The Stock Market is up..You should be pissed off!
As I write this, the Dow Jones Industrial Average is approximately 26,000, up 400 points for the day; Sure, at its highest point earlier this year, it was at 29,568 but 26,000 is still incredibly high. Perhaps more interestingly, just as the Covid-19 pandemic took root in the United States, it dipped to just above 18,000. It climbed back almost 50% from its pandemic-induced low. The NASDAQ is unapologetically flirting with new highs. As of this writing, it is almost 9700, just 200 points shy of its-time high.
Okay, so what’s the problem? Well if these incredible numbers don’t jar you, then I’m not sure what will. The US is in flames. Protests have recently raged and are raging in dozens of US cities. The Covid-19 Pandemic has killed over 100,000 people in the country and 40 Million Americans have been driven out of work. Unemployment systems are overloaded; forlorn messages for help are all over social media. The US President cowers in his bunker and incites violence, propagates hatred, and has set the country back decades.
So why the hell are the stock indices so robust?
Well, here’s why:
1. If you believe in the theory of stock-prices, they represent the discounted future cash-flows of a company. Put simply: When stocks go up, it is because the “collective wisdom” suggests that they’ll be increasingly profitable. As they go up even as America burns, the market is indicating that large companies will continue to reap super-profits, ignoring the death, destruction, and misery of the population. Spoiler alert: The more unemployed you have, the more the downward pressure on wages. In other words, peoples’ desperation impels them to work for less, enriching corporate profits.
2. The dead don’t matter. It is as though the 100,000 people who died and the 2M (or so) people who have gotten sick simply don’t matter to the Masters of the Universe.
3. Those murdered, maimed, disenfranchised or otherwise put upon by the racist and anti-poor institutions on which our society is built don’t matter to the “markets.”
4. The unemployed don’t matter. They will work for less and didn’t buy Teslas anyway so who cares?
5. Markets are not connected to the pains and reverberations of society other than in the inverse- the more pain, the higher they go.
This disconnect is a sign of deep malaise, of an economic sickness that is wrought by the very system that creates the need for protest and civil disobedience. As the country burns and people suffer in their homes, pundits talk about a $2T valuation for Microsoft and Amazon removes the $2/hour hazard wage for its warehouse workers. Such excesses would have roiled populations and brought down governments in a more sensible era.
If the “health” of companies is judged differently than the health of those they purport to serve- or if indeed if these two factors are at odds, then we should either question the axioms on which we judge companies or the disingenuous horseshit they pass off as their mission statements. Or both.
