America's stock-market dominance is an emergency for Europe

https://www.wsj.com/finance/investing/americas-stock-market-dominance-is-an-emergency-for-europe-627b3221

by mudil • 11 months ago

43 57 11 months ago

juniperus• 11 months ago

funny to note how Europe is considered more socialist and America more capitalist, but in America, the public owns the means of production through pension-based stock market ownership, which is one of the core tenets of communism, whereas this article points out European pensions are state-based or through bond investments. Of course, not much power is derived through American ownership of the means of production via the stock market because that power is delegated to the institutions who have the actual control, serving the same role as the politburo, for instance, in more ostensibly communist systems.

luckylion6• 11 months ago

While the public doesn't have immediate power, it has a lot of freedom. If you manage your retirement fund, you can use it in whatever way you want. Buy a boat. Start a company. Gamble it all away in a week.

A lot of European countries have a much more paternal approach. Citizens can't be trusted to make good decisions, so they only receive part of their salary, and the rest is being managed "for them" - and that's non-negotiable (but there are some exceptions). A lot more stable, but a lot less free because you have a guardian making those decisions for you.

tfourb7• 11 months ago

This is not what happens. European public pension systems are mostly based on a solidarity system in which current wage earners pay for the pensions of current pensioners.

This system has its problems, mostly demographics with fewer young people entering the workforce and an unwillingness to fill the gap with immigration, but it has nothing to do with not trusting people to make their own decisions. It’s simply a historically grown approach which actually has worked quite well (and better than in the US for a greater share of society) for over a century.

lucketone• 11 months ago

Your analysis is fully correct.

I want to add one more aspect to this.

If I gamble my pension away, I have detrimental effect on my neighbours and the rest of society. Sure I could work for a little longer, but not for too long.

One non-exhaustive example: If I don’t die right after my last contract ends, it means I’m consuming food and have some kind of shelter, which is payed by somebody.

dlcarrier3• 11 months ago

I think what's more important isn't who runs current production, but who can start future production. The people of the US own the means of production because they can legally start their own companies, with relatively low barriers to entry, to replace the ones currently in power.

The US has far more protectionism and other barriers to entry than it did when it seized the means of production from England, through the Boston tea party and the revolution that followed, but it still has enough freedom of business that it easily beats the European Union in pretty much every developing field.

Where the American Revolution differes from communist reviolutions is that, after seizing the means of production from a repressive government, the revolutionaries' new government did not hold onto the means of production through a planned economy, but instead held effectively zero economic oversight, leaving production open to a free market and anyone who wished to participate in it.

motorest2• 11 months ago

(...) but in America, the public owns the means of production through pension-based stock market ownership, which is one of the core tenets of communism (...)

Do they own it, though?

Or is the US public relegated to a position of financing investment corporations without any ownership or control in exchange for a fraction of the profits and the bulk of the losses?

If anything, the US public seems to be used as a strategy to lower investment risks of investment firms.

(...) whereas this article points out European pensions are state-based or through bond investments.

The "state-based" aspect which you are casually glancing over refers to full blown income redistribution schemes, where everyone's paycheck, being rich or poor, is proportionally deducted to finance retirement pensions, unemployment benefits, parental leaves, and even medical leaves.

Do you think that paying a corporation to invest in the stock market is more socialist than this?

9rx2• 11 months ago

Do they own it, though?

Yes.

Do they control it? If you really get right down to it, technically also yes. If the public banded together to get things done, it would get done. But as with anything shared by millions people in the real world there becomes a disconnect between the people and in the chaos of lack of communication and no shared will to get things done a few actors end up usurping control. So in practice, no. But, I mean, that has always been the criticism of socialism — that a few actors end up taking control — so no surprises there.

9rx2• 11 months ago

which is one of the core tenets of communism

One of the core tenants of the Communist Party, who believe (on paper, at least) that socialism is the path to enabling post-scarcity.

Communism is an imagined sci-fi world where we've already achieved post-scarcity; Star Trek is a more modern adaptation of the same idea. If it has anything resembling "core tenants", there being no ownership is one of them. It is imagined that in a post-scarcity world, ownership doesn't mean anything.

neonate• 11 months ago

https://archive.md/XiL3M

crinkly3• 11 months ago

WSJ are pushing it there. Depends what you mean by dominance. The US market is propped up on hyped big tech investments with little chance of ROI for shareholders other than inflating the valuations. PE ratio is quite frankly bananas too.

At some point it’s going to be absolute carnage. Private investment companies have already seen the end game and from direct observation have been pushing the hype to drive volume so they can shift their holdings on to the bagholders.

Good luck. It’s not a stable market. It’s fucked.

dlcarrier3• 11 months ago

Multiple branches of the US government regularly go after business for having too high of a profit margin. I really don't blame businesses for holding onto their cash, instead of making stock disbursments, when that's exactly what they are incentivized to do.

devoutsalsa• 11 months ago

I really wish they’d ban stock buybacks. When executives get paid in stock options, they want the stock price as high as possible. The easiest way? Buy back shares to make the remaining ones worth more.

