Really, anyone with a 401k or similar investments has benefited from this. That's a lot of middle class folks. Your parents, your grandparents, and very likely you. It's far from limited to the super-wealthy.
So, we will see if this privatization of pensions really benefits us all or merely enriched a generation of asset managers while absolving the corporate and the government from providing pensions for workers.
Other options included pensioners taking a haircut and/or workers taking a paycut, neither of which is particularly palatable and still runs us into the ground eventually. Increasing corporate taxes could square the circle for a little while, but then corporations would slowly move more operations offshore, decreasing tax revenues eventually anyway. There's also the option of cutting other government expenditures, but eventually that stops working and at least some of the things that were cut can't stay un(der)funded forever.
The only other (distantly) feasible idea I can think of would be, again with an eye to Japan (of the past), near-total isolation from other countries economically, but that would have an even more substantial stagnating effect.
How does this jibe with ever-increasing profits?
A traditional pension fund cannot afford that kind of risk without a massive cash buffer and could not have captured that value anyway because it cannot cover its own firm's losses with some other firm's gains. After all, it's not like the same 500 companies are occupying the index as decades ago, and even those that stick there have changed relative positions a lot.
The only thing that could have conceivably replaced traditional pensions and captured all of this value and given it to the workers "fairly" without suppressing the factors that made it possible would have been a sovereign wealth fund run passively but competently by the government, but such a thing is in and of itself a moonshot.
I think it's more than "a few". For one thing, many 401k-equivalent funds that government employees can make contributions to are low cost index funds, and there are lots of government employees. For another thing, most 401ks offered by large corporations also offer low cost index funds, which many employees contribute to because they're usually the default that you get if you don't pick something else, and there are lots of employees of large corporations.
Nothing can protect you from ill timed trades.
However, trades can only be ill timed if they are made. If you just pick an index fund with an appropriate time horizon for your planned retirement and then leave it alone, you don't have to worry about ill timed trades because you aren't making any trades at all.
1: https://www.federalreserve.gov/econres/scf/dataviz/scf/chart...
But I'm so extremely skeptical the "your 401k will always go up by 10%" argument is going to continue to hold for more decades.
Eventually the blood they are squeezing out from companies and consumers will run out...
Whoops!
If it is 5 years or 10, nobody knows.
I don't understand this viewpoint - this seems like the obvious end result of the last 50 ish years of tomfoolery.
The US doesn't make anything anymore, our economy is purely theoretical. We're lying on a huge scale and scamming, and that's how we have our economy. We gave up entire industries - and almost all of them - to foreign countries. China, Korea, Japan, Bangladesh and on and on.
Yes, these companies are "American". In name only. All the capital, all the means of production - which is the actual "economy" here - is being held by not us. We literally just gave up our means of production.
What we did then is made up a bunch of fake jobs to justify these companies in the US and to extract money from these developing countries.
It's only a matter of time before they wisen up and realize they have all the capital.
Granted, not all industries are like this. Just most.
So, yeah, it helps your 401k, but in the mean time you don't have a job. And if you do have a job, your salary is not increasing in line with inflation...
The US taxing almost no kind of corporate profit is an oddity, and they can carve more exceptions to any kind of reinvestment they decide.
Less hyperbolic - the existence of large pools of capital without a voice on the boards is partly responsible for the management-led short-termism mess we're in.
Ironically, if you happen to have made lots of money in the stock market over the last 10-15 years, your best strategy may be to retire now, mid-career, even if you don't have enough to last the rest of your life. Basically you're arbitraging the large labor force of today to fund your time off through high stock values. Then when the market crashes, the recovery will likely be in all-new firms in all-new industries, so you reinvent yourself to capitalize on the labor shortage then. Or even better, start one of those new firms and capitalize on all the workers who need to go back to work because they can't afford their retirements.
You can't do that with a 401k, though, it'd have to be a taxable investment account that you can withdraw at will.