“Workers of the world, unite!” That was the battle cry of Marx and Engels as they tried to topple capitalism with their 1848 work The Communist Manifesto. Marx’ vision was a world in which lowly workers would rise up against their oppressors, distributing the means of production amongst themselves and leaving the world devoid of private property. One hundred-sixty years later, the capitalists are going strong as ever, while workers continue to complain the odds are stacked against them.
But a solution to the workers’ plight exists in an old cliché: "If you can’t beat them, join them!"
House Speaker Nancy Pelosi suggested as much when she spoke last week at the United Steelworkers International Women's Conference in Pittsburgh, where she spoke not only of wage parity, but also ownership and equity. The Speaker, perhaps without realizing it, is on to something - and not just for the women of the United Steelworkers Union, but Americans from every walk of life who could benefit from becoming not just stakeholders, but shareholders, in the U.S. and global economies.
To put it bluntly, it’s the difference between being given the cow’s milk and owning the cow itself.
It is a near fact of life that wealth will accrue to those who own the means of production. It is the very definition of capitalism, and the success of those who play the game is testament to its effectiveness. Fortunately, the world of capitalism is not a private club, closed to all but the privileged few. Any and all can play through a little thing called the stock market. Yet those who complain loudest about the unfairness of the system so often seem to be the same ones who refuse to play. This is evident in the almost militant resistance to, and Chicken Little arguments against, any attempt to privatize Social Security.
What’s so sad about this is that the stock market is one of the most effective ways to become an owner of the means of production. Yet fear, distrust or perhaps simple ignorance have caused many to both dismiss and disdain the thought of investing. History indicates this is a big mistake.
The truth is, that despite much publicized market gyrations, the stock market has historically returned outsized gains to those who invest regularly over many years. Even after historic declines like the ones we've seen since 2008, there is more opportunity than reason for gloom as this provides a discount buying opportunity for those in the market for the long haul, which would describe most of us. And thanks to index funds (mutual funds that precisely track the performance of indices like the Dow 30 Industrials or the S&P 500), investors can enjoy those returns with little to no understanding of how the market or the underlying companies work. You leave the dirty work to those who have been trained to understand all the market’s complexities.
There are many issues that would have to be addressed or resolved, including who makes the decisions on funds, determining how to avoid speculation, whether individual would have choices in the specific investments made and providing a wind-down of equities investment and transfer to more stable income-producing or money-market funds as retirement age nears. Personally, I would recommend any such privatizing as a supplement to, rather than a replacement of, traditional Social Security, with perhaps 2% of pay directed to private accounts in addition to our traditional Social Security contribution. With Social Security facing demographic-driven financial challenges, such a bifurcated approach might alleviate some of the pressure on the Social Security Trust Fund, though it might also make it easier for forces to suggest cutting traditional benefits because of the private account fallback.
Still, imagine the societal and generational change such investment could have if such nest eggs could be passed on to future generations, and the lessons that could be learned by involving all in stock market investing. We could see Marx and Pelosi become the biggest contributors to proletarians becoming the owners of capital. What an irony that would be,
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