DEMOCRATIZE THE UNITED STATES STOCK MARKET
It’s known that over 93% of publically held shares are owned by the top 10% wealthiest few and the top 1% own approximately half of all shares. This massive wealth concentration is bad for the functioning of the markets but what’s more, it's bad for the functioning economy,of a free democracy and our Republic.
The American Dream as it existed in many of our minds describes a meritocracy where upward mobility exists and thrives. For far too many of us that no longer exists. The dream has morphed into a paycheck-to-paycheck struggle to merely survive. Homeownership and completing an advanced college degree are not only less obtainable they’re no longer a guarantee of financial security and the prospect of passing along generational wealth to our children.-
While it’s true that inflation numbers are down considerably and job creation is reaching new highs, people especially younger adults graduating into the pandemic recession, and many of those older adults who experienced the previous great recession and never really bounced back feel financial security is something they’ll never attain.
Between college loan repayment, rising rent costs, a shortage of housing construction taking place over several decades, restrictive zoning regulations favoring single-family homeowners, astronomical childcare costs, and home healthcare costs for the elderly, millions of Americans feel a sense of hopelessness and despair.
The Biden-Harris administration did make an effort to address the college loan crisis in America though they met tremendous obstruction by Republicans and the extreme rightwing US Supreme Court. The Harris campaign is also proposing bold measures to build millions of affordable homes and help first-time home buyers, something as I mentioned that’s long overdue and necessary.
Former Justice Brandeis wrote we can either have concentrated wealth in the hands of the few or we can have democracy. If we are to be a free people we must have far less concentration of wealth and a much smaller gap between the rich and poor.
Without correcting this situation we are vulnerable to dangerous guys like the former President rallying people to scapegoat other poor people so they can seize more wealth and power for themselves. And this very well could spell the end of democracy and this Republic. The stakes not only of this election but of correcting our economic inequalities are extremely high and just as serious.
Wealth is necessary to be free. Living paycheck to paycheck unable to afford emergencies, healthcare, or to take vacations or to attend college is not freedom.
The wealthy have access to money through inheritances and through very low-interest bank loans and lines of credit.
When central banks lower interest rates or engage in quantitative easing (QE), the value of assets like stocks, bonds, and real estate tends to rise. Since wealthier individuals own more financial assets, they disproportionately benefit from these increases in inflated assets. For example, a drop in interest rates often results in a surge in stock prices, which primarily benefits those already heavily invested in the stock market which as I pointed out is mostly owned by the very wealthy few, increasing their wealth faster than everyone else.
It’s easier for millionaires to become billionaires than for a regular working-class person to become a millionaire and they are closer to being homeless than they are to becoming millionaires in most cases.
I believe we must reform the out-of-control stock markets. To reform the American stock markets and address wealth inequality, I propose the following structural changes aimed at increasing access to wealth and economic mobility:
1. Employee Stock Ownership Programs (ESOP) Expansion
Mandate or incentivize companies to offer broader employee stock ownership plans (ESOPs). These programs would allow workers across all income levels to accumulate equity, promoting wealth distribution to a broader base of Americans.
- Argument: ESOPs foster shared prosperity by giving employees a stake in company success, turning them into shareholders, and allowing them to grow wealth as the company grows.
2. Public Equity Trust Fund
Create a public equity trust where a portion of stocks from major corporations are collectively owned by the public, with dividends paid out directly to citizens or invested in public welfare programs.
- Argument: A public equity trust democratizes stock ownership, providing all Americans with a steady income stream, reducing wealth concentration, and giving more people access to the benefits of capital growth.
3. Tax Incentives for Small Investors
Introduce tax breaks or subsidies for small investors who earn below a certain income threshold, making it easier for them to enter and remain in the stock market.
- Argument: By lowering the financial barriers to investing, more middle- and lower-income Americans would have the opportunity to grow their wealth through stock market participation.
4. Progressive Capital Gains Taxation
Implement a progressive capital gains tax structure where the tax rate increases for those earning higher levels of investment income, while offering lower or zero rates for small investors.
- Argument: This would help curb the accumulation of wealth at the top while encouraging investment from lower-income Americans by making it more financially rewarding for them.
5. Universal Retirement Accounts
Automatically enroll all workers in low-cost, publicly managed retirement savings accounts that include a mix of safe stocks and bonds. This could be similar to the federal Thrift Savings Plan (TSP), offering all citizens the benefits of long-term market growth.
- Argument: These accounts would give all Americans access to the stock market in a managed and secure manner, encouraging lifelong savings and wealth accumulation even for those without direct access to employer plans.
By addressing both access and wealth redistribution, these reforms could help millions of Americans participate in wealth-building opportunities while mitigating the current levels of extreme concentration of stock ownership.
