Stockholders gain at the expense of the rest of us

Unemployment is now officially below 6%, but the point is still valid.

Large businesses such as General Motors earmark less money for workers’ pay and for investment, research and technology compared to earlier eras.

They do this in order to be able to hand over more money to stockholders in the form of dividends and stock buybacks.

The reason is that stockholders have leverage and workers don’t, and stockholders no longer take the long view. In 1960, the average stockholder owned a stock for eight years, Harold Meyerson reported in the Washington Post.  Now they sell their stocks after four months, and, when high-frequency trading is factored in, it’s 22 seconds.[1]

Passive, short-term stockholders, unlike the original investors, contribute little or nothing to the value of a company.  Why should their interests be paramount?

LINK

Why salaries don’t rise by Harold Meyerson for the Washington Post.

Technology should be used to create social mobility – not to spy on citizens by Cory Doctorow for The Guardian.

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[1] Meyerson may be referring to the average stock holding rather than the average stockholder, because I don’t think that middle-class people who own stocks buy and sell that frequently.  A relatively small number of people and fund managers do the bulk of the trading on stock exchanges.

Tags: General Motors, Income, Investment, Investment Gap, Stockholders, Wages, Wall Street