For massive employee share ownership in OECD countries, i.e. the dilution of existing shareholders

The considerable gap between shareholders’ return on equity (RoE) and risk-free interest rates, which is linked to the skewing of income distribution against wage earners, is contributing to high social tensions. One solution would be to rebalance income distribution in favour of wage earners by rapidly increasing wages. But this solution would entail dangers: It would have to be coordinated between countries to avoid distortions in competitiveness; It could give rise to inflation and restrictive monetary policies. There is another possibility: a massive capital increase in favour of wage earners by distributing free shares to employees, i.e. a large increase in employee share ownership. Whereas contemporary capitalism seeks to boost earnings per share via share buybacks, the situation calls for the dilution of existing shareholders in favour of employees. This would obviously reduce RoE, but it would give wealth and income to wage earners without worsening cost competitiveness and without giving rise to inflation.