Wouldn’t it be nice if someone declared, in this summer of shame for the stock markets, a moratorium on price updates? Not abolish markets outright, be still my heart, but end their hourly glorification, the burbling reports from floor or studio of nothing but prices. Up good, down bad. They might as well add a track of cheers and groans.

It’s worse than sports scores. No one equates those with a society’s welfare. Yet stock markets have somehow managed to equate themselves with the economy; their health equals ours. It’s brilliant.

They have managed to conceal the elephantine reality that they are merely one sector, like auto, steel or dairy. They are overwhelmingly controlled by a small set of players, who have insinuated something else entirely. People know the banks are just the banks, yet they think the markets are us!

It can’t be because everyone has got into the market, since that isn’t so. Even in the U.S., by a recent calculation, fewer than half of households held stock, including mutual and pension funds, and the top 5 per cent held about 95 per cent of all stock. In Canada, we lack decent stats, but a good guess is that only 25 per cent of households own stock with a similar tiny minority having enough to matter.

Nor is it because of any role in the “real” economy. The stock market itself is just another way to make money. In that sense, it is an end in itself. It is related to “real” enterprises — farms, stores, airlines et cetera. — only opportunistically. It does not provide them, in almost all cases, with new money. Ninety-five per cent of investment in the U.S. between 1952 and 1997 was paid for by the firms themselves.

The stock market moves shares around among firms and issues dividends. The partial exception is IPOs and especially bubbles such as the Internet; but it’s clear those, too, are mainly about making money, not raising it: for the founders who “take” their business “public” and bite their nails to see how rich they’ll get and for those who float and promote the issues.

The markets are not a way of building the economy; they are a way of making money off it, and I know I sound like a 19th century prairie populist when I say that. It feels good.

So enough with the glorification and enough with the contradictions. What contradictions? Take the vaunted “expansion” of the ’90s, when wages stagnated and net incomes, due to debt, often declined, while investment and productivity were both low compared to other periods of growth. So what expanded? Market valuations! KA-BOOM. Because of market valuations, that pipsqueak AOL, with almost no employees, earnings or product, actually took over a genuine gargantuan, Time Warner.

Any idiot could see it was absurd, but market “realities” overrode every impulse of common sense. Now we find out even those unreal, essentially fictitious market valuations were frequently falsified. Lies made the “expansion.”

It’s a relief, really, for many who felt during the past decade that they were floating through an illusion of growth, wealth and prosperity, according to all they read and were told, while their own experience was of falling earnings and expectations, along with deteriorating supplies of health care, education, housing and air. One feels less self-doubt at least.

On Wednesday, when markets rose (again) in response (supposedly) to oaths of probity signed by U.S. CEOs, IBM and American Airlines announced more huge layoffs. It’s not a contradiction, stupid: It’s the plan. Market valuations rise with profits, and short-term profits rise with layoffs. One layoff is said to add $60,000 (U.S.) to future earnings. You “expand” wealth by increasing market valuation (and, incidentally, human misery), not by creating anything real.

It’s nice to be able to turn a seeming contradiction into a simple formula for someone else’s self-enrichment, even if it’s at your own expense. It may be disgusting, but it’s not crazy-making.

I’d exempt President George W. Bush, by the way, from the ban on contradictions, mainly because he’s so good at them. You have to let people go where they excel. Maybe it has to do with him thinking slowly, which gives him a chance to forget the implications of what he just said. At his economic summit in Waco this week, The New York Times said he used “the same terms he has reserved for Osama bin Laden,” when he told CEOs, “If you break the law, we will hunt you down, we will arrest you and we will prosecute you.” I’m pretty sure he was about to add, “Hey, that means us, Cheney!” but one of his aides cut it short.

Then, continuing with the language he likes for Osama or Saddam, he’d have gone on, “I wouldn’t put it past me to be lying through my teeth.” That’s the style the press likes to call “folksy,” based on the fact that he often uses the word “folks.” “I’m under arrest,” he’d have concluded, with a firm, narrow smirk.


Rick Salutin

Rick Salutin is a Canadian novelist, playwright and critic. He is a strong advocate of left wing causes and writes a regular column in the Toronto Star.