When it was conceived, “the Dow” was a pretty solid indicator of the overall economic health of this once-great nation. It was a quick little snapshot of the strengths of various core industries. Back then, “the Dow” was actually called ‘the Dow-Jones Industrial Average.’ It was comprised of various industries like Steel and Rail – things the US made and the mechanisms we used to move those good around.
Americans got the update on the nightly news telling everyone where “the Dow” was today. When “the Dow” went up, America was a little bit stronger. People got used to it. They may not have been able to articulate exactly what was in “the Dow” or, perhaps, even what it meant but they knew it measured America’s overall strength of economy and they liked to see it go up.
People do a funny thing: when we like someone or something, we shorten it’s name…unless the name is one syllable, in which case, we lengthen the name. It’s an odd form of demonstrating affection but it’s so common, so ubiquitous, we don’t even realize we’re doing it. People liked the Dow Jones Industrial Average and everyone just started using the verbal shorthand, “the Dow.” We, the people, still get the daily update on “the Dow.” It still shows up on daily news programs. And we still call it simply “the Dow.” But a curious thing happened to “the Dow” between the time it was conceived and today.
As America dismantled it’s manufacturing base, more and more of the elements of “the Dow” were removed. After all, how can one measure United States Steel when United States Steel doesn’t exist anymore? So, one by one, as various industries failed or were off-shored in cost-cutting measures, industries were replaced by financial services. Over time, “the Dow” stopped including any industrial stocks. This made calling it an “industrial average” kind of dumb so they’ve even changed the name. These days, “the Dow” is actually ‘The Dow Jones Index.’
There’s an old rule of economics. We don’t talk about it much today. It’s seen as poor form or something but the rule remains whether