The stock market is not the economy
Traders at the New York Stock Exchange listen to President Donald Trump's televised White House news conference, March 17, 2020 in New York. The month of April, by percentage gain, was the stock market's best month in 33 years. | Mark Lennihan / AP

For years, Trump has been telling us that when the stock market soars, the economy booms for us all. Whenever the Dow Jones or the S&P 500 hit a new high, we’ve been expected to clap and cheer for the latest proof that America is “great again.” On such occasions, the president has regularly tweeted, “Congratulations USA!”, as if we were all on the way to the bank with our stock dividend checks.

But if you ever suspected that those who live off the stock market inhabit a different economy than the rest of us, this week provided plenty of evidence to confirm it.

On Thursday, as the number of unemployed claims added to their record-shattering tally—33 million since the pandemic started—the NASDAQ Composite actually turned positive for 2020. This means that the index—which is dominated by big tech firms like Facebook, Apple, Microsoft, Google (Alphabet), Amazon, and Netflix—is higher now than it was back at the beginning of January before the economic shutdown started.

In fact, since March 23—a time when the rest of America started receiving pink slips—these six giants have seen their share prices rise dramatically. Leading the pack is Facebook, whose shares have added 41%, while Netflix brings up the rear with a 20% increase. Those gains add up to billions in new value, which has made a lot of already rich people a lot richer.

How does that make sense? How is so much money being made by some on Wall Street when tens of millions of working people have no jobs and can’t pay the rent and bills, buy food, or afford health insurance? When workplaces are shut down and some companies are declaring bankruptcy, how is it possible that the lords of high finance are raking in the cash?

Boom: The tech giants have seen their share prices soar during the pandemic. | CNBC chart

We’ve long been led to believe—by politicians of both parties, a big chunk of the mainstream media, and business leaders—that we’re all together in this thing called “the economy.” When the boss does well, you’ll do well. “What’s good for General Motors is good for America.” “Trickle-down economics.” It’s all the same.

It is true that we’re all in it together. But rather than capital and labor being partners in some mutually-beneficial enterprise, the relationship has actually always been more of a parasitic affair.

In the era of Trump, this blatant ideological façade been carried to a clumsy extreme. Before the coronavirus pandemic hit, the president’s entire case for re-election was based on the claim he had created a strong economy, with the stock market’s undeniably stellar performance offered as proof. His political fear that stocks would go down if there was too much panic is actually a big part of the explanation for why he was slow to take action against COVID-19 and for why he’s in such a rush to reopen the economy now.

Of course, with families hitting rock-bottom after missing just a paycheck or two, it’s become obvious that the “Trump boom” wasn’t really booming for most people even before the pandemic. But that isn’t stopping him from trying to divert the attention of the unemployed with fresh praise for Wall Street’s greatness.

Just a few days ago, Trump was fawning over the wisdom of the investor class and linking their growing wealth to his own supposed economic stewardship:

“The market is smart. The market is actually brilliant. And they’re [Wall Street] viewing it like we’ve done a good job. … We had the greatest economy in the history of the world, better than China, better than any country in the world, better than any country’s ever had. We had the highest stock market in history, by far, and I’m honored by the fact that it’s started to go up very substantially.”

Thanks to the trillions of public dollars that have been pumped into financial markets and the quick corporate bailouts flooding out of Washington, some of the biggest monopolistic companies have indeed seen their share prices “go up very substantially.” But this jackpot for the few is happening at the expense of the many. Even other capitalists are being offered up as sacrifice—the job-rich retail sector, standing on the ledge of a likely wave of corporate bankruptcies, is but one example.

Boom: Stock market has best month in 33 years

If you can believe it, by percentage gain, April 2020 was the best month for the stock market since 1987. From the lows of March when the economic shutdown started, the market is up more than 30%. In just 23 days, the billionaire class in the U.S. increased their wealth by $282 billion. As Markets Insider reported, “Billionaires saw their net worth increase,” even while the economy has been closed, “as stock markets rallied sharply, rewarding those with large stock market investments.”

