Rationalizing the negative impact of President Trump’s tariffs on the stock market, Treasury secretary Scott Bessent has said that stocks are essentially a rich person thing, that they’re 88 percent owned by the top 10 percent of U.S. earners. That’s true, and that’s the point.
Bessent’s protest is a sign that he’s aware of who creates all the businesses and jobs. There are no businesses and no jobs without investment first, and it’s the well-to-do and rich most notably who possess the wealth to invest.
Which means Bessent doth protest too much when he gives the impression of indifference to the doings of the stock market. As opposed to some kind of other that the rich enjoy like private jets, caviar, and second homes, the market is a proxy for the availability of capital that not only leads to the creation of businesses and individual opportunity, but also the democratization of access to goods and services. Google “MCI,” “long-distance calling” and “Michael Miken” if you’re confused.
Bessent’s public pose is that the very tariffs that turn off investors turn on the typical worker, but once again the jobs of workers are an effect of the excitement felt by investors when it comes to putting wealth to work. Paraphrasing John Kerry of all people, you can’t love jobs while hating the job creators.
It’s no surprise that job creators like productivity. This is useful to think about when contemplating what is regularly referred to as “the economy.” It’s just individuals.
This is important to remember when it’s lamented that tariffs shrink markets for producers. The latter is undeniably true and a reason for fewer tariffs, but it misses the much greater truth about the genius of open markets: they free individuals to do what they do best.
When investors put wealth to work, they’re buying future returns in the dollar, euro, pound, yen, yuan, Swiss franc, and a few other key currencies. Returns are a function of enhanced productivity born of talented people being matched with capital.
Thinking about productivity in the face of tariffs, they exist to protect the status quo whereby people do what they always do, and as they’ve always done it. Yet investors want to connect capital with new ways of doing things so that the doing can result in much greater production. In short, they want to put capital behind industrious workers made more industrious by work divided not just with man, but man overseas and machine overseas.
Is it any wonder they loathe tariffs beyond the very real, but somewhat surface notion of selling into global markets? The more that production is divided across a growing number of specialized hands and machines, the more production there is.
All of which speaks to why open trade is so pro worker. Probably the best way to understand its genius is to imagine the converse of it. Imagine having to do what you hate every day in return for compensation. In a scholastic sense, it would be the equivalent of having to study calculus all day when what really interests you is history and politics.
Open markets free us from what we hate precisely because the doing of what we hate is handled by others so that we have greater odds of doing what we don’t hate, or at least what we’re reasonably good at. From there, the specialization implied by doing what we’re good at or love implies much more production of the market good.
Which means the specialization part that is a function of capital being matched with specialized talent means that more and more people are doing what they enjoy in return for what they need and want at prices that continue to fall. This is what well-to-do investors gift us with. Bessent knows this. He shouldn’t be afraid to say he knows this.
