I think this idea of an index fund bubble makes a lot of sense in terms of metrics like economic efficiency. Investors are paying more money to buy stocks which

I think this idea of an index fund bubble makes a lot of sense in terms of metrics like economic efficiency. Investors are paying more money to buy stocks which provide less economic value per dollar invested... but low productivity and economic inefficiency doesn't mean low profits. Indexed companies often have monopolies in their fields and can derive profits from rent seeking activities and lobbying for beneficial regulations so they don't need to be efficient in order to derive profits.