As the coronavirus crisis shuts down the economy and calls come for bailouts to save businesses that have seen their revenues plummet, complaints across the political spectrum come about bailouts for businesses that have engaged in stock buybacks. For example, Rep. Katie Porter, a California Democrat, complained that United Airlines shouldn’t seek congressional support because it spent $3 billion on buybacks, and Sen. Josh Hawley, a Missouri Republican, proposed banning buybacks as one of a series of conditions of government relief. Anyone making blanket condemnations of stock buybacks is either confused or otherwise fundamentally unserious — and proposing counterproductive policies that will slow the recovery.

Let’s start with what a buyback is, since even many financial journalists do not understand this: A corporation purchases stock from its shareholders. It’s economically indistinguishable from a special dividend, where a corporation pays out money to every shareholder, except it permits shareholders to elect their own tax consequences, unlike a dividend that creates a tax event immediately.