Kevin Drum writes
Felix isn’t happy about this: "What we don’t want is a world where most companies are owned by a small group of global plutocrats, living off the labor of the rest of us. Much better that as many Americans as possible share in the prosperity of the country as a whole by being able to invest in the stock market." Agreed — but like Felix, I don’t have any bright solutions to this. And who knows? Maybe this is just the flavor of the day on Wall Street and the public stock market will make a comeback shortly. But the overall story of the past couple of decades has been the steady funneling of all the richest investment opportunities to a smaller and smaller class of the super rich, and this trend fits right in. It’s a problem worth thinking about.
The idea that all of the good investing will be eaten up by insiders with no way for outsiders to get a piece of the actions seems doesn’t seem right to me. It could come about from very stringent government regulation but outside of that my spidey sense is telling me that its unlikely.
The problem is this. Ok, I can make a lot of money as a rich insider getting in on Facebook. But, I can always make more money by leveraging the savings of other folks.
The question is how to get access to their savings. In the old old days people could drop their savings off at the bank and then the bank could go bananas. It could invest in everything from crop futures to perpetual motion. Needless to say this didn’t always work out as planned.
So more or less, we have corralled folks into tighter and tighter opportunities. New regulations of public companies might even be squeezing the public out of the direct ownership game altogether. Yet, there is always lots of more money to be made in leverage. Someone will find a way. Money clubs of some sort.
Maybe you could swing a deal where the ordinary investor like Kevin gets some fraction of the current receipts of a hedge fund, in return he makes them the beneficiary of his life insurance policy and then the hedge fund goes out and issues bonds backed by those benefits. Then the hedge fund uses the bond proceeds to invest in private ventures.
I just don’t see how any public or private system of controls can stop people from finding someway to get common money into the big game.