Regardless of what’s actually happening on Main Street USA in terms of jobs and economic opportunity, there is no question that the stock market has been doing well. By November of last year, Wall Street was celebrating record gains and investors were doing very well. As is often the case during such times, companies across the board made moves to buy back large volumes of their own stock. According to Nick Hanaur at The Atlantic, this is somehow a nefarious scheme which is killing the economy.

Nick points out that we’ve seen record corporate profits, but goes on to note that wages are flat, infrastructure is in need of repair, federal R&D investments are on the decline, public university tuition is rising and fire departments lack needed funding. You might wonder what these things have in common. (I certainly did.) According to Hanaur, it all comes down to corporate greed.

Where did all this money go?

The answer is as simple as it is surprising: Much of it went to stock buybacks—more than $6.9 trillion of them since 2004, according to data compiled by Mustafa Erdem Sakinç of The Academic-Industry Research Network. Over the past decade, the companies that make up the S&P 500 have spent an astounding 54 percent of profits on stock buybacks. Last year alone, U.S. corporations spent about $700 billion, or roughly 4 percent of GDP, to prop up their share prices by repurchasing their own stock.

In the past, this money flowed through the broader economy in the form of higher wages or increased investments in plants and equipment. But today, these buybacks drain trillions of dollars of windfall profits out of the real economy and into a paper-asset bubble, inflating share prices while producing nothing of tangible value. Corporate managers have always felt pressure to grow earnings per share, or EPS, but where once their only option was the hard work of actually growing earnings by selling better products and services, they can now simply manipulate their EPS by reducing the number of shares outstanding.

The author blames all of this on a corporate management theory called Shareholder Value Maximization (SVM) which he describes as “The World’s Dumbest Idea.” Perhaps I lack Mr. Hanaur’s subtle understanding and expertise in high finance, but that sounds like a critique which would blame the lion for killing the wildebeest.

First of all, Nick’s pining for the days of yore when highly profitable companies sank large portions of those funds into expansion and hiring seems to ignore the fact that there was a reason to expand in those boom times. If the market allows for growth and offers the potential for increased profit, then investment in such expansion is a good move. But what’s missing from this analysis is the key rationale behind that fact: the companies were expanding so they could make more money, not just to make the world a better place. If there had been no likely market for the company’s goods or services, such investments would not take place.

This is the chief fallacy of the Social Justice school of thought when analyzing capitalist activity. The sad fact is (and you can write this one down as part of the Jazz Explains Everything Notebook) that job creation has never been an end goal of industry. It is only a happy side effect. No successful person or group sets out to start a for profit company with the specific, driving goal in mind of improving the economy by creating more jobs and investing in the community. They are in business to make a profit, and when there are profits to be had they will seek to maximize those profits. (See the SVM theory above.) This is not something new. It has always been thus.

True, the act of engaging in business will frequently lead to the creation of jobs and the spreading of wealth around the community, but these are secondary effects. (And smart companies will always capitalize on this via the PR front by touting the number of jobs they create and how much they are giving back to the community. This is smart business and increases their standing and support among potential customers.) But when a company reaches market saturation or economic conditions make is less profitable to expand, expansion will cease. Hiring will stagnate. Assets will be pared down. And, yes, stocks will be bought back so the owners can grab some of those dividends for themselves.

This isn’t evil. It’s just math.