Van Ens: Only those who hold stock can prosper from a soaring stock market (column)
Tax cuts benefit investors in the stock market. These cuts fatten already thick wallets of politicians who propose them, rather than help the poor, for whom tax cuts are proposed.
Destitute citizens live paycheck to paycheck and lack savings. Consequently, owning stocks isn’t an investment option for them.
“Most Americans can’t draw on stocks, rental properties, capital gains or significant home equity to generate cash,” reports Josh Boak, financial analyst for The Associated Press. “They depend exclusively on wages. And after adjusting for inflation, the government reported that Americans’ average hourly earnings haven’t budged over the past 12 months” (The Denver Post, “Why Americans aren’t benefitting,” June 16, 2018, p. 14-A).
The GOP promised tax cuts would propel rich and blue-collar citizens up the socio-economic ladder. Yet, the poor are stuck on a bottom rung because they lack money to invest in the financial boom prosperous citizens enjoy. The GOP’s tax cut plan promised that a broad sweep of Americans would land on firmer financial ground. However, tax cuts have not lifted poor people out of a financial black hole.
What happens to the poor when gas prices escalate, food gets pricier and inflation cuts into the purchasing power of their paychecks? They are forced to belt-tighten, lacking a living wage.
“U.S. inflation hit its highest rate in more than six years, (in June 2018) with consumer prices eating away at modest wage gains by American workers and underscoring questions about how much they are benefiting from an economy that by many other measures is booming,” reports The Wall Street Journal’s Paul Kiernan (“Surging prices chip away at wage gains by workers,” July 13, 2018, p. A-1).
He concludes that inflation erodes tax cuts’ value for working-class families. “In June, for a second month in a row, annual inflation fully offset average hourly wage growth over the previous year.”
Wage increases are sluggish because companies opt to hike shareholders’ dividends rather than workers’ paychecks. Corporate boards spend lots of saved cash to buy back their own stock. By reducing the number of shares outstanding, they could artificially increase per-share earnings.
Investment scales are tipped to investors, not the guy driving a bus, who lives paycheck to paycheck. Biblical cautions are ignored: “A double standard of weights is disgusting to the Lord, and dishonest scales are no good” (Proverbs 20:23).
Wealthy citizens benefited from tipped financial scales at our nation’s birth. James Madison and Thomas Jefferson distrusted Alexander Hamilton because his financial policies were one-sided, favoring prosperous citizens.
Hamilton’s “high esteem for the wealthy contributed enormously to the partisan vitriol of the 1790s and was the ultimate cause of many mistakes he made in government,” writes historian Jay Cost. “Over the course of his tenure at the Treasury Department, he would exhibit a shocking naivete regarding the greed and small-mindedness of the speculative class, which attached itself like a barnacle to his administration.
“They were not the natural aristocracy (sharing their wealth with the poor) he assumed them to be. Many were just crooks who abused his misplaced trust” (“The Price of Greatness: Alexander Hamilton, James Madison, and the Creation of American Oligarchy,” Basic Books 2018, p. 44).
Today, tax cut scales are unbalanced. Investors get richer; the poor get shafted.
The Rev. Dr. Jack R. Van Ens is a Presbyterian minister who heads the nonprofit, tax-exempt Creative Growth Ministries (www.thelivinghistory.com), which enhances Christian worship through dynamic storytelling and dramatic presentations aimed to make God’s history come alive.