Like gamblers in a casino, the members of the investor class are placing bets on which companies will come out of the crisis and be able to pick over the carcasses of those that didn’t make it. In such a calculation, the lives affected or jobs destroyed don’t matter; profit is the sole criteria.

And the worst part? The barons of finance are getting big payouts from some of the very same companies that are closing plants and laying off workers. The Washington Post featured blunt reports this week of U.S. companies cutting “thousands of workers while continuing to reward shareholders.” Just five of them—Caterpillar, Levis, Stanley Black & Decker, Steelcase, and World Wrestling Entertainment—have forked over a combined $700 million in dividends to shareholders during the shutdown.

These kind of quarterly payouts make companies very attractive to investors and prop up their share prices. Since the right-wing neoliberal revolution of the 1980s, the corporate class has followed the rule that companies exist only to serve their shareholders and no one else. In the midst of the coronavirus crisis, they’re following that rule religiously.

Bust: Workers have worst month ever

Meanwhile, as the stock market enjoyed its best month ever in April, the actual economy—where the rest of us live and work—saw its worst month since the Great Depression. Over 20.5 million jobs evaporated in just 30 days.

Bust: Job destruction is happening faster than ever. | Bureau of Labor Statistics data / CNBC chart

The official unemployment rate is 14.7%, but many progressive economists think that is an undercount because of collapsing unemployment filing systems in many states. Elise Gould from the Economic Policy Institute estimates that for every 100 people filing for unemployment, another 50 people who lost their job can’t get through the application process or find it too difficult and give up trying. If these “missing claims” and the undocumented workers who aren’t eligible to file were counted, the actual number of jobless people could be 40 million or more.

That’s not the only bad news for working families, though. Nearly 1/3 of the country’s food banks have closed their doors over the last few weeks. Volunteer help is down, operating costs are skyrocketing, and food donations are in short supply. One pantry, the Central Texas Food Bank, was serving 50,000 families weekly before the pandemic; by early April, it had 72,000 families asking for help.

Workers who have lost their jobs line up to file paper unemployment benefits applications, April 21, 2020, in Pearl, Miss. April was the worst month ever for workers, with 20.5 million jobs evaporating. | Rogelio V. Solis / AP

The people dependent on unemployment checks and food banks don’t benefit much from stock market booms. In fact, half of U.S. families own no shares in the stock market at all, even when you count 401Ks and retirement accounts. For communities of color, the numbers are even lower. Only 36% of Black families own any shares; for Latino families it is about the same, 37%. The reality is that almost the entire stock market—some 84% of shares—are owned by just 10% of Americans. And it’s long been proven that prosperity for those at the top rarely trickles down much in the form of job creation.

A tale of two economies

If the coronavirus crisis has shown us anything, it is that the stock market is not the economy. Those who make their riches in the casino world of paper trading and finance—what Karl Marx referred to as “fictitious capital”—are not the real economy. Their wealth is made speculating on and borrowing against the proceeds of the labor power of those who actually go to work every day.

The real economy is made up of grocery workers, nursing home attendants, Uber drivers, Amazon warehouse workers, waitresses, postal workers, cashiers, shelf stockers, steelworkers, construction and tradespeople, nurses, hotel maids, janitors, flight attendants, journalists, delivery drivers, meatpackers, farmers, researchers, sanitation workers, teachers, miners, and everyone else who earns a living from their labor.

If all of us are not doing well, then the economy is not doing well. We are the people who should be prioritized by Congress when it is drafting stimulus and recovery legislation, not the banks and monopoly corporations who are lined up at the bailout trough. Longer term, what we need is a system centered on and planned around the needs of the “real economy”—socialism—rather than one left up to the anarchy of private capital chasing profits.

Whenever Trump and his allies claim that a strong market equates to a strong economy, you can be sure they’re trying to put more money into the hands of those who already have pockets full of cash. And they’ll do it at your expense—just like they’re doing right now.


CONTRIBUTOR

C.J. Atkins
C.J. Atkins

C.J. Atkins is the managing editor at People's World. He holds a Ph.D. in political science from York University in Toronto and has a research and teaching background in political economy and the politics and ideas of the American left. In addition to his work at People's World, C.J. currently serves as the Deputy Executive Director of ProudPolitics.

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