The Stock Market Is Not The Economy
It is important to take into account a wide variety of political, economic, cultural and environmental factors when working to improve equality of opportunity for individuals and communities wherever they are.
One common challenge that we come across is helping people and organisations understand the economic implications of growing global wealth and income inequality.
Often people, driven in large part by a heavy US focus in conservative discourse, on stock returns as a gauge of economic success - confuse stock market performance with general economic performance.
The stock market, however, is not the economy. In the US - the wealthiest 1% of Americans own more than half of all the stocks. The stock market is not even representative of the economic or financial interests of the majority of the people who live there.
This disconnect was illustrated even more clearly, when 'Walmart announced last month that it was raising pay for some of its lowest-wage workers. Investors responded by pummelling its shares, sending them down by more than 6 percent on the day.'
Companies love posting ESG statements, and marketers are constantly touting the benefit of appearing to have social impact - claiming that customers 'want to do business with companies that are doing more than just do business for profit'. The stock market regularly proves that this is not necessarily the case. Rather than embrace a living wage for employees, the stock market immediately punished the Walmart for raising pay for it's most at-risk employees.
In order to focus on improving outcomes for people, we need to ensure that we have appropriate metrics that measure the opportunities, impacts and investments in individuals and communities - not simply corporations and the wealthiest 1%
Stagnant wage and productivity growth, cheap finance for banks and corporate instruments like derivative trading, stock buy backs and speculation drive stock market growth. Growing inequality is not the sign of a good economy - it is an injustice that we should seek to address everywhere it appears.
*Karen Petrou 'Engines of Inequality'
*Kevin J Delany 'Big Ideas About Rethinking Pay'
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