Should Trump Receive Credit for Surging Stock Prices?

CNS News | 8/10/2017 | Staff
TaylorShaye (Posted by) Level 3
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I’m rather frustrated about the lack of real results from the Republicans in Washington.

They haven’t repealed some or all of Obamacare despite seven years of promises.

Taxes - Tax - Code

They haven’t lowered taxes or reformed the tax code.

They did a business-as-usual budget deal earlier this year.

Trump - GOPers - Credit - Stock - Market

Yet Trump and some GOPers want to take credit for a rising stock market, as if that is some sort of positive reaction to their non-accomplishments.

As you can see from this interview, I don’t completely reject this hypothesis. After all, stock values are a reflection of the market’s expectations of future after-tax profits. So if investors think that good reforms – such as a lower corporate tax rate – are going to happen, then it makes sense that the value of financial assets will increase.

Way - Claim - Economic - Policy - Institute

By the way, I can’t resist commenting on the claim from the Economic Policy Institute that the stock market is a “meaningless indicator” that has nothing to do with the well-being of workers.

That’s nonsense. Assuming we’re looking at genuine and durable increases in stock values (rather than a bubble), that’s a reflection of a growing economy, which translates into more income for workers.

Language - Economists - Capital - Labor - Goods

In the language of economists, capital and labor are complimentary goods. More of one increases the value of the other. Which is why I told the folks at Politifact that it’s good for workers in the long run when financial assets become more valuable since that presumably means more investment.

“Dan Mitchell, a scholar at the libertarian Cato Institute, agreed that ‘capital and labor compete for shares of income in the short run.’ Over the long term, however, ‘there is no trade-off between corporate profits and labor income,’ he said.”

Issue - Trump - Credit - Stock - Market

But let’s focus on the bigger issue of whether Trump deserves any credit for the stock market’s performance.

Ira Stoll, writing for the New York Sun,...
(Excerpt) Read more at: CNS News
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