John,

While I largely agree with your conclusion, it’s important to ask why companies are motivated and incentivized to use debt to repurchase shares/pay dividends. Actually, it’s really two questions, 1) why execute these actions in the first place, and 2) why fund them with debt?

As for number one, there are a number of reasons argued and a fulsome discussion of that point is another topic entirely. However, the allocation of capital towards share repurchases and dividends comes at the expense of capital investment, and I agree that this trade-off does not add value to our society.

Simplistically, the debt question is easier to answer, and the use of debt (versus cash from profits) is largely due to low interest rates and the relative uncompetitiveness of the US corporate tax regime (also drives inversions) that disincentivizes repatriation of overseas corporate profits.