Index funds are slowly consuming more and more capital. To achieve democratic socialism smoothly, all we have to do is set up state-owned index funds, and let them keep growing until they've accumulated all of the capital.
Voila, full democratic ownership of the means of production!
Basically you are saying the state should just slowly buy stock in every company until it owns every company.
> Basically you are saying the state should just slowly buy stock in every company until it owns every company.
That's right. The goal is full public ownership of the means of production.
Because of short-selling, index funds could own all the market or more and active funds could still exist. For example we could imagine that index funds grow until they're 105% of the market, and active funds own 5% of the market long and 10% of it short. That adds up: 105% + 5% - 10% = 100%. And the active funds would still be doing all the price discovery. Of course the index funds wouldn't have all the assets-under-management, those would be split in the ratio 105:15 (with 10 of that 15 being collateral for the shorts).
In other words: it doesn't matter if index funds own all the shares, active funds can just make side bets with each other.
With the progress AI is making, I predict a future where humans-run firms will mostly go out of business. What will emerge are companies that are great at training models that then act as active investors. These models bet against each other and some emerge as winners.
Ultimately, the models that make the most bank (sorry couldn't resist) will be the ones smart enough to make its decisions based on public data from companies, social media etc.
This is already happening, HFT, Two Sigma Investments, many hedge funds. And they don't just use public data, they work really hard to get as much proprietary information as they can. Just one example: https://www.cnbc.com/id/38722872
[1] https://www.bloomberg.com/opinion/articles/2016-08-24/are-in...
If that’s a strange thought, consider that the Bank Of Japan is a significant owner of equities on the Nikkei.
Disclaimer: Vanguard customer
I'm interested in this question: would the US economy be where it is today without index funds? Or is it the index funds like Vanguard that allowed millions of Americans a cheap, safe way to predictably grow their wealth?
The reason I ask is that throughout American history, its the banking sector that was responsible for financial crises and a loss of wealth for most Americans. Have index funds plugged this hole and allowed the US to grow?
Yeah yeah I know about 2008 etc. but that _was_ caused mostly by active investors.
Yes.
You could out public funds into any investment and end up with all the capital.
The way index mutual funds work is to distribute returns to everyone according to how much capital they have contributed.
The socialist version would be a find that everyone is required to contribute all their capital too. And then each citizen receives an equal share of the returns.
(The company is actually named after Lord Nelson's flagship at the Nile, but who's counting?)
a group of people leading the way in new developments or ideas.
1. https://en.wikipedia.org/wiki/Salvador_Allende#Presidency
2. https://www.investopedia.com/terms/l/lia.asp