On Thu, 15 Aug 2002, Misha Gambarian wrote: > On the other side, if we allow people to buy more than one share (as it > happens in real corporations) - then I think we can expect that rich > people will buy many shares (as they do in existing real corporations) > to get political influence more directly than now > and USA will become oligopoly with poor people having less power than > they have now.
Ok. Assume 280 million shares (approx. current population). Current GDP is approx. 10 trillion. I have no idea what the current valuation of the stock of wealth in the US is, so let's just assume a lower bound share price as being 1/n of the PDV of income flows (GDP). The present value of an infinite income flow of 10 trillion dollars at 5% interest is about 200 trillion dollars. Dividing that by the number of shares, we get about $700,000 share value. The share price can't go much lower than that because, in the limit, somebody could buy all the shares, enslave everyone, and get output that would be some fraction of current output (lower since it would be expensive to keep everyone as slaves). But, to get the majority necessary to do that would require an investment of at least half the market valuation -- $100 trillion. While I think capital markets are fairly efficient, I find it quite implausible that anyone could raise that kind of money to run a hostile takeover. And, absent that, just buying another $700K share to get one more vote would be ridiculous. Even if all the rich folks in the country liquidated all of their resources to buy shares, they still wouldn't have any significant increase in their control rights. Bill Gates has what, about $62 billion? If he sold everything, he could buy about 89,000 shares. Out of 280 million. That's still less than a tenth of a percent of the shares. Fears (or hopes!) of oligopoly are greatly overstated.
