Wall Street and the Rest of Us

Fight disinformation: Sign up for the free Mother Jones Daily newsletter and follow the news that matters.


Tony Soprano is right about the stock market: “You have to be high up in the corporate structure to make that sh-t work for you.” Or, as economist Ilene Grabel of the University of Denver told me, “Stock markets prove profitable for a small proportion of the U.S. and global economy, but the relationship between the stock market and the underlying economy has never been established.”

Have you ever wondered how the world might be a different—and better—place if Wall Street didn’t demand ever-widening profit margins? The income gap would likely shrink, making 90 to 99.9 percent of Americans happier. And a broader view of corporate success might lead corporations to show some respect for the environment and their workers.

The New Yorker brings a little good news on this front (caveat: It’s the magazine’s job to make New Yorkers feel good about themselves). James Surowiecki calls bullshit on the “7 percent rule,” a handy rule of thumb that sprung up during the dotcom boom, suggesting that any company announcing layoffs would see a 7 percent rise in its stock value.

Surowiecki argues that layoffs only make long-term financial sense when demand changes significantly—not, as they have become of late, as “a default business strategy, part of an inexorable drive to cut costs.” Stock prices may feel as cold and hard as a surgical knife, but Surowiecki claims they generally reflect what you know is true if you’ve ever worked through a round of layoffs: “Downsizing may make companies temporarily more productive, but the gains quickly erode, in part because of the predictably negative effect on morale.”

Stock prices consider my feelings? That feels a bit too cheerleader-y, so let’s get back to the bad news. The flies in the ointment are, you guessed it, C.E.O.s and analysts. (What would the world look like without them?) Many analysts push companies to downsize, and companies have to act like they’re listening even though the analysts aren’t always right. And C.E.O.s are all about quick and dirty: “The average C.E.O.’s tenure today is just six years, long enough to see the benefits of downsizing (like a lower payroll) but not long enough to suffer costs that may appear in the long term.”

Assuming no one will take my suggestion to abolish the stock market seriously, here’s a few quick partial fixes that are good for the rest of us. Can you say labor unions, where wages are higher and layoffs more difficult? We could also stop paying C.E.O.s so much, at least in stock options. And less golf for bigwigs.

AN IMPORTANT UPDATE

We’re falling behind our online fundraising goals and we can’t sustain coming up short on donations month after month. Perhaps you’ve heard? It is impossibly hard in the news business right now, with layoffs intensifying and fancy new startups and funding going kaput.

The crisis facing journalism and democracy isn’t going away anytime soon. And neither is Mother Jones, our readers, or our unique way of doing in-depth reporting that exists to bring about change.

Which is exactly why, despite the challenges we face, we just took a big gulp and joined forces with the Center for Investigative Reporting, a team of ace journalists who create the amazing podcast and public radio show Reveal.

If you can part with even just a few bucks, please help us pick up the pace of donations. We simply can’t afford to keep falling behind on our fundraising targets month after month.

Editor-in-Chief Clara Jeffery said it well to our team recently, and that team 100 percent includes readers like you who make it all possible: “This is a year to prove that we can pull off this merger, grow our audiences and impact, attract more funding and keep growing. More broadly, it’s a year when the very future of both journalism and democracy is on the line. We have to go for every important story, every reader/listener/viewer, and leave it all on the field. I’m very proud of all the hard work that’s gotten us to this moment, and confident that we can meet it.”

Let’s do this. If you can right now, please support Mother Jones and investigative journalism with an urgently needed donation today.

payment methods

AN IMPORTANT UPDATE

We’re falling behind our online fundraising goals and we can’t sustain coming up short on donations month after month. Perhaps you’ve heard? It is impossibly hard in the news business right now, with layoffs intensifying and fancy new startups and funding going kaput.

The crisis facing journalism and democracy isn’t going away anytime soon. And neither is Mother Jones, our readers, or our unique way of doing in-depth reporting that exists to bring about change.

Which is exactly why, despite the challenges we face, we just took a big gulp and joined forces with the Center for Investigative Reporting, a team of ace journalists who create the amazing podcast and public radio show Reveal.

If you can part with even just a few bucks, please help us pick up the pace of donations. We simply can’t afford to keep falling behind on our fundraising targets month after month.

Editor-in-Chief Clara Jeffery said it well to our team recently, and that team 100 percent includes readers like you who make it all possible: “This is a year to prove that we can pull off this merger, grow our audiences and impact, attract more funding and keep growing. More broadly, it’s a year when the very future of both journalism and democracy is on the line. We have to go for every important story, every reader/listener/viewer, and leave it all on the field. I’m very proud of all the hard work that’s gotten us to this moment, and confident that we can meet it.”

Let’s do this. If you can right now, please support Mother Jones and investigative journalism with an urgently needed donation today.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate