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?