For most people, the stock market isn’t that important.
That’s according to Edward Stuart, emeritus professor of economics at Northeastern Illinois University, who suggested in a recent appearance on WTTW’s Chicago Tonight not to worry about the recent market plummet.
Tribune Pulitzer Prize-winning columnist Mary Schmich was so taken aback by the assertion that she followed up with Prof. Stuart in her column. As a good journalist, she didn’t want to take him out of context.
Stuart doubled down, responding:
For 10 percent, 20 at most, the stock market has some direct effect on their income and standard of living. They’re people who live in Lake Forest and Wilmette and Glencoe. They’re not people who live on the South Side and Humboldt Park and Albany Park, most of Chicago.
So, why all the consternation about the big drop?
It’s rich people worrying about their money. We pay a lot more attention to rich people than we do poor people.
He went on with how he’s more worried about the not-so-rich, like his students, who can’t find jobs. True enough, the job market isn’t so hot.
Pardon me, professor, I don’t have a PhD after my name, but I disagree. I’m not rich, nor am I poor. I’m one of the middle class old farts trying to live off my meager retirement package, social security and whatever cash I can round up by freelancing.
So, the financial markets are damn important to me, and to the increasing millions of people like me. With more people banking their retirement income on the performance of IRAs and 401Ks, the stock market means one hell of a lot. But you’re a public employee in Illinois, where public employee pensions ensure comfortable, to say the least, retirements.
It’s not just the stock market. It’s all the allied markets–bonds, treasuries, mutual funds, money market funds and the others that move in relation to one another and when they drop precipitously, so do the fortunes of millions of American retirees or those who are about to retire.
Even those who plan to live off their company or their generous government retirement plans have reason to think that market performance is important. Where are those guaranteed pension funds invested, other than in those exact same markets? I’ll leave it to you, professor, to look up how Illinois public employee pension fund values are affected by the ups and downs of the market.
You should know, as a economist and an old guy yourself, that as the population ages and more and more workers are being shifted out of defined benefit plans and into defined contribution plans that the importance of the market investments will be increasing dramatically.
Professor, you’re absolutely correct when you said that we should worry more about the economy than about the stock market itself. Income equity, economic opportunity and employment–as well as profits and consumer spending–are all important. But let’s not diminish the important of the markets because “only” rich people benefit (or suffer) from their actions.
CNN has the latest on market movements here.
For information on my award-winning historical novel, Madness: The War of 1812, go to www.madness.1812.com.
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