By: Alex Bornemisza
Former Board Chair for the New York Public Interest Research Group
“It’s just business,” every one of us has heard this phrase at some point in our lives. We have heard it so much that we almost forget the cut throat philosophy it represents. While the country was distracted by the outcome of its bread and circus we call the Super Bowl, laughing or scoffing at the needless rioting which followed, and almost unanimously finding a sense of satisfaction in Tom Brady frowning, the stock market plummeted. After nearly a year of rather steady gains in the stock market, the country witnessed the largest two day market crash in years. What happened? How is it that with a strong economy, a tax bill hand out to the wealthy, and with unemployment so low, how would the market suddenly crash? Some economists will tell you that this is normal, that the stock market goes up and down all of the time, and they’re right. This though, this is an anomaly and there are many questions to ask.
What are the facts? According to the U.S. Department of Labor, the unemployment rate is at 4.1 percent, on January 26th the stock market hit a record high, tax cuts passed by the Trump administration gives billions to the wealthiest as reported by the Economic Policy Institute, and the new administration rolled back many important regulations. You can find a list of eliminated regulations on the Competitive Enterprise Institute’s website. So, forgetting what may be good for the people or the country, here is a situation which is supposedly a boon for the economy. What goes up though must come down. Even more appropriately in this case, however might be better to say, what goes down will bring others down with it. Let’s talk about unemployment.
Low unemployment is generally seen as good by the population. Almost everyone you know is employed and that’s good. Wall Street though, they’re not happy at all. When unemployment is low, competition to be hired decreases and a competition for higher wages begins. Investors do not like higher wages, it means less money for their bottom lines, higher inflation, and then higher interest rates. Don’t take my word for it though, take it from The Fiscal Times article entitled “Do Businesses Benefit from Unemployment” or from the New York Times piece, “Stocks Fall to End a Bad Week, and a Boom Begins to Look Shaky” also explains what happened immediately after the crash took place.
Wages did not increase much though, only rising 2.1 percent towards the end of January. And that shows an alarming aspect of the U.S. economy. If the people do better, those who run the economy, i.e. the grotesquely wealthy and investment class purposely sabotage the market. If the economy, and therefore all who live under it, are to be punished because we are suddenly employed and people become a bit less poor, who does this economy actually work for? Certainly that can’t work for the population. It should no longer surprise anyone that there is such wealth disparity in the United States. After all, we just witnessed the financial troubles of our citizens finally lifting just a little bit and it literally scared the richest Americans. The wealthiest shouldn’t be worried about increasing wages, but be happy to provide them to the people who allow their businesses to work. Maybe, just maybe, they should be more focused on the lives of their workers and stop engorging themselves and their shareholders with the money they have earned on the backs of people like you and I. Unfortunately, that will most like not happen any time soon, because “it’s just business” and we apparently don’t matter.