Google is an outlier in that the employees (in some departments) can begin to approach the wealth of the large investors. In most companies, the shareholders are rewarded far and away beyond what employees are rewarded with, even though their opportunity costs are generally lower (even if they theoretically risked large nominal amounts in their investments). The assertion is that investors generally tend to be rewarded disproportionately to their value contributed.
When an investor buys shares of a company, the company doesn’t get that money, the other seller investor does. No investment capital is “contributed” to the company (unless the seller is actually the company itself).
These investors aren’t contributing capital to the company—they are betting on one square on a roulette wheel.
Theoretically, being a shareholder exposes you to the risk of the company failing or the shares otherwise becoming worthless. The previous owner is selling their investment to you, and it is now as if you are the original investor, for whatever price the shares were originally sold by the company. So there's a kernel of substance in there at least.
How many Robinhood users have made more than pocket change without losing it all in a subsequent gamble? And of those who did, how many are not already at an upper income bracket?
Obviously you realize that investing in stocks is risky. Risk is the flip side of making investment gains. Anyone who invests in stocks takes a risk that it tanks.
You asserted that Robinhood is evidence that "labor" in general has access to "rich-get-richer" mechanisms. My assertion is that this assertion is not valid.
The rich-get-richer mechanism in question is investing pre-existing large amounts of money in investments that are more or less zero risk, specifically from the perspective of the investor's personal livelihood and well-being. This is simply not available to most people, even if they do have access to zero-commission fractional-share trading on Robinhood.
Also, "labor" covers a large amount of people, of whom a very small subset are Robinhood users, and of whom an even smaller subset are legitimately successful traders, as opposed to one-off financial market lottery winners (who are themselves a small subset of all users).
But what labor did they contribute? Follow the chain and at most what they did was buy someone else's labor and attach it to the Google brand (through having more cash for hiring), there's other ways to do that though, like loans, or structuring as a co-op so all employees are simply the only shareholders.
What actual risk does an investor take? Loss of capital? Compared to an employee who, in the situation where capital is lost, loses the means by which they feed and house themselves, and in the USA, provide healthcare for themselves?
On top of which, right now, investors aren't really taking much loss. This action by Google is done for shareholder value. So not only is the loss for an employee higher in a situation that "harms" a shareholder, it's also more pervasive: the employee might get fired anyway through no fault of their own, even if it's not because the company is going bankrupt and everyone's losing their money.
And while all this is happening the investor has invested in other ventures, potentially even competitors. If google goes bankrupt they lose their initial investment, which by most financial advisories I see should not account for a significant portion of their investment, retirement, or even just savings, so by material measures, they'll be fine.
Meanwhile the employee has put in their time, energy effort. They haven't been able to explore other means of making money, do research into potential investments for themselves. They've been building social capital, specific domain knowledge, client relationships, things that hold some value after a Google collapse, but not all.
At the end of the day I just don't see why what an investor does has any value at all compared to an employee. Can you help me understand better what you mean?
The assumption that price paid == utility is only valid in the economic equivalent of "assume no friction" from intro-level physics. The equivalence isn't guaranteed to hold once you bring individuals' budget sets and various market distortions into play (information problems, sticky prices, et alia). You see the same thing on the supply side, with the assumption that price sold == marginal cost breaking down in general, except under very specific conditions.
Bottom line: you're still only valuing something by what you are willing to pay for it. That is its value to you. (Others assign a different value, but that's how the market works.)
Right but notice utility is mentioned nowhere. Demand is totally irrational, because it's human. See toilet paper, fujifilm x100v, tesla stock, NFTs. Supply can be arbitrarily subject to the irrational whims of humanity as well - see oil, diamonds.
"Supply + demand" seems an oversimplification of a huge chain of irrational human links.
There is a dangerous path in this rationalization that will lead you to Marxism. The theory is cute and some people in Europe thought it would work. It didn't and that's how we ended up with capitalism. Humans are capitalist traders by instinct. Marxism makes logical sense, however.
Humans are Feudal creatures by instict - thats why feudalism lasted thousands of yeats.
Democracy and freedom are fragile and unnatural, they must be cherished.
> There is a dangerous path in this rationalization that will lead you to Marxism.
This is the brain disease of American politics, anyone pointing out injustice of any kind is accused of Marxism.
The only acceptable way for society to evolve is ever-increasing privilidges for the wealthy untill average man can never hope to afford real estate and can't afford a layer.
> There is a dangerous path in this rationalization that will lead you to Marxism.
Too late, I'm already a communist. A very capitalistically successful one, mind you.
Further along this thread is way off topic, I don't want to kick off a flame war of communism vs capitalism, I wanted to see what people have in mind about how companies like Google, that exist in a capitalist system, can be forced to care for the needs of their employees over the needs of their shareholders. Whether or not the system should / can be changed is, well, another thread or something lol, not for here.
That said your comment has some interesting ideas that I'm seeing as misconceptions ("some people in Europe that thought it would work" are arguably some of the most important philosophers in the western tradition) but maybe you're thinking along some lines I'm not aware of, so if you want to chat about this I'd love to do so in email, my address is on my profile page here.
They contributed investment capital to the company.