Nelson Peltz's Trian Takes Big Stake in General Electric

Ok, what is wrong with this picture?  Nelson Peltz, through Trian Fund Management buys 98.5 million shares, or $2.5 billion worth, of General Electric.  That may seem like a lot, but it is not even a filing position, a mere one percent of the outstanding shares.  Unlike many that take such a stake in a publicly traded company, Trian has not asked for a seat on the board of directors (yet).
So, what is it that Trian would like?  Quite naturally, to enhance shareholder value.  How should that be done?
One of the proposals mentioned in a white paper issued by Trian involves GE borrowing money.  Taking on additional leverage is not always a bad thing and is frequently viewed in a positive way by the market.  However, one of the possible uses of GE borrowing $20.0 billion dollars suggested by Trian is to "return capital to shareholders", better known as stock buybacks.  Really???
General Electric in 2014 employed 305,000 employees in 175 different countries (2014 10-K).  Through 2012, 2013, and 2014, GE spend $17.46 billion buying back 754.8 million shares of stock.  The stock of GE closed at $18.65 per share on January 2, 2012, and closed at $25.06 on December 29, 2014, a 34.4% increase.  Seen another way, GE stock rose at about a 10.44% annual rate for those three years.  If you started out owning $1,000,000 worth of GE on 1/2/12 you would have ended 2014 with $1,347,053.97 worth of GE.  But if you started out 2012 with $1,000,000 in a savings account at your local bank, the one that pays 0.5% interest, you would end 2014 with $1,014,075.13.  Clearly, you'd be better off by $331,978.85 by having your money in GE than in a bank.
Nelson Peltz thinks that is not enough of a return for GE.  So he wants GE to borrow money and buy back stock so that returns will be higher.  Funny thing about this is that in the olden days, long, long ago, a company's stock price reflected its potential future earnings, where earnings were understood to have something to do with producing a good or service.  Stock buybacks divert money from being productive to being what we might call sterile.  Instead of using money to increase research and development (which requires hiring human beings to do the R&D) in search of new things that can "bring new things to life", instead of building new factories (which requires hiring human beings to do the building) that can produce new goods or old goods less expensively, instead of building new factories that are environmentally sustainable (which includes hiring human beings to design, build, and run), using money to buy back stock does absolutely nothing to help anyone except the shareholders.  Buying back stock removes money from the economy to benefit shareholders short-run.  Buying back stock instead of funding R&D, instead of producing new goods more efficiently, instead of trying to lead the industrial sector to a pathway of sustainable production merely robs the future in order to enhance shareholder value.
If the shareholders of GE really want to invest in the future, borrow the $20.0 billion as directed by Trian but use it to increase the wages of non-management employees and the lowest two levels of management.  Use that $20.0 billion to create an in-house university where workers can improve their stock of human capital.  Use that $20.0 billion to fund clean water delivery systems in less developed areas, after all the first step in economic growth is clean water which leads to less disease which leads to the opportunity to become a market economy where people can buy GE products.
Stock buybacks do nothing productive.  In an economy with lots of disguised unemployment, with increasing numbers of people dropping out of the labor force because they cannot find work, where we are experiencing one of the slowest growth rates of GDP in decades, we really need to rethink the ethics of stock buybacks.