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Like it or not, we are all betting on AI taking over the economy. In the last 40 years, the US has become a nation of stock investors. On the whole, it has made Americans rich. Now the stock market is soaring on the hopes that AI will make everyone more productive — and if that doesn’t work out, we all may learn the definition of a bad tail risk.
More than 60% of Americans own stock. For most of the middle class and lower earners, it is through workplace retirement accounts, which have boomed since the 1980s. In 1989, only about 30% of Americans owned stock. In 2007, employers started automatically enrolling plan participants in the market, often in target-date funds that put younger workers almost entirely in stock and move them slowly into bonds as they age. (By the time they retire, they are about 50% stocks.) Some 84% of participants in Vanguard’s defined-contribution plans, representing about half of all covered workers in the US, are invested this way.
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Allison Schrager is a senior fellow at the Manhattan Institute, a contributing editor of City Journal, and a Bloomberg Opinion columnist.