Conversely, I think about the "sell" side of the equation. The government will make it sting pretty sharply should I decide to sell any of the stocks that I was bribed into purchasing. That seems to create another false set of market demands by taking away our ability to sell the stocks we didn't really want to buy in the first place.
Maybe I'm crazy or just plain stupid - but it seems ironic that our market has escalated so quickly since the 401K plan was implemented. What I'm really concerned with is the virtual spitting in the face of supply and demand to determine fair market value of stocks. We're bribed to buy and we're strongly reprimanded if we sell. Like the pyramid scheme, something has gotta give. Maybe we're top and middle pyramid people and don't have anything to worry about - maybe it's our kids who will find themselves crushed at the bottom of the pyramid. . .then again, maybe I'm way off base. Only time will tell.
I'm not sure that I agree that you're reprimanded if you sell what you were 'bribed' to buy. There aren't any penalties if you sell your invesments, just if you take the money out of the account. If your company only offers Oppenheimer funds and then you leave and roll your money to an IRA, you can then invest in pretty much anything you want from cash to individual stocks to real estate and there are 0 penalties as long as you don't take the money out and use it. You're only stuck with the funds your company 'bribed' you to buy until you leave that company.
Maybe I'm missing something...
I can see your concerns about an artifical inflation of the markets due to 401ks though. The markets have definitely changed since their inception - more average joes are in the market than ever were back before 401ks were established. But I don't really see there being any kind of backlash - at least not for a long time - because as more companies offer retirement plans and as more people invest independently due to lower entrance barriers, money will just keep entering the market. Like you said though, only time can tell.