The Role the Stock Market Plays in Concentrating Wealth in the U.S.
This article took some courage to publish, and some real work to write. It draws on freely available (if you know where and what to look for) data from the Federal Reserve to illustrate how much money is taken out of U.S. corporations from dividends, stock buybacks and mergers and acquisitions. Since 1952, U.S. corporations have distributed $14 trillion in inflation-adjusted dividends to shareholders, with 76% of that total, or $10.650 trillion, occurring in just the last thirty years.
My conclusions about the role of shareholders will rub some the wrong way. What I am trying to do here is paint a more objective picture about the real value that shareholders provide to the economy. They do play an important role, to be sure, but it is not what many of us assume it to be, and it comes at a relatively heavy price (more than 5% of our GDP, every year).
As I say, questioning the value of shareholders here in the U.S. takes some courage. We’ve come to assume that the goal of “maximizing returns for shareholders” is inseparably tied to the pursuit of profit and even capitalism itself, but it is not, and I am not questioning those very important economic drivers here.
What I am trying to investigate here is the tenet of “shareholder primacy” and how it contributes to the growing problem that this country has with our concentration of wealth. I also attempt to foreshadow what could happen when more of our publicly traded corporations are increasingly automated with robotics and artificial intelligence. This is the “perfect, profit-making machine” and it could accelerate the process of wealth accumulation already underway.
The way the timing of this piece worked out probably couldn’t be worse, given the emotional turmoil wrought by the stock market in recent days.Things usually happen for a reason though, so perhaps this recent roller coaster will help to unleash a different kind of conversation than we might normally have about this very difficult topic.
#stockmarket #wealth #shareholders #pikkety