One of the stupidest defenses of shareholder maximization theory is the bullshit argument that since everybody owns stocks these days through our 401Ks and mutual funds, then high corporate profits and a booming stock market benefits everybody! Except, not really:
— Sudeep Reddy (@Reddy) December 29, 2014
The vast majority of working and middle class Americans simply don’t own much stock, because you can’t invest money you don’t have.
Forty years ago, annual US corporate profits averaged about 6 percent of GDP. Today profits consume about 13 percent of GDP. That’s an extra $1 trillion a year in corporate profits propping up equity prices. Meanwhile, labor’s share of GDP has declined by a corresponding 7 percent over the same period. Coincidence?
Righties hate numbers like this, fearing that they might be used to justify some sort of massive redistribution of wealth. But that redistribution is already going on. It’s just going in the wrong direction.