Yves here. William Lazonick has explained how financialization, particularly stock buybacks, share-price linked executive pay, and the outsized role and pay levels in asset management, particularly private equity and hedge funds, have been at least as destructive to middle and working-class standards of living as globalization.
By Lynn Parramore. Originally published at the Institute for New Economic Thinking website
For the last 40 years, millions upon millions of hard-working Americans have been clocking in, doing their part — and getting less in return. They are very upset, as well they should be. Wages have stalled. Job security’s a joke.
Yet corporate profits are sky high.
Just look at the scoreboard: In 2024, Apple raked in $93.7 billion, Alphabet (Google’s parent company) pulled in $100.1 billion, and ExxonMobil reaped $33.6 billion. Yet the workers powering these companies aren’t seeing much of the immense value they have created. Some of Alphabet’s contract workers only recently fought their way up to $14.50 an hour. That’s not even close to a fair share of over $100 billion in profit.
So where’s the money going?
As economist William Lazonick, an expert on the American business corporation, points out, it’s not going to the people creating the value. It’s going into stock buybacks, dividends, bloated CEO pay, and the war chests of hedge-fund activists. In 2024, Apple did $94.9 billion in buybacks, Alphabet $62.2 billion, and Exxon Mobil $19.6 billion. These big productive companies aren’t struggling—they’re thriving. But instead of reinvesting in workers or society, they’re juicing their stock prices and enriching the top.
Just look at General Motors (GM), where the United Auto Workers (UAW) staged a major, large, successful strike in September 2023—only to have GM do $11.1 billion in stock buybacks in 2023 and $7.1 billion in 2024. Instead of using that money to pay workers better or invest in things that would actually help the company grow—like new equipment, research, training, or EVs—the company spent it buying back its own stock in order to push up the stock price and make shareholders and top executives richer.
Most workers don’t realize how much is quietly being siphoned away. They might blame globalization—and sure, it’s part of the story—but they often miss the issue that tariffs won’t touch: executives using Wall Street tricks to pocket profits that should’ve gone to the workers who earned them and helped make the profits possible.
Tariffs promise to bring back well-paid jobs, but they ignore the core problem: even the jobs we do have, in some of the most profitable industries, still aren’t paying what they should—and haven’t for decades. And it’s not because the money isn’t there—it’s because of where it’s going. As Lazonick notes, “UAW leader Shawn Fain has been supportiveof Trump’s tariffs — but what he and his members should be railing against is the $18.2 billion that GM spent on stock buybacks in 2023 and 2024.”
Lazonick points out that it wasn’t always like this. In the mid-20th century, many American jobs came with decent pay, benefits, and social support for upward mobility—though, of course, those gains were mostly reserved for white men. Still, back then, wages rose with productivity. When companies did well, workers shared in the success. And corporations and the wealthy accepted high tax rates that helped educate the labor force. That link is now broken, largely because companies have been allowed to get away with playing Wall Street games that short-change workers.
Lazonick brings up an idea from economist William Baumol’s 2012 book The Cost Disease: Why Computers Get Cheaper and Health Care Doesn’t. Baumol pointed out something interesting: industries that produce goods—like factories making computers—can boost productivity over time, which helps lower costs. But service-based industries—like education and health care—don’t really have that option. A teacher still needs to spend about the same amount of time teaching a class, and a doctor still needs time with each patient. Even though they can’t speed things up the way machines in factories can, these workers still need to be paid competitive wages. That’s what drives up costs in services over time, and it’s what Baumol called the “cost disease.”
Not to worry, said Baumol. Our society can afford the education and health care we need by transferring the profits from the goods producers (such as Apple, Alphabet, and Exxon Mobil) to fund social services. But, as Lazonick points out in a forthcoming INET working paper on goods and services in the U.S. economy, the high profits of the goods producers have been funneled into buybacks and dividends that make the rich richer, who then transform their economic might into political power to demand even lower taxes. Meanwhile, most Americans experience deteriorating social services—which, with the Republicans in control, are now on the chopping block.
The result of extreme corporate financialization is that even in high-productivity sectors like manufacturing and tech, wages lag behind. Companies are more productive and profitable than ever, but the gains are being concentrated at the top. Take a new chip or drug—costly to develop, cheap to mass-produce, and easy to sell worldwide. That’s the promise of scalable tech: big profits with low unit costs. It’s paying off—just not for most workers.
So what should those profits be doing? Lazonick argues that in a healthy economy, the incredible profits generated by high-productivity companies shouldn’t be used to do buybacks and flow to shareholders—they should be reinvested in the productive capabilities of the labor force and in the provision of the high-quality social services that we all need.
That means paying workers their fair share and funding essential services like education, health care, public safety, environmental protection, and the arts—most of which aren’t, or shouldn’t be, driven by profit (though private equity companies are trying to squeeze profits out of them). Lazonick, building on Baumol’s insight, points out that we have the economic capacity to support all of this—the real question is, do we choose to? Because the point of an economy isn’t just to provide jobs so people can scrape by. It’s to raise living standards for everyone and ensure that prosperity is shared.
That’s why profitable companies should be sharing more of the gains with their employees. And that’s why the country needs a fair corporate tax rate. As Lazonick argues: “That’s where you get the money — you recognize those corporations are actually living off society, and they need to pay their workers more and pay their taxes so that we can give everybody the services that make life worth living and, by the way, keep the economy productive.”
And here’s the political punch: when people feel secure — when they have decent jobs, health care, and a future — they’re less likely to fall for fear-based politics. A fair economy supports a healthy democracy — which, Lazonick notes, is why people who are not interested in a fair economy don’t actually want people to feel secure.
The bottom line is that as long as we stay locked into shareholder value ideology — where boosting stock price is all that matters — American workers will keep losing ground, and our overall quality of life will keep slipping. Lazonick notes that this deeply flawed mindset, popularized in the ‘80s when “greed is good” became Wall Street’s mantra, continues to dominate corporate boardrooms despite being exposed as a failure that ruins the long-term value of companies, fleeces workers, and harms society. It still goes largely unchallenged, even by many Democrats, who need to confront practices like stock buybacks head-on if they’re serious about improving American job quality.
Lazonick’s core message is straightforward: those massive corporate profits are not just private gains. They’re built on public investment and worker productivity. Taxpayer-funded research, public infrastructure, and a trained labor force all make them possible. So when companies play Wall Street games with profits and hoard rewards only for the top, it’s not just unfair—it’s a failure of the entire economic system.
For decades, workers have been told to tighten their belts, work harder, and wait for the gains to trickle down. But the gains already happened—they’re just going elsewhere, and tariffs won’t fix it. If we want an economy that actually works, we need to remember what it’s for: not just growth, but shared prosperity. Not just jobs, but better lives.
The money is there. And a big chunk of it is rightfully ours.
For the American economy to reform, it may be a case of that you can’t get there from here. Take stock buybacks for example. Back during the Great Depression the US made this practice illegal as it was blatantly market manipulation. For half a century this rule worked well though towards the end it was nibbled away at. Then under Reagan the SEC implemented Rule 10b-18 which essentially made stock buybacks legal again. Thanks Reagan. I suppose that since then that trillions of dollars have been taken away from productive measures like research & development, paying essential staff well, investing in newer technologies, etc. and it was instead used for corporations to do stock buybacks which would give that corporation a quick cheap thrill and led to CEOs and the like being able to claim bigger pay packets. And that is the problem. If a US President tried to make stock buybacks illegal again, they would have the opposition of at least every major corporation in the US as well as overseas and Wall Street would loudly clear their throat. The only way to do it would be to nationalize those corporations but we know that that will never happen. So as I say, this is a case where the US has taken a path where they can’t get back from. You can’t get there from here.
“…you can’t get there from here.”
Agreed, the only reason we got away with it during the New Deal was because the elite knew the alternative was risking the guillotine being brought out of retirement. Now that doesn’t mean we can’t go back down that road, but at the moment that pass on the Rubicon is still closed off.
US is too militarized at this point. Americans should prepare to be the new Palestinians/Gazans…
All that Israeli training of American police should come in handy then.
“ the only reason we got away with it during the New Deal was because the elite knew the alternative was risking the guillotine ”
Yes but why? Because the system broke down producing general poverty. When people have little to lose they tend to resent the rich, to put it mildly. Does the current system of massive accumulation of monopoly wealth seem stable to you? Luigi is just a taste of what’s to come when recession/depression bites.
“ the only reason we got away with it during the New Deal was because the elite knew the alternative was risking the guillotine ”
The guillotine itself is not scarry enough, but communism is. The Red Scare kept those elites more-or-less under control. Once it was gone, they pulled out all the stops.
” … Can’t Get There From Here”
Ahhhh yes, the first R.E.M. song I ever heard, and the opening lyrics are quite apropos to the topic:
Kicking the clay that holds the teeth in implies deeper structural change … and that is exactly what we need.
The irony is that the benefits of a high wage labour force used to be well known in America, where as Michael Hudson has pointed out it was believed that it would be more productive, and therefore more competitive, than European “pauper labour.” Related to this was the premise that the state should tax economic rents rather than wages and invest in public services (education, health care, canals, railroads and ports) in order to lower costs for business, again in the service of creating more productive and therefore competitive industries.
America’s protectionist takeoff 1815-1914 : the neglected American School of Political Economy
https://search.worldcat.org/title/americas-protectionist-takeoff-1815-1914-the-neglected-american-school-of-political-economy/oclc/639424368
Heck — wasn’t this once part of what the world called “the American system?”
I think a goal of the ultra-rich is not only to be very, very rich but also for others to be poor. They only seem to believe in “I win, you lose”.
I lose too much you lose your head, monopolist.
They only believe in “I win, you lose” because resources are limited. There is not enough gold on this planet for eveyone to make a toilet bowl out of it. Math says that every golden throne needs many poor underneath to support it.
According to David Gelles’s The Man Who Broke Capitalism, engineers enjoyed working in factories before Jack Welch became CEO of GE. The difficulty in reviving manufacturing in the U.S. is not that manufacturing itself is hard and painful, but that the greed of CEOs makes it so.
Thank you, Yves.
It’s the same here, as per Andy Haldane’s observations: https://www.ft.com/content/7d347016-32f4-11e5-b05b-b01debd57852, in 2015.
Andy also floated the idea of big investor institutions, typically long-term, appointing non-executive directors if they held a large per centage of shares and had held them for some years. The banks took the lead in opposing that kite.
When I vote my shares I only vote for directors with shareholdings in the company.
I am old enough to remember TV interviews with Milton Friedman, when he always had a very smug look on his face promoting his philosphy of maximising shareholder value. To this day, I see and hear people claim that a company is legally required to maximise shareholder value. No economist has seemingly been able to puncture this smug and clearly disadvantageous to the vast majority of society assertion. At least to my knowledge not since the late Galbraith sallied forth but silence since then.
The Chicago Boys continue to rule, despite the devastation their theories have wrought all round the world. I guess politicians are sufficiently renumerated not to rock this particular boat.
Thank you for this. I strongly recommend all of Lazonick’s work, but would make special mention of a sectoral analysis of the British economy which he produced with Bernard Elbaum in 1986: “The Decline of the British Economy: an Institutional Perspective”. It traces the deep roots of that decline, especially in the period between the mid-19th century and mid-20th century. That book is fundamental to any reasoned understanding of deindustrialisation and the present configuration of the British economy, but it is not nearly as well known as it ought to be.
Hi Froghole, like every link you post, that sounds interesting so I looked it up. It is paywalled but the abstract is:
“This paper attributes the relative decline of the British economy in the twentieth century to rigidities in its economic and social institutions that had developed during the nineteenth-century era of relatively atomistic competition. Inherited and persistent constraints impeded British firms from acquiring the market control, authority in labor relations, or managerial hierarchy necessary to avail themselves fully of modern mass production methods. At the societal level there was an interrelated failure to transform the character of British educational and financial institutions, labor-management relations, and state policy in order to promote economic development. By performing better in these respects late industrializing countries were able to surpass Britain in economic growth.”
So, there are potentially good questions in there (where is it going with that reference to market control, for instance? sounds like MITI industrial policy and/or tariff barriers would be argued for) but it could also just be “too many Oxbridge classics graduates in management and government” and “Britain should have been welfarist Bismarckian Germany” arm-waving.
Your recommendation suggests the paper is more exciting than the abstract threatens, of course. Are you willing to share a bit more why this paper is more than a lions-led-by-donkeys exercise?
This is not an assignment!
Speaking of investments and greed… Billy “White Shoes” Gates bumped his fee for the annual privilege of using his data-mining software from $99 to $125. That’s a nice increase!
Imagine how many of those he sells a year!
Add on the data sales. Long Microsoft, all Hail Billy White Shoes!
For the Becoming Luigi crowd, he has to be on the top of more than a few lists.
Venal Creep falls woefully short, if I were to get all Judgy McJudgeface. But that would be unChristian…
We were promise that no Heaven is waiting for the rich guys… at least by Jesus and James.
Paul on the other hand…
I finally bailed on Microsoft software. Libre Office is working just fine, for free. https://www.libreoffice.org/
And I use Brave for my browser and search. More private and blocks ads on YT!
“Venal Creep falls woefully short,”
Monopolist ghoul?
While I’m sympathetic to this argument — wages have not kept up with worker productivity for 45 years — blaming it on stock buybacks is a fundamentally flawed argument. What a company does with its after-tax money is largely irrelevant to whether it’s paying its people enough or “their fair share.” That question has to be solved somewhere in the business before the profit is created, since profit is what’s left over after expenses (i.e. labor costs and taxes). This article gestures to some of those places — corporate taxes that are too low, personal income taxes on the highest earners that are too low, low bargaining power of workers, a regulatory environment that locks in incumbents and discourages competition (and thus investment), etc. Those are all real sources of income disparity and, over time, wealth inequality. Higher corporate taxes, for example, provide more incentive to invest for the longer term, including paying your employees better wages, since the government is footing part of the bill.
Yes, over time the concentration of financial power — through things like stock buybacks — cements political power that further cements financial power (i.e. buying politicians who further lower corporate/personal taxes), but that process exacerbates the fundamental problems that are/were already there. So stock buybacks are more an effect of income/wealth inequality than a cause of it, though they are also a secondary cause. You won’t truly solve this problem until you deal with the fundamental issues.
see rev above…reagan was 45 years ago
Without stock buybacks, the price of a share reflects the long term prospects of a company, primarily via the dividend stream and the retained profits.
Stock buybacks enable managers to financialise the share price, by accessing debt and using it not for productive investment but for manipulating the share price through buybacks (and the manipulation is incentivised BH management share option schemes).
A large non-bank business with substantial assets can be asset stripped by management through buybacks and the share price appear unchanged whereas borrowing on the same scale to pay a special dividend without buybacks would reduce the share price and be adversely taxed in the hands of the (management) recipients and would share the loot inefficiently with all “real money” long-only shareholders, not just the participants in the C-suite bust out.
As ever, the best way to rob a bank is to own one….
Great article, but implicit in this whole piece is that somehow if only the state regulated and taxed more, things would be fine. Actually, this just shows the US market is not free enough; this what is creating this situation in the US. These companies mentioned are exceptional and do not represent the majority at all where most Americans work; these are oligarchic companies with deep ties and contracts with the federal state, benefitting from restricted competition and preferential treatment in a number of ways. That is not to say that stock buybacks do not have impact, but this is part of the bigger artificial financialisation of the US economy that is far from being a natural evolution.
Baumol’s point about services (and healthcare) costs is not entirely really correct ; there are obvious improvement that can be made in those sectors too; even in industries traditionally relying more on labor, like teachers, nurses and doctors. Technological improvement will reduce the amount of labor needed (AI, robotics, better processes, reduce personnel not in contact with patients/customers), and also hospitals need very expensive equipment that also drop in cost with time. The problem in the US is that healthcare is highly regulated and captured by insurance companies, and is certainly not free. It is were, then we would see the same trend as in other sectors; prices decreasing and quality increasing. Why on earth should that sector somehow follow a different logic that the rest of the market economy?
“point of an economy” : there is no “point” of the economy in a free market ; it just is. It is the aggregate of the billions of exchanges going on every day. Saying that there is a “point” to it is to introduce politics and ideology.
To give an example with Apple’s use of Intellectual Property. IP wouldn’t even exist in a free market, because you can’t own ideas. IP is the state favoring to first comer at the expense of competitors and stifles innovation.
It’s difficult to pinpoint exactly how much of Apple’s profit comes directly from patents, but it’s estimated that Apple earns $4-8 billion per year from patent licensing fees and royalties. However, a significant portion of Apple’s revenue, including its iPhones, comes from the value created by its intellectual property, including patents, even if not directly from licensing. And IP is just one example of preferential treatment to the “national champion” in this field.
But this good treatment from the state comes at a cost for Apple. This is how oligarchy / fascism work. “I scrub your back and you scrub mine” : Apple’s overall commitment to the U.S. includes direct employment, infrastructure, and support for numerous suppliers across the country. This includes a $500 billion investment over the next four years, highlighting Apple’s significant presence in the U.S. economy. This is massive. The question is how much it will benefit US workers/ society, this would have to calculated.
If you take the other Magnificent 7 companies in the US, you would find similar pattern. Why their stocks sell at a premium ; because they cannot go bust because of their relationship with the state (“systemic”) , just like the big 5 banks. This is not the free market, this is the textbook definition of fascism.
Have you personally seen this mythical Free Market Fairy that magically creates all these great positive outcomes libertarians always promise or are you saying this based on something you were told?
Back in The McCarthy Years (early ’50s), my high school teachers (in a suburb of Detroit) knew, and passed on to us, that a good society needs a lightly/fairly regulated market. Otherwise the thieves take over. We were told that we didn’t live in a capitalist economy nor a socialist economy, but a mixed economy. This knowledge was earned three thousand years ago, from thousands of years of experience. The Code of Hammurabi defines approved weights and measured, and woe betide the merchant who went to the market and tried to sell watered beer. Starting about the time of Jimmy Carter the “libertarians” took control of the Democratic Party, and this is what we have now. I don’t think there will be a way back until the Chinese embargo starts hitting store shelves and the economy goes into full Depression. I don’t think there’s a Franklin Delano Roosevelt/class traitor in the wings. I don’t even know if I want the Chinese to drive our economy into the ground, but it’s one possible outcome.
Saying that there is a “free market”, is to introduce politics and ideology, and religion and superstition. As an atheist, I prefer regular religions, because they got cookies.
The “point” of an economy is to produce and distribute goods, and it’s the latter part — distribution — which makes attempts to divorce economics from politics a fool’s errand. Or worse, a pernicious lie in order to defend contemporary economic arrangements on behalf of those they benefit and at the expense of the rest of the citizenry.
The original name of the subject, “political economy” remains correct. Those who claim otherwise are up to something …
This article should be sent to all those blue-collar MAGA voters. So far, they’ve gotten higher prices for their groceries, and more to come. You have to hand it to the right wing: Getting people to vote against their own interests.
But how does a does a voter “vote for their own interests”?
That never seems to be on the ballot as the voters vacillate between the two wealth extracting parties in the USA.
Where are the bright political lights on the horizon who will actually do anything of substance?
Perhaps that is part of the reason many don’t vote.
I certainly was conned into voting against my best interests (and my values) when I voted for Biden. So this isn’t just a Republican MAGA thing.
Its a economic thingy …
Our neoliberal domestic economy and our neocon foreign policy put a double squeeze on the working class. What the corporations siphon off for themselves and their stockholders is part one. What the government siphons off to support endless wars is part two. Trillions are available but always end up in the same pockets.
I see no relief from this because we have no real opposition party in the US that would even begin to challenge this dynamic. In the 1930’s it took a depression to get a governing party, backed by a fairly united working class, that was willing to change the status quo.
I’m not confident that even a depression today would be enough to effect a change, as both factions of the Uniparty have been so effective in keeping the working class divided and confused.
Also to be considered is over three million men in the Army in 1918. That’s a lot of angry veterans by 1933, many whom had been in the trenches of the Western Front. The union coal miners had already shown that at the battle of Blair Mountain in the early 20s that they weren’t afraid of gun thugs or the government. They had the experience and training of combat.
I’m sure that wasn’t lost on the ruling class.
“Actually, this just shows the US market is not free enough”
How to solve the problems directly caused by a half century of free market fundamentalism is even more free market fundamentalism?
Hoo boy. There really is no way out of this Boeing 737 Max as it spirals downward. Even the escape hatches were left off to cut costs so the C Suite can have another round of stock buybacks.
“When people feel secure — when they have decent jobs, health care, and a future — they’re less likely to fall for fear-based politics.” Maybe, but I remember a ton of fear-based politics in the late 1960s, when we were probably at peak for decent jobs, health care, and future prospects for workers. Fear of drugs, fear of crime and riots, fear of nonwhites threatening “us”, fear of Commies that we had to “stop over there so we don’t have to stop them over here”, fear that everything was changing too fast in our culture, even the first real environmental fears being articulated strongly. And a lot of it came from television, and the increasing sophistication with which television programs were learning to manipulate the emotions of viewers. Just as Facebook and Twitter learned to propagate division and outrage to win eyeballs and clicks, the initially rather primitive television programming and advertising of the 1950s led to much more divisive and fear-mongering tactics in news reporting and program content as the following decade progressed, because that drove more compulsive viewing and Nielsen ratings increases. And made it easier for those with money to drive voters into electing politicians who would serve them. Yes, big corporations and the wealthy are basically robbing the rest of us blind, and ultimately cannibalizing the society that hosts them, but one cannot ignore the critical role of media in sowing fear and division and serving the interests of the worst financial predators.
Great comment!
Our beloved billionaires are largely blind to any reality beyond their world of Mammon. I watched Jackass Jordan Peterson interview/counsel Peter Thiel on Youtube. Thiel, who seems death averse in the extreme, is very upset because he believes technological advancement has slowed. Never once does he mention financialization as a problem sapping innovation in the corporate world. Instead, he blames “feminization,” whatever that’s supposed to mean, and, of course, the hippies. Thiel’s evidence for the Hippie Apocalypse was that we landed on the Moon in July of 1969; then came Woodstock three weeks later, and it’s been downhill ever since. He neglects to explain how 500,000 people in very adverse conditions living in peace together for 3 days has managed to slow the technological juggernaut, but since the hippies are ultimately responsible for our not having flying cars, the decline in religion, the lack of reverence for our institutions and male baldness, who needs detailed proof?
It’s not stock buybacks or financial engineering that cause the inequality of wealth, although those do not help. It’s the fundamental aspects of our political economy, particularly as it relates to labor. Two features in particular stand out: the Fed’s anti-inflation mandate, and our immigration policy.
Regarding the Fed’s anti-inflation mandate, look at the recent cycle of inflation and Fed reaction. The pandemic was a restrictive supply shock for labor which gave workers a little more bargaining power than before. At the same time, the government gave everyone a little extra money and a lot of it got spent immediately on consumer goods rather than saved or used to pay down debt. This was an increase in effective aggregate demand. Producers/retailers responded in the short term by increasing prices, as standard microeconomics suggests they would. (Whether this was gouging or not is not relevant to my point.) Real wages started to rise. This got measured as ‘inflation.’
This, particularly rising real wages, triggered Larry Summers to trigger the Fed to start raising rates to fight inflation. The purpose of raising rates is to slow down economic growth to keep demand for inputs, primarily labor, low so that rising demand doesn’t cause prices, or in the case of labor, wages, to rise. In other words, the response to rising aggregate demand was to destroy demand by causing the economy to be smaller than it otherwise would be, and by causing wages to be lower than they otherwise would be. Presumably, this led to people going back to buying roughly the same amount of consumer goods that they had before the pandemic, and the inflation is beaten.
From a distributional perspective, costs have gone up, prices have gone up, companies have higher profits in nominal terms, but wages are stagnant.
The overall message to the populace from the Fed in this scenario is that a shift in distribution of wealth toward workers will be met by the Fed with measures that subtract wealth from workers; the Fed will not let aggregate demand act as a price signal to increase production so that more consumers can have more stuff.
What *could* have happened, in an alternate version of history, was that Powell held the line on inflation being ‘transitory’ and not raised rates. Aggregate demand could continue its upward trajectory, giving producers super economic profits. At that point, as microeconomics suggests, super-economic profits encourage greater production, and supply rises to meet the demand. The increase in supply causes prices to fall, inflation to slow, just like in the other scenario but in this scenario, the distributional consequences are that real wages have risen, people have more stuff and producers do not get to lock in super economic profits for very long. A new equilibrium is established with a higher standard of living and a higher percentage of GDP going to wage earners.
“The overall message to the populace from the Fed in this scenario is that a shift in distribution of wealth toward workers will be met by the Fed with measures that subtract wealth from workers; the Fed will not let aggregate demand act as a price signal to increase production so that more consumers can have more stuff.”
This is why I say that “independent” central banks are aristocratic institutions inimical to labour.
I use the scare quotes because the supposed independence is a sham — the Fed is a creature of Congress, created by the latter’s laws which it could also uncreate. But the fiction is useful to your elected representatives because by voluntarily putting the Fed’s behaviour “outside” of politics they have created a useful “accountability sink” which allows them to escape democratic accountability for poor economic outcomes due to their failure/refusal to use fiscal policy — which is vastly more powerful and flexible than monetary policy.
Trump in his usual way is just clumsier and more blatant in his use of blaming the Fed, in this case for his poorly designed and implemented tariffs — and tariffs are a form of fiscal policy.