The Stock Market and the working class

Rick, You seem to say/think that only rich people "profit" from the stock market. Perhaps that is true statiscally, i don't know. I do know that many, like my family, through the prosperous years of the 1950s were able to invest some funds in the stock market and, if lucky, came to have a nestegg from these investments. In my generation, we were encouraged to put aside some money in 401k or other investments and, again with luck, managed to come to retirement with money to supplement social security. I see the stock market like all other gambling. If you are lucky you win, but most come out not winning. If you are lucky, you will have more money than if you left it under the pillow or in a savings account. Can you please address this. I think there are a lot of people like me who are in this position. When you generalize about the rich living off the profits of the rest, it doesn't ring true and challenges your credibility. Thanks for your presentations and all your work. It very useful and illuminating. Yours in solidarity. Steve

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Yes, of course, some non-wealthy people can and do set aside sums they save from current expenses - voluntarily or via job-related mandatory pension withholdings - to invest them in stocks and bonds. And those, as you say, can go up or down with the gyrations of securities markets. However, lets look at the statistics to see whether and how this matters. First, a tiny percentage of the population owns the vast bulk of securities purchased privately and not through pensions funds etc. Second, most Americans own little or no appreciable quantity of stocks and bonds, either individually or through pensions. Third, most pensions are managed by professional pension managers such that pensioners have neither control nor knowledge of what investments are made and often pay inflated fees for the management as well. 

What I have said is that government policies (e.g. trickle down economics of the sort practiced by most US governments, Republican and democrat alike) can target either the corporations and the rich or the average incomes and poor. The trickle down policies can, for example, increase money supplies to the corporations and the rich and thereby boost the stock markets and thereby make the rich richer and thereby perhaps see some of that wealth trickle down to the masses.. Or they could target the mass of people - say via money disbursements to them or rising minimum wages or public employment programs - and thereby practice trickle up policies that enrich the mass first and from there perhaps benefit the corporations and the rich. In that framework, it is clear who profits most from stock market rises, etc.

It is usually the case that generalizations about major group differences in economics have exceptions. So, yes, there are average and maybe even a few low-income Americans with stock and bond portfolios. Likewise, there are a few top corporate executives who also do labor for wages to supplement their incomes. But these exceptions do not invalidate the generalizations all economists use to usefully designate major group differentiations in analyzing economies.

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