(Centennial Fellow) Despite diatribes to the contrary, American corporations include multitudes that are tough–minded, occasionally brilliant and manifestly capable, a major reason the stock market is not just alive and well, but downright perky.
That’s worth a grin, as is the somewhat misleading decline in the unemployment rate. But don’t suppose the government can’t change that to a frown, even wailing and gnashing of teeth. It’s trying right now.
Corporations have not had an easy go of it in either the past recession or a recovery in which federal wizards aimed to spend us out of trouble, thereby spending us into danger. Yet even with the worry of catastrophic debt default, the coming of the ultra–burdensome Affordable Care Act—“Obamacare”—and still other regulatory deathtraps, any number of corporations big and small have managed to earn credible profits.
One means was cutting costs, and one way of accomplishing that end was to do more with less labor, horrifying many on the left. They think that, instead of increasing efficiency in hard times, businesses should convert to welfare agencies. Many, of course, would then go out of business, or at the least perform abysmally. Brave, bold profits, on the other hand, set them up for a sterling future of expansion and—let’s all say hallelujah—hiring sprees.
Investors see this, they begin to have hope where there was very little, they invest more, stock prices go up and the left sneers. The supposition, as economically uninformed as it is ideologically inspired, is that the stock market is just a way for the rich to get richer.
The actuality is that about half of all Americans have stock investments, and whether the stocks are individually owned or, say, part of a union pension fund, owners profit when stocks grow in value. If that pension fund is for government workers, some taxpayers get off a hook or two.
When investments by nonprofit groups do well, they can provide more services to the needy. As their value goes up and they get more capital, businesses can provide more goods, services, tax revenue and occupations that put money in pockets and not infrequently do something that too often gets lost in the discussion. Jobs can add purpose to human lives.
Of course, it wasn’t just corporate character and cleverness that led to the latest rise in stocks, but a number of other factors, not the least of which was the Federal Reserve and its easy money policies. Though those policies help boost stock prices, they also threaten runaway inflation. If you think the Federal Reserve is always a lifeguard and never an anchor tied to a swimmer’s foot, think again. Easy money helped drag us into a recession along with crony capitalism and federal policies that prompted people to buy houses they could not afford. There’s little that big, bad Wall Street did wrong that was not abetted by big, bad government.
The other cheering news of the moment is that unemployment is down to 7.7 percent of those seeking work. The heart palpitates at a slower speed when we realize we got there in large part because of ever fewer people seeking work. That’s not all there is to it—the construction industry is jiving again and 236,000 jobs were created last month—but vast numbers have retreated in the battle to secure employment.
The cure is really, truly vigorous economic growth that we can only instigate and sustain if the administration quits handling the politics of overspending by exaggeration, trickery and blatant insincerity. At some point, we need seriousness about long–term reductions of a debt that could turn our world upside down.
In the meanwhile, the free citizenry and a private sector of amazing energy and ingenuity are edging us in the right direction. The government obstructs, but we the people keep doing our best to overcome.
Jay Ambrose, formerly Washington director of editorial policy for Scripps Howard newspapers and the editor of dailies in El Paso, Texas, and Denver, is a now columnist living in Colorado and a Centennial Institute Fellow.