Your first assumption is wrong. The market is a positive-sum game. Corporate earnings will continue to increase over time (or at least they have for the past 400 years) at a rate of around 10% per year. This will eventually be reflected in share prices and dividends.

Based on PE ratios, you may think that stock prices won't reflect increased earnings in the middle term, but this is hardly ironclad. It's just as probable that PE ratios will remain constant, meaning increased earnings will cause increased share prices. Over a 20 or 30 year horizon, you can be fairly certain that the market as a whole will beat inflation and short-term interest rates.