The Stock Market is Not the Home Team

One infuriating feature of business reporting is the constant cheering for a higher stock market. I have nothing against a higher market, but I know of no general public interest in a high stock market.

In principle, the stock market represents the discounted value of the future profits of corporate America. If the value rises because the economy can now be seen as growing more rapidly, then this is certainly good news. But, if future profits are projected to be higher because of lower wages or lower corporate taxes (e.g. a higher tax burden on workers or fewer public services), why should the mass of the population, who own little or no stock celebrate?

Of course, the higher stock market may just be due to the irrational exuberance of people who control lots of money, as happened in the nineties. This is also not obviously good news. In this case, a higher stock market will shift wealth to those smart enough to get out, from those stupid enough to get in.

In short, there is no general public interest in a higher stock market. When reporters celebrate a run-up in the market, their class bias is showing.

-- Dean Baker

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