Voting With Money?

The stock market closed down by about 127 points today. Does that result reflect disapproval by Wall Street of the "bonus tax" voted by the House of Representatives yesterday? Does it reflect anxiety on the part of investors over the uncertainty of their winnings should Congress resume its taxing ways? These are questionable questions to ask, but I sometimes hear or read people saying that a given day's poor performance on the stock exchange, or a bear market tendency over days or weeks, is the market's vote of no-confidence in the President's economic policies.That would be an absurd idea if I didn't have a guilty suspicion that it might be true.

Under normal circumstances the price of stock in any given company should, in an ideal stock market, reflect the market's considered judgment of the company's value. It should be based on the company's performance and its sales prospects, and nothing else. But people in America, and especially those inclined to speculate in stocks, have grown accustomed to the idea that spending money is a form of political speech. In the marketplace of political ideas, the Supreme Court has said that donating money to a candidate is the same, as far as the First Amendment is concerned, as making a speech for him. The market mentality may encourage the belief that any kind of spending might be a political statement. Republicans have embraced this idea by insinuating that each day's trading is a fresh vote of confidence in the Obama administration. How hard is it to believe that some of the traders might take this talk seriously? Couldn't some of them believe that they might influence the administration to adopt policies more favorable to Wall Street by demonstrating, through selling stock and driving the market down, that only be doing so can Obama restore market confidence? Would they dare play chicken with the stock market to get their way? It sounds irrational, but aren't we in the middle of what used to be called a "panic?"

Given the possibility, if not the plausibility of such a strategy, let's remind ourselves that Wall Street is not a branch of the American government. The government is no more accountable to the stock market as an entity than it is to individual traders in their capacity as citizens on Election Day. The market's panicky fits should be ignored as often as other irrational outbursts from the people in general. Unfortunately, the news media conditions us to treat the Dow Jones numbers as accurate measurements of the nation's economic health, as if they measured something as objective as pulse rate or blood pressure. But there's nothing objective about the stock market at work, and the notion that the government must strive to please Wall Street is as loathsome as any demand that it serve a "special interest." The brokers may not be the best judges of the economy. After all, they're the ones who valued stocks so high so short a time ago. For politicians interested in the well being of all Americans, it may be an obligation to ignore the stock market, unless they can figure out for themselves what the market is really saying.