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Why doesn't the stock market act as a balancing system to low wages? Lowering wages implies higher efficiency thus resulting in higher profits which ultimately

Why doesn't the stock market act as a balancing system to low wages? Lowering wages implies higher efficiency thus resulting in higher profits which ultimately end up in "investors" pockets. Why are these "investors" not the common American "worker" whose wages are low? Why has the market not created such an instrument to supplement the "worker" who has low wages but could ultimately profit from the ever-increasingly efficient economy? This is an honest question whose answer I ponder. Why doesn't the stock market act as a great redistributor of capitalistic wealth?

malcolmgreaves 8y ago
Because you need lots of captial in order to buy enough stock to make a substantial life improving financial gain. The short term gains, fluctuations, etc. can easily wipe out the capital gains that one is able to make on a worker's take home pay.
padobson 8y ago
I feel like unions really missed the boat on this one. Maybe I don't know union history well enough, but it seems like the UAW should have made large equity stakes in Ford, GM and Chrysler (or the equivalent historical companies) important priorities in their heyday.
dragonwriter 8y ago
> Why are these "investors" not the common American "worker" whose wages are low? Because workers don't have money to buy stock, so they don't get the gains from stock appreciation. And because workers are taxed vastly more heavily than investors at the same income level, people who don't stay out living off investments rather than wage labor are, even if m with the same pre-tax income, greatly disadvantaged at accumulating the resources to become others of capital sufficient for their own support (the lucky worker manages to accumulate enough for a modest but decent retirement by the time they are incapable of further wage labor, but many do not.) It's a lot easier for a modestly wealthy capitalist to become a very wealthy capitalist than for a worker to become even a self-sufficient capitalist. > Why has the market not created such an instrument to supplement the "worker" who has low wages but could ultimately profit from the ever-increasingly efficient economy? Because that would involve the people who have disproportionate political and economic power handing over the tools of accumulation of that power to the people they spent considerable effort denying it to in order to accumulate it themselves. > Why doesn't the stock market act as a great redistributor of capitalistic wealth? Because that (at least, in the direction of redistribution you propose) is literally the exact opposite of its purpose.
- gbacon 8y ago
  Because workers don't have money to buy stock Nonsense.
s73v3r_ 8y ago
"Why are these "investors" not the common American "worker" whose wages are low?" Where the hell are they going to get the money to become investors in the first place? "Why has the market not created such an instrument to supplement the "worker" who has low wages but could ultimately profit from the ever-increasingly efficient economy?" What employer, and it's the employers that are the ones this would have to be directed toward, has been asking for this?
SketchySeaBeast 8y ago
There's a barrier to entry and a requirement in regards to education that are intrinsic in the stock market. You also need liquid cash you're willing to part with, and in large enough amounts to matter. And in between the stock market and the worker are a ton of predatory "advisers" who would rather suck someone dry with fees than ever see the worker profit. I'm finally at a point where I have enough liquid cash to finally start investing, and I'm finding the whole process very daunting. Trying to get enough information to make the "right" decision has filled me with analysis paralysis.
- vturner 8y ago
  Me too...started reading some stock investing/trading books. What lingo and complexities.
  - SketchySeaBeast 8y ago
    I even have friends who are accountants / actively participate and I get nothing but mixed messages.
- npsimons 8y ago
  > There's a barrier to entry and a requirement in regards to education that are intrinsic in the stock market. This right here. While the audience here should be able to invest, based on income and education levels, the sad fact is that a vast majority of people have never been taught to save or even budget. I am very much in favor of self-reliance, but when you have an entire generation raised by a generation that doesn't save, what do you think is going to happen? Add on to this ever increasing prices in rent and basic necessities (food, utilities), and it's not a surprise when the vast majority of people don't own stock, even in an index fund. Shit, pensions were created over half a century ago because our grandparents couldn't be trusted to save for retirement! I will say this: scrape together $1k USD, open an account at Vanguard and put it in a total stock market index fund. Keep putting money into it, as much as you can afford. There are other better websites out there that go into more detail, but that's the gist of it.
germinalphrase 8y ago
Are you suggesting some kind of "American Dividend" for all citizens?
- vturner 8y ago
  Yes, why hasn't this arisen naturally? Are the potential profits too low to collect the meager income of many low-wage Americans and then redistribute the gains over time?
  - kolpa 8y ago
    housing, food, clothing, and energy must be paid for before the rest of income is invested. 20% annual growth of 0 is 0.
  - dragonwriter 8y ago
    > Yes, why hasn't this arisen naturally? Why would it arise naturally?
bluGill 8y ago
They are. Well most likely. It is hard to track down the real numbers, but somewhere around 60% of all stocks are owned by mutual funds, and the primary investors in those funds are retirement accounts. However you do need to have a retirement account to share in this, the lower your wage the less likely you are to have such an account.
kolpa 8y ago
If you don't have high wages you can't buy stock.
- gbacon 8y ago
  False.
- dragonwriter 8y ago
  If you don't have high wages, you can't invest enough to expect more than a very modest retirement. You can buy some stock, and lots of people do—America has a fairly large number of people who own some stock, just very few who have accumulated enough to live off their investments while still growing them.
closeparen 8y ago
It does. Around half of all financial asset wealth is ordinary people’s retirement savings. And that’s nothing compared to the wealth the American middle class holds in home equity. High-flying Wall Street types are ultimately dealing with regular people’s money (often through indirections like pension funds).

