That's not necessarily a good thing. Take VC out of the economy and you don't have much funding for innovation outside of academia, and academia fails miserably

That's not necessarily a good thing. Take VC out of the economy and you don't have much funding for innovation outside of academia, and academia fails miserably at bringing the results of research to the product / usability stage. It's also important to note that over-investment in index funds will lead to economic distortions for the same reason that the housing bubble happened. "Mortgages are incredibly safe as an asset class, so let's put all money into broadly diversified pools of mortgages!" (Six years later...) "Who could have predicted that the entire housing sector would over-inflate and all mortgages would suddenly default?" When you inflate a sector you change the odds via feedback loops.