Blackrock CEO Larry Fink Can Fix The “Silent Crisis” He Warns Is Impacting Millions Not Investing Enough
Consumers Should Earn Equity In The Consumer Companies They Buy From
Blackrock CEO Larry Fink said in his annual shareholder letter that millions of people are facing a “Silent Crisis” resulting from not investing enough.
With a platform like Blackrock, I contend that Mr. Fink can single handedly fix this problem.
While I agree with his premise that millions of people are not investing and that is a big problem, I don’t completely agree with his explanation as to why they are not investing. Mr. Fink suggests people are saving too much and not investing enough. I otherwise argue that disposable or discretionary income is the problem – the vast majority of people simply don’t have enough income to set any aside for investing.
A picture is worth 1,000 words. Here’s a snapshot of U.S. Personal Savings over the last five years:
US Personal Saving Rate - 3.80% for Dec 2024
It doesn’t appear that people are stashing away lots of cash.
Again, Mr. Fink is right about people not investing. The Federal Reserve reports that 93% of all stock is held by the wealthiest 10% and that the bottom 50% only hold 1% of all stock.
Given the Federal Reserve data and the savings chart above, I submit my argument that a lack of disposable or discretionarily income is the problem, and not a competing impulse to save rather than invest.
Mr. Fink warns that the lack of investing will result in people not being able to retire with dignity. I think the problem is bigger than that.
70% of the U.S. GDP comes from consumer spending and consumer spending is shrinking. I suggest the shrinkage is directly linked to the lack of investment income for most of the population.
Today, only half of 30-year-olds earn more than their parents at the same age. 92% of children born after 1940 earned more than their parents where only 50% of children born after 1984 earn more than their parents.[1]
Where Mr. Fink might think he is doing a service to the public by encouraging them to invest, I think it behooves him, on behalf of Blackrock, to encourage more investing. A shrinking GDP will not be good for Blackrock.
As I said at the onset, Mr. Fink, with Blackrock as a platform, can do more than encourage investing. He can create an entirely new category of investing that is far more inclusive where anyone that pays rent and goes to a grocery store will have access to investing.
Consumer Equity
The United States has the largest GDP in the world at over $29 trillion. Again, 70% of the GDP comes from consumer spending. A company like Apple depends on consumers to purchase iPhones and Apple Music and the like. Consumers are quite arguably the largest asset of Apple. Consumers are clearly the largest asset of the United States economy. Consumer spending gives Apple it’s high market capitalization value, yet consumers, as arguably the largest asset of Apple, do not benefit from the market capitalization that depends on them. The United States Government leverages the consumer spending dependent GDP to borrow money to fund its growing deficit. However, the consumers do not similarly directly benefit directly from the GDP that depends on them. That growing deficit otherwise increases the financial burden of future consumer generations. The current capitalist framework is way out of whack.
The disparity between an elite few benefiting from the U.S. investment markets and everyone else screams that the rules, practices, policies and habits governing the U.S. investment market are not working. The game needs to change.
Capitalism works best when it works for everybody.
There has long been a movement to stick up for the rights of workers in exchange for their contributions to capitalism. Proponents of capitalism have long debated the proper divide of the fruits of a capitalist endeavor when it comes to the interest of labor versus the interest of owners. Beyond the multitude of mechanisms to protect minimum wages, adequate benefits and safe work environments, today, 35% of private companies and 43 percent of public companies include employee stock ownership programs as a component of compensation.[2] Perhaps it is time to add consumers to the capitalist debate over stock ownership.
Might it be in the best interest of all to include consumers in the opportunity to acquire stock in consideration of their loyalty? Wouldn’t a consumer option to acquire stock in a corporation offer that corporation competitive differentiation and customer loyalty, not to mention enhanced stock liquidity and appreciation by adding a new source of shareholders? Allocating a portion of corporate profit for the potential conversion of a loyalty reward into a stock purchase may reduce profit margins, but it would not reduce cash intake or retention. In fact, the profit reduction might result in a tax savings.
Consumer Equity (patent pending) is an innovative concept that can revolutionize capitalism by rebalancing the fruits of capitalism between owners, labor, and consumers.
A Consumer Equity Rewards program could allocate a portion of profit on any product or service sale towards the potential future conversion of the Reward into equity at which time the allocated portion of profit would be booked as a sale of stock.
Consumers’ greatest monthly expense is housing.
A Consumer Equity solution in the housing market holds the highest potential for transforming capitalism with the introduction of a stock accumulation opportunity for the general public.
Currently, consumers that cannot afford to purchase a household, either rent a property or purchase a property by engaging a mortgage.
The U.S. apartment rental market is $150 billion.[3]
The U.S. mortgage market is $19.3 trillion.[4]
Converting monthly housing payments (consumers highest monthly expense) into a corporate stock investment opportunity gives the general public access to the corporate stock market that is the source of wealth differentiation between the top 10% and everyone else.
The housing market is just the point of entry into the equity accumulation opportunity through a Consumer Equity Rewards program.
Consumer spending that can garner equity for the consumer redistributes corporate stock ownership, reversing the wealth gap trend, and improving the sustainability of the democratic, capitalist economy by making the benefits of capitalism more equitable.
From Blackrock’s perspective, Consumer Equity Rewards expands the investing market by 90% when it makes investing more accessible to everyone outside the wealthiest 10%. Consumer Equity Rewards also protects the buying power of consumers by giving consumers more access to investing income, in turn protecting the longevity of the U.S. GDP.
Maybe somewhere within in Blackrock’s $120 billion real estate investment portfolio is a good place to start.
Capitalism works best when it works for everybody.
[1] Fewer Americans Are Making More Than Their Parents Did – July 25, 2018 – Richard V. Reeves & Katherine Guyot - Brookings
[2] Companies Ramp Up Stock Ownership To Compete For Talent – March 1, 2022 – Stephen Miller - SHRM
[3] IBIS World – March 31, 2023
[4] Statista – November 21, 2022
