The slow growth, rising indebtedness, and financial bubbles and crises of the past few decades have a common root cause: the skewed distribution of income, which is only being made worse by the pandemic. While many investors have so far been shielded from the consequences, thanks to soaring stock prices and asset valuations, a reckoning is coming.
But it can be avoided if investors remember the insights of business leaders such as Henry Ford and Marriner Eccles, who knew that rising prosperity requires rising wages for all. Counterintuitive as it may seem, investors would benefit from sacrificing some wealth and income today in exchange for higher returns in the future.
The simple reason for this trade-off is that most people spend almost everything they earn on goods, services, interest payments, and other outlays over the course of their