Carol - You seem to have a pretty good grasp on some of the inherent problems connected with the stock market, but there are others. Manipulating information to move the market for a specific stock around is a huge problem, particularly when you have amateurs day trading and dabbling. "Insider information" is hard to prove and prosecute.
My main problem with the market is that it creates the illusion of ownership, rather than the reality of ownership. Sure, you own a piece of paper that represents a part of a corporation. But there remains a huge difference between being a farmer and owning stock in an agricultural corporation.
A farmer owns land and grows food; feeding people is his business. If the farmer does that he/she (theoretically) makes money. Unfortunately, before the crop is planted the futures trader's have already set the market price for that crop. It has little or no relationship to the cost of production or the current demand. And yet the farmer continues to grow food because that is what he/she does.
An agricultural corporation, on the other hand, is in the business of making money. Period. The means to do this is (nominally) production of agricultural products. If it is determined that more money can be gleaned from the land by making it a golf course, storing nuclear waste or selling the mineral content, that is what the corporation will do because the only mandate a corporation has is to maximize profits for the stock holders. And a stock holder would be a fool to tell the board of directors to do anything other than drive the stock price up.
That's the problem. There is no committment in corporate America to anything but generating profits. It is only moral suasion and the counterweight of the federal government (they is us, you know) that keeps corporate greed in check. But I'm repeating myself. I'm gonna go now and let others voice their concerns and opinions. Have a nice night.