For over a century, the idea of the United States as a “nation of shareholders” has been a powerful one. This notion has its roots in attempts by the New York Stock Exchange to broaden its political base by ensuring that more Americans owned at least a handful of stocks, and Cold War comparisons of the United States as a shareholding democracy with the central planning of the Soviet Union. The myth of a market dominated by “mom and pop” investors has been used to argue that policies which boost corporate earnings are good for all Americans—because all citizens own a stake in America’s corporations.

But stock owners are not a representative cross-section of society. Most stocks are held by the richest. Inequality in stock holding is far more pronounced than inequality in consumption or income. Moreover, while consumption inequality has stayed stable, inequality in corporate equity holdings has grown considerably over the past generation.

(more…)