But when companies do this while their stock is overpriced, they’re wasting shareholder money on expensive shares. Executives pad their own pockets while shareholders get screwed.

I’d rather see companies pay better dividends or keep the cash. At least then shareholders actually benefit instead of just watching executives get richer.

motorest2• 11 months ago

I don't know who is downvoting this post. The fact that companies such as Tesla as being featured as meme stocks for years, with valuations that bear no relationship to performance let alone fundamentais, is a clear indicator that the house of cards can tip at any moment.

thrown-08252• 11 months ago

The foundation of that house of cards is composed of nuclear weapons, stealth bombers, nuclear subs, and aircraft carriers.

sunshine-o3• 11 months ago

Yes go most banks in Europe and ask to invest anywhere from 1000 to 1M euros they will sell you mainly two things: European govs debt and bluship US tech stocks. It might be wrapped in all kind product but it is often most of it (MS, Apple, Google, Nvidia, etc.).

I once asked what could be the alternative they literally couldn't answer me. Virtually every EU citizen with a bit of money has part of their savings invested in the same 5 US big tech companies. And I am sure it is the same in many parts of the world.

We are very very far from initial role of a bank and you might wonder why Europe has its own banking system in the end. It also explains why the price of those stocks are so high.

crinkly3• 11 months ago

That’s idiotic really. I mean I’m not sure why you’d go to a European bank for investment advice other than “bank do money, ug”. There’s a whole advisory market out there which gives you better options based on your attitude to risk profile and goals. Not the usual put it all in a TSLA/NVDA/MSFT ETF and to the moon shit.

I made more out of the tech market in the last 5 years than I would have in it by having sensible advice and a half decent financial model.

iamacyborg• 11 months ago

Virtually every EU citizen with a bit of money has part of their savings invested in the same 5 US big tech companies. And I am sure it is the same in many parts of the world.

Consolidation of power means that’s just what happens when you chuck money into an index fund, even a global one.

dachworker2• 11 months ago

Actually you must be thinking of the most reputable banks.

Because most of them will absolutely try to fleece their older customer demographic by trying to make them invest in high expense funds that perform terribly. For them to advice you to put them into a decent index tracking fund is already a good sign.

thrown-08252• 11 months ago

The US market is propped up by the most powerful military that has ever existed, and its exists purely to maintain the US hegemony.

Tech sector dominance/hype is a nice perk.

tfourb7• 11 months ago

„Higher pay for U.S. executives is another draw. Peter Jackson, the chief executive of Flutter, which owns the betting platform FanDuel, nearly tripled his compensation after the gambling company moved its main stock listing to New York last year from London.“

Well, I think we solved the riddle …

ur-whale• 11 months ago

https://archive.is/XiL3M

elcritch• 11 months ago

I hope that the European Union reforms its bankruptcy laws to match those in the US.

Bankruptcy clemency is one of those key advantages the US has to really enable entrepreneurship. Another one in California is no non-competes.

As an American I want to see the EU be economically vibrant!

anonzzzies2• 11 months ago

No non competes are there in some countries (not sure how many but at least where I had companies, they are not worth the paper they are written on as they don't hold up). And bankruptcy, again where I have had companies, is not really a big issue if you didn't do illegal stuff. You mostly have to show your accounting is proper and you didn't do anything bad. Really not that complex. People do still put a stigma on it; I had 20 companies, 3 bankruptcies, 10000+ jobs made, 100m+ in taxes paid and still people whine about the bankruptcies; but it is not hard to execute. What makes the US easier outside less stigma?

RugnirViking• 11 months ago

Having tried myself in the EU; access to capital. People as far as I can remember there's something between 5-50x as much capital going around in America. For industries outside of strict software, you NEED capital to get going. Can't bootstrap medical trials.

roenxi• 11 months ago

The article seems to roughly match the headline - I don't know why we're sourcing the WSJ to comment on Europe's policy with ideas like "emergency" or "wake up call"s. The Europeans are the ones with the opinions that matter on this one, presumably they think this is all acceptable given that they've been heading in this direction for a decade (if not decades), cheerfully willing to bear the consequences of being less business-friendly than the States (to say nothing of China). I'm not even sure we can call this unintended consequences - there seems to be some acceptance that Europe is going to be #3 when it comes to raw economic power.

I can make a forecast - anyone outside the US who lets their policy positions be swayed by the US press is heading for a disaster. Even if the Americans turn out to be accurate in their opinions. Countries need to maintain their own internal dialogue.

It'd be more interesting to be looking at what the British, or even the Germans and French think about the situation. They're the ones with the levers.

chaostheory• 11 months ago

Why Germany? Isn’t Germany already in a demographic crisis that’s nearly impossible to recover from?

LaurensBER• 11 months ago

European here.

I feel that our priorities have been on social/climate issues. For a very long time the feeling was that we had enough prosperity and that more was nice but that it was not as important.

There was some serious talk about "de-growth" and the trend (for some groups) was mostly towards working less but maintaining the same standard. Among left political circles it seemed that the focus was on doing the most good, for the most people and this focus often lay outside of Europe. To put this in a historical context, many Europeans (especially Germans) feel that we have historical sins to atone for.

We trusted the US and were happy to see them succeed. To a lesser degree we trusted China and Russia and we figured that they would make (economical) rational choices to codependency was seen as a strength and not a weakness.

It's very clear that we were in some degrees naïve and lazy and wasted opportunities and choices. Europe occasionally needs a good crisis to get going again, I'm glad we're finally getting one.

snapplebobapple• 11 months ago

You did the same dumb canada did, assuming usa would be happy forever taking care of the world while you focused on luxury beliefs. We are all paying now that usa finally figured out the arrangment was too costly given the impending doom of the ussr existing was gone. It makes me aad thinking about where we migjt be now if we had focused on actual progress rather than luxury beliefs. Chance is strongly non zero we would have developed the tech to solve our climate issues for example.

aworks2• 11 months ago

Stephen Kotkin, the historian, made a podcast comment that the US share of global GDP has remained about the same over time, regardless of politics/policy/crisis.

We Americans love our economic growth, for better and worse.

I used to manage software teams in Europe, Russia, North America and China/Taiwan. Quality of life seemed best in Europe, Asia seemed best for the young, and the US was the most business aggressive. I liked the Canadians. California climate (and innovation) can't be beat.

In my next life, I will figure out what's best...

oytis2• 11 months ago

I don't think everyone is OK with declining economic power,but rather is too comfortable and helpless at the same time to actually change something.

I think outside perspective is actually useful, because internal dialogue often goes rounds like should do something -> can't do anything -> football -> should do something

apexalpha2• 11 months ago

As a European, I kind of agree.

In the Netherlands we try to compete globally but as long as we’re rich enough people focus more on free time.

As our income grew the past decades the Dutch have cut back on working hours in stead of just hoarding more money.

The average Dutch person now works 400 hours per year less than the average American.

More than 50% of us now work a 4 day workweek and this will probably be made official before 2035 if I had to guess.

People just dont care enough to become even richer.

And though I am considered a workaholic by family and friends I too enjoy my 16 weeks paid time off this year with my newborn. :)

Xymist• 11 months ago

This seems entirely sensible to me. If I was offered the choice between doubling my salary or keeping the same one but halving my days worked in a year I wouldn't consider the former for more than about half a second.

ath3nd• 11 months ago

No, it's not. Nothing stock market is relevant or important.

dzonga• 11 months ago

what's not spoken about is the moral posturing of western countries the uk/e.u etc that has affected their global markets.

without their moral posturing - dubai wouldn't exist.in 3rd world countries a while back in the 90s companies would dual-list on their home exchange and the LSE. win-win. back then visas were not difficult to get etc or you could travel visa free if part of commonwealth.

now the shaddy business dealers would rather prefer dubai were they're not lectured about the moral failures of their business practices or who they associate with.

trump for all his failures was able to recognize this - hence one of his first trips was to the GCC.

spwa4• 11 months ago

Don't worry, EU governments have already JUMPED into action. They have collectively decided they will make the rich richer and use whatever means required to insulate the government from the economy. Zero economic compromises when it comes to government's own functioning ... You know, things that absolutely do not matter for competitveness.

So the plan is to save their way to growth. For example: less students, less research, less teaching (including at lower levels), less ...

https://universitytimes.ie/2025/05/french-students-protest-b...

https://www.uni-mannheim.de/en/news/higher-education-budget-...

https://www.timeshighereducation.com/news/layoffs-begin-dutc...

It gets a lot more vindictive than this. For example, one of the few things that is getting increased funding is debt collection. Also, the laws are getting "strengthened" (e.g. pensions are no longer untouchable for debt collectors in France). There's a saying "you can't whip blood out of a stone", by which they mean that you can't get money from the poorest of the poor. Clearly, the plan is to lash the poor until blood comes out.

It's not like the economic theory these governments claim, in their high school economy courses, clearly states that governments should save when things go well, like the last 15 years, and then seriously increase expenses in times like these ... Otherwise, given that they saved less than nothing, those courses amount to lying to essentially every student in the EU. Hell, given that it's lying about the money of these students, you could argue it's fraud ...

Oh wait ... that's exactly what they teach.

aworks2• 11 months ago

'“The wealth creation will happen to Texas teachers and California public-sector employees, not to European pensioners,” said Stephan Leithner, CEO of Deutsche Börse, operator of the Frankfurt Stock Exchange.'

Well, ok.

America's stock-market dominance is an emergency for Europe

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