- Billionaire investor Chamath Palihapitiya said large corporations should not receive a “single extra dollar” of stimulus and Congress should prioritize putting money in Americans’ pockets instead.
- At the CNBC Institutional Investor Delivering Alpha conference Palihapitiya criticized the “idiotic forms of capital allocation” of big companies.
- He said the only way the nation will dig itself out of the economic crisis is to give money to ordinary Americans who will then use capital to spend.
- “Give money to ordinary Americans, priority number one. Priority number two, give money to small businesses. But do not start ripping any more money into these big companies. They don’t know what to do with it,” the billionaire said.
Billionaire Chamath Palihapitiya criticized capital allocation of large corporations and said the government shouldn’t give them a “single extra dollar” but focus on paying ordinary Americans instead. He made the comments during a panel at the CNBC Institutional Investor Delivering Alpha conference on Wednesday.
In April the venture capital investor told CNBC the government should not bail out large corporations like airlines during the pandemic and let them “get wiped out.” He expanded on this on Wednesday and said these corporations have done “the most absolutely horrid and idiotic forms of capital allocation.” The companies did not use the first stimulus to invest in research and development, raise worker wages, or save cash – and they weren’t doing that before the pandemic either, he said.
“What they were doing is they were entering the markets, they were buying back their stock, they were inflating earnings per share to drive their own personal compensation. And this isn’t a one-year problem; this has been happening, frankly, for the last 15 or 20 years,” Palihapitiya said.
The only way America will dig itself out of the economic crisis is by focusing on the consumer, the Social Capital CEO added. Americans are “unbelievable at spending” and their consumption drives gross domestic product. Therefore, Congress should prioritize additional unemployment benefits, loan forgiveness programs, and small business aid in the next stimulus bill.
“Americans are unbelievable at spending. And I think that spending right now is probably the best way for us to dig ourselves out. But giving more money to these class of CEOs and boards is idiotic and dumb,” he added.
Palihapitiya also said that small businesses, unlike large corporations, “are forced to actually run a good business” in order to make money and will do so much better if they are given extra capital.
“Give money to ordinary Americans, priority number one. Priority number two, give money to small businesses. But do not start ripping any more money into these big companies. They don’t know what to do with it,” the billionaire said.