malcolmgreaves 8y ago

Because you need lots of captial in order to buy enough stock to make a substantial life improving financial gain. The short term gains, fluctuations, etc. can easily wipe out the capital gains that one is able to make on a worker's take home pay.

padobson 8y ago

I feel like unions really missed the boat on this one. Maybe I don't know union history well enough, but it seems like the UAW should have made large equity stakes in Ford, GM and Chrysler (or the equivalent historical companies) important priorities in their heyday.

dragonwriter 8y ago

> Why are these "investors" not the common American "worker" whose wages are low? Because workers don't have money to buy stock, so they don't get the gains from stock appreciation. And because workers are taxed vastly more heavily than investors at the same income level, people who don't stay out living off investments rather than wage labor are, even if m with the same pre-tax income, greatly disadvantaged at accumulating the resources to become others of capital sufficient for their own support (the lucky worker manages to accumulate enough for a modest but decent retirement by the time they are incapable of further wage labor, but many do not.) It's a lot easier for a modestly wealthy capitalist to become a very wealthy capitalist than for a worker to become even a self-sufficient capitalist. > Why has the market not created such an instrument to supplement the "worker" who has low wages but could ultimately profit from the ever-increasingly efficient economy? Because that would involve the people who have disproportionate political and economic power handing over the tools of accumulation of that power to the people they spent considerable effort denying it to in order to accumulate it themselves. > Why doesn't the stock market act as a great redistributor of capitalistic wealth? Because that (at least, in the direction of redistribution you propose) is literally the exact opposite of its purpose.

gbacon 8y ago
Because workers don't have money to buy stock Nonsense.

s73v3r_ 8y ago

"Why are these "investors" not the common American "worker" whose wages are low?" Where the hell are they going to get the money to become investors in the first place? "Why has the market not created such an instrument to supplement the "worker" who has low wages but could ultimately profit from the ever-increasingly efficient economy?" What employer, and it's the employers that are the ones this would have to be directed toward, has been asking for this?

SketchySeaBeast 8y ago

There's a barrier to entry and a requirement in regards to education that are intrinsic in the stock market. You also need liquid cash you're willing to part with, and in large enough amounts to matter. And in between the stock market and the worker are a ton of predatory "advisers" who would rather suck someone dry with fees than ever see the worker profit. I'm finally at a point where I have enough liquid cash to finally start investing, and I'm finding the whole process very daunting. Trying to get enough information to make the "right" decision has filled me with analysis paralysis.

vturner 8y ago
Me too...started reading some stock investing/trading books. What lingo and complexities.
- SketchySeaBeast 8y ago
  I even have friends who are accountants / actively participate and I get nothing but mixed messages.
npsimons 8y ago
> There's a barrier to entry and a requirement in regards to education that are intrinsic in the stock market. This right here. While the audience here should be able to invest, based on income and education levels, the sad fact is that a vast majority of people have never been taught to save or even budget. I am very much in favor of self-reliance, but when you have an entire generation raised by a generation that doesn't save, what do you think is going to happen? Add on to this ever increasing prices in rent and basic necessities (food, utilities), and it's not a surprise when the vast majority of people don't own stock, even in an index fund. Shit, pensions were created over half a century ago because our grandparents couldn't be trusted to save for retirement! I will say this: scrape together $1k USD, open an account at Vanguard and put it in a total stock market index fund. Keep putting money into it, as much as you can afford. There are other better websites out there that go into more detail, but that's the gist of it.

germinalphrase 8y ago

Are you suggesting some kind of "American Dividend" for all citizens?

vturner 8y ago
Yes, why hasn't this arisen naturally? Are the potential profits too low to collect the meager income of many low-wage Americans and then redistribute the gains over time?
- kolpa 8y ago
  housing, food, clothing, and energy must be paid for before the rest of income is invested. 20% annual growth of 0 is 0.
- dragonwriter 8y ago
  > Yes, why hasn't this arisen naturally? Why would it arise naturally?

bluGill 8y ago

They are. Well most likely. It is hard to track down the real numbers, but somewhere around 60% of all stocks are owned by mutual funds, and the primary investors in those funds are retirement accounts. However you do need to have a retirement account to share in this, the lower your wage the less likely you are to have such an account.

kolpa 8y ago

If you don't have high wages you can't buy stock.

gbacon 8y ago
False.
dragonwriter 8y ago
If you don't have high wages, you can't invest enough to expect more than a very modest retirement. You can buy some stock, and lots of people do—America has a fairly large number of people who own some stock, just very few who have accumulated enough to live off their investments while still growing them.

closeparen 8y ago

It does. Around half of all financial asset wealth is ordinary people’s retirement savings. And that’s nothing compared to the wealth the American middle class holds in home equity. High-flying Wall Street types are ultimately dealing with regular people’s money (often through indirections like pension funds).