narratives. It now looks like Flint took on the very tough job of water treatment as a jobs / stimulus program[1] -- something they turned out to be completely incompetent at -- and also as a way to resolve a pricing spat with Detroit over water supply.
As well the Michigan DEQ shoulders a lot of the blame for covering up the issues.
1. http://reason.com/blog/2016/01/25/the-flint-water-crisis-is-...
If I'm the best farmer its probably in the entire cultures best interest if I get the most farmland because we'll share in the utility of an average increase in production despite the unfair concentration.
If, people earn their pile of wealth by providing the most utility, then them having it is naturally great news. On the other hand if they got their pile via less than fair means, and they are not using their pile of wealth to maximize societal utility, well, then there's no real loss in taxing it away from them, if they're not the "best holders" of that wealth.
This is probably little consolation to out of work farmers unable to purchase food for lack of employment.
The question is at what point do such concentrations cease to enough of the culture/population to be worth the negative consequence?
It may be more beneficial, over all, for more to have jobs within an industry and thus able to afford essential goods than for maximum efficiency at the cost of fewer able to earn a living.
I think temporary monopolies are good - permanent monopolies maybe not so much. It's an interesting way to think about capitalism that's for sure.
If. But whether that "if" is true was, I think, rayiner's question.
I'm not sure how this is valid reasoning... Aren't stocks "bought-back" on the public market? If so, then buybacks would push up the stock price, which would benefit arbitrary investors directly (those who were willing to sell at a slightly higher price) and all investors indirectly.
In addition, this helps to keep your share price high/growing, which benefits insiders who then sell the stock, knowing that the fundamentals of the business are shaky.
The best part is that all of this is done in the open, it's just that typical retail investors are not necessarily sophisticated enough to understand what's happening, and accept the company's argument that they're buying back their stock because it's "undervalued"
Suppose you own 100 shares shares worth $100. If they issue $10 worth of dividends, then you receive $10 and the stock price goes down to $0.90, so your 100 shares are worth $90. If they do a share buyback, you get $10 and your remaining 90 shares are worth $90.
The main difference is that in the first case you pay dividend tax on $10, in the second case you only pay capital gains tax on 10x($1 - cost basis), plus the cap gains rate is lower than the dividend rate.
A CEO might be able to hide poor results for a quarter or two, but the investors always catch on.
