It is always curious when the health of the economy is equated with the stock market, as President Trump did when he touted the recent record highs of the S&P and Dow Jones, claiming he is presiding over the “fastest economic recovery” in U.S. history.
This is strange given that the stock market doesn’t represent the economy or its people’s well-being. As economist Dean Baker has noted time and again, “The stock market is a measure of the expectations of future profits of companies that are listed in the exchange.” In other words, it is a projection of how good things will be for the wealthy investor class, not for you or me.
Furthermore, the benefits of stock market increases go primarily to a small number of already rich and wealthy people. According to a 2016 Federal Reserve data analysis by New York University economics professor Edward Wolff, “84% of stocks owned by U.S. households are held by the wealthiest 10% of Americans.” So, while Trump tries to portray stock gains as good for average people by pointing to retirement funds and pension plans, Wolff explains that in reality, “For most Americans, a stock price increase is pretty immaterial to their well-being.” They might see small increases to their wealth, but “it’s not going to be anything to write home about.”
Whenever Trump, the Republicans or anyone within the mainstream tries to portray a good economy by pointing to a good stock market, just remember they are talking not about you but a small group of privileged people. As George Carlin said, “It’s a big club, and you ain’t in it!”
This tendency to equate what’s good for the rich with what’s good for all is deeply ingrained in U.S. politics. Despite the fact that future corporate profits do not necessarily equate to a better economy, the stock market continues to be used as an indicator of overall economic health. This is largely because doing so serves the interests of those who benefit from higher stock prices. Namely, the very wealthy who own most of the stock and — due to their economic status — have an inordinate amount of power and influence over what narratives are discussed throughout the media. When a narrative reinforces a worldview that is beneficial to powerful elites, there is a lot of incentive for it to be proliferated without being held to much scrutiny.
Yet this becomes a problem when the people whose lives aren’t much affected by stock prices start to internalize this framework. While stocks can trend with the economy given that strong growth will normally also mean larger profits, it is also just as likely that profits are rising for other reasons. If labor costs go down because a company slashes worker benefits, or if companies receive large tax breaks, that would translate into higher profits and stock prices, but it says nothing about the growth of the economy. When this narrative is continually repeated, however, it is no wonder that many working people will reflexively start to adopt it. But this is very dangerous, as it will likely lead people to support policies that help increase the wealth of the very rich instead of ones that would improve their own lives.
Having an understanding of this is even more imperative since it is glaringly apparent that the overall economy has been structured to work primarily for the privileged few.
From 1979 to 2017, total productivity rose by 70.3 percent. Yet the wages of typical workers largely stagnated in comparison, growing by just 11.1 percent. That “excess” productivity went almost exclusively to corporate profits, investors and the top 1 percent of earners. During the same period, the top 0.1 percent saw their earnings grow by a staggering 15 times that of the bottom 90 percent combined.
When UN Special Rapporteur Philip Alston conducted an official investigation into the nature of inequality in the U.S. in 2018, he pointed to key policy platforms that were contributing to the problem, noting the “high tax breaks and financial windfalls to the very wealthy and largest corporations” which were paid for in part by “reducing welfare benefits to the poor”; the undertaking of radical deregulation that “eliminates protections mainly benefiting the middle classes and the poor”; attacks on health care that left millions without coverage; restrictions of “eligibility for many welfare benefits”; “dramatic increases in spending on defense”; insufficient funding to tackle the opioid crisis; and there being “no effort to tackle the structural racism that keeps a large percentage of non-Whites in poverty.”
Yet in the COVID era, the failures of our unequal system have been more starkly evident. Even before the pandemic, nearly half of Americans lived paycheck to paycheck. Nearly 40 percent didn’t have the funds to cover a $400 emergency, and 50 percent of workers made less than $33,000 per year in 2018.
Now, in addition to over 177,000 COVID deaths within the country, the number of food-insecure households with children doubled from pre-COVID levels, as many as 40 million people are at risk of eviction from their homes, and more than 57 million have filed for unemployment benefits since March. Meanwhile, food banks are struggling to meet increased demand during the economic crisis. This, of course, is on top of the fact that frontline workers were forced to go back to work and risk their lives prematurely, without adequate safety measures implemented, and largely without hazard pay.
Meanwhile, a very different U.S. lurks on the other side of the divide. Since the nationwide lockdowns in March, the wealth of U.S. billionaires increased by $685 billion, leading to a situation where now, for the first time in history, the 12 richest individuals in the U.S. collectively hold over $1 trillion in wealth. And while joblessness, homelessness, devastated public services and bankrupted small businesses affect average Americans, a majority of the most profitable corporations in the U.S. are set to gain $85 billion more in 2020 than in previous years. And, as Oxfam America notes, “If we continue with business as usual, these windfall profits will not be handed out to workers in wages, won’t be used to lower consumer prices, nor used to pay a bit more in taxes to fund healthcare workers. These profits will be paid to shareholders, a group of largely white, rich men who already control the vast majority of our country’s corporate stock.”
The Oxfam analysis tracks the most egregious of these pandemic profiteers, and the researchers advocate an excess profits tax — one targeting profits not derived from hard work, but from rent-seeking and luck, like taking advantage of a public health crisis to spike prices. The logic is simple: Why should the already ultra-wealthy be allowed to profit through luck or exploitation at a time when others suffer, especially when those funds could be redirected toward COVID relief and recovery efforts and supporting the working people on whom our society relies?
Yet, the Trump administration and Republicans are doing the exact opposite, vowing to continue tax cuts and attacks on public services while arguing that working people don’t deserve to be compensated for being unemployed during a pandemic.
Republican lawmakers have continuously negotiated to slash the meager $600 a week unemployment benefit down further. And now that the program has expired, the administration has implemented a continued payment of only $300 per week. The justification being put forward is that people are making more money off unemployment than they were at their former jobs, and this is disincentivizing them from returning to work. Despite the fact that this is simply untrue, no one seems to state the obvious: If people were making less than $600 per week (or $15 per hour) at their job prior the pandemic, the problem is that their job doesn’t pay them a living wage, not that they are receiving unemployment.
It should also be noted that the historic rise in the stock market and the ominous sickness-profiteering by big business has been buoyed by a massive government corporate welfare program. The Federal Reserve and the U.S. Treasury’s stimulus package, which vastly outweighs the Obama-era stimulus, has seen a massive windfall of government cash into the hands of the financial markets, which has allowed these record stocks and profits to come to fruition. In addition, the administration’s response to the pandemic directly aided corporate profiteering. It was even admitted by a Trump confidant that the president deliberately faltered on addressing the pandemic because doing so “would spook the markets and so we just shouldn’t do it.”
Portraying stock gains as indicative of economic recovery is really just another example in a long line of dishonest “pro-worker” rhetoric. While there exists a vast divide between the wealthy and everybody else, and while policy is crafted to serve the interests of that wealthy sector, those very same policies are promoted as though they are made with the interests of working people in mind.
Far from actually supporting policies that benefit average Americans, Trump continually uses pro-worker arguments while touting pro-investor policies, as can be clearly seen within his steadfast dedication to raising stock market prices while denying workers unemployment compensation during a pandemic.
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