If You Love Workers, You Must Love Investors Even More
Businesses don’t exist to create jobs. If readers doubt this they need only try to raise start-up funds with “creating jobs” listed at the top of their business plan. Lots of luck finding investors when your goal is costs, as opposed to returns.
Crucial here is that the desire for returns among investors is what indirectly leads to copious hiring. Workers enable the returns that entice those with means to delay consumption in favor of the investment without which there are no companies, jobs, and progress.
Still, it’s the investment returns that matter simply because they beget more investment. If you love the worker, you must love much more the investors who make work opportunity possible in the first place.
Which brings us to a recent opinion piece by National Review editor Rich Lowry. Lowry argues that President Trump should forget about the stock market, and focus his attention on the working classes. About NR's editor, Lowry has few peers as a wordsmith, and arguably fewer when it comes to influencing the political debate. He’s done this while filling the biggest (William F. Buckley) of big shoes. At the same time, his economic analysis has been puzzling of late given his support for national productivity strategies, federal policies focused on wage subsidization (think the odd embrace of Oren Cass among conservatives), and as of last week, policies and rhetoric meant to emphasize the needs of workers over investors. In his critique of Trump, Lowry forgets that the elevation of the investor class is the only way to boost the economic chances of workers.
About Trump, Lowry writes that it's "a strange disconnect" for "a president who underlined the increasing importance of working-class whites to the GOP coalition and who trampled so much bipartisan economic orthodoxy during the campaign, to be so overtly obsessed with the stock market." He goes on to say that as opposed to the stock market, working-class “wages” would be a more worthy “new object of his attention.”
Up front, Lowry’s focus on wages is rooted in a surprising conservative belief that compensation has long been stagnant in the U.S. Ok, but if the latter were even remotely true then it would also be true that the U.S. would not presently be showered with imports from around the world. Stated simply, a law of economics (Say's) embraced by conservatives disproves a popular conservative narrative of the moment. We’re only able to consume insofar as we’re able to produce first. That wages are supposedly stagnant in the U.S. is further evidence that the economic statistics followed by economists and pundits aren’t worth their attention.
The wage narrative is further belied by stock market indices that Lowry would prefer Trump ignore. Since the early ‘80s, and amid major economic liberalization in the U.S. that NR helped provide the intellectual foundation for, U.S. market indices have soared. To believe pay has stagnated over the decades is to believe that liberalization in fact harms the masses, and that businesses prosper through exploitation. Except that they don’t. Lowry knows this. And from his perch at NR he surely knows CEOs who would confirm what he likely knows. The most expensive employees of all are the underpaid ones. Great companies, and the U.S. is full of them, don’t get that way without well-compensated talent. The wage stagnation story is such a non-story. Yet Lowry wants Trump to make it a story.
He calls for Trump to “shift the public conversation” to the supposedly underpaid American worker. Lowry’s advice that Trump focus on workers over investors misses the point. You quite simply cannot have a discussion about wages without talking about investors first. No economic school or theory can get around the previous truth. Investors are always and everywhere the source of jobs, along with the quality of jobs on offer.
Which brings the rich into the discussion. Lowry has lately made clear his belief that tax cuts for them no longer make sense. The problem is that such a view doesn’t square with his desire to improve the lot of the working man. The rich are essential to the wages of workers. While all statistics rate skepticism, the ones available indicate that the richest 1 percent hold roughly 40 percent of all outstanding public U.S. shares, while the richest 10 percent own 84 percent of U.S. shares.
The rich, precisely because they’re rich, have the most unspent wealth after taking care of their own wants and needs. Short of stuffing their unspent wealth under the mattress, they must invest it. That’s why tax cuts not focused on reducing the burden on those with the most (like the well-oversold Trump tax cuts) are largely Keynesian in nature. The ones that truly stimulate progress are the tax cuts that greatly shrink the amount of money the rich must hand over to politicians. That they won’t spend all of what the government doesn’t take explains why. The rich uniquely have the capacity to invest in size fashion, and workers benefit as a result. Lowry implicitly acknowledges this truth.
As he correctly puts it, “Wages are ultimately related to productivity growth.” Of course they are. Important here is that there’s no productivity growth without investment. The rich once again have the means to invest. So if we ignore the long-term wage stagnation falsehood that is belied by the stock market and the hoovering of the world’s plenty by America’s supposedly suffering workforce, the only way to improve on what’s already great is more investment. We know where investment comes from.
Back to Trump, one of the better qualities of a more than uneven president is his focus on the stock market. Unlike the statistics crafted by economists, the stock market tells the truth for it reflecting the views of the bulls, bears, and everyone else. It’s information personified. And if Trump just gets out of the way, history says investors will cheer. If they do, watch the work opportunities for the common man soar.