BlackRock CEO Larry Fink warned in his annual chairman’s letter that wealth inequality could worsen if more people don’t participate in financial markets to reap the benefits of investing.
Fink said that the vast majority of wealth has flowed to people who own assets, as opposed to those who earned most of their income from working, and warned that artificial intelligence (AI) could exacerbate that trend.
“Since 1989, a dollar in the U.S. stock market has grown more than 15 times the value of a dollar tied to median wages. Now AI threatens to repeat that pattern at an even larger scale – concentrating wealth among the companies and investors positioned to capture it,” Fink wrote.
He said that at the corporate level, the companies that have the “data, infrastructure, and capital to deploy AI at scale are positioned to benefit disproportionately.”
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“That is not unusual, and none of this is inherently problematic. Market leadership has always shifted with technological change,” Fink said. “The broader question is who participates in the gains. When market capitalization rises but ownership remains narrow, prosperity can feel increasingly distant to those on the outside.”
He noted that it’s unclear how the deployment of AI will impact the labor force, particularly for entry-level white-collar workers.
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Fink added that, historically, automation has boosted productivity and, over time, broadened the range of work available even as certain roles were displaced – though he cautioned that “new roles take time to emerge, and workers don’t always move seamlessly from old ones to new ones.”
“One thing is clear: AI will create significant economic value. Ensuring that participation in that growth expands alongside it is both the challenge and the opportunity,” he wrote.
Fink went on to discuss ways to broaden participation in financial markets to expand access to the market to a larger segment of Americans.
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He said that the newly created Trump Accounts could be a “very significant step” in encouraging young people to put their money in the market.
Trump Accounts are savings accounts given to newborns and seeded with money from the government and philanthropic benefactors as well as parental contributions that are invested in a broad index of U.S. stocks. They may also be created for people under the age of 18, and are held in custody by a parent or guardian until the child turns 18.
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Fink said market-based approaches like that could also be used for programs like Social Security to stabilize the safety net program, which is approaching insolvency in under a decade.