Totally agree that the money doesn’t vanish. My point isn’t “buybacks literally destroy capital,” it’s about how that capital tends to get redeployed and by whom.

Buybacks concentrate cash in the hands of existing shareholders, which are already disproportionately wealthy and already heavily allocated to financial assets. A big chunk of that cash just gets recycled into more financial claims (index funds, private equity, secondary shares, etc), not into large, lumpy, real world capex that employs a bunch of electricians, heavy equipment operators, lineworkers, land surveyors, etc. AI infra does that. Even if the ultimate economic owner is the same class of people, the path the money takes is different: it has to go through chip fabs, power projects, network buildouts, construction crews, land acquisition, permitting, and so on. That’s the “leakage” I was pointing at.

To be more precise: I’m not claiming “no one would ever build anything else”, I’m saying given the current incentive structure, the realistic counterfactual for a lot of this megacap tech cash is more financialization (buybacks, M&A, sitting on balance sheets) rather than “let’s go fund housing, transit tunnels, or new aircraft.”

I really don't think any of that is true; it's just popular rhetoric.

For example: "Buybacks concentrate cash in the hands of existing shareholders" is obviously false: the shareholders (via the company) did have cash and now they don't. The cash is distributed to the market. The quoted statement is precisely backwards.

> A big chunk of that cash just gets recycled

That doesn't mean anything.

> more financial claims (index funds, private equity, secondary shares, etc)

And do they sit on it? No, of course not. They invest it in things. Real actual things.

> buybacks

Already discussed

> M&A

If they use cash to pay for a merger, then the former owners now have cash that they will reinvest.

> balance sheets

Money on a balance sheet is actually money sitting in J.P. Morgan or whoever. Via fractional reserve lending, J.P. Morgan lends that money to businesses and home owners and real actual houses (or whatever) get built with it.

The counterfactual for AI spending really is other real actual hard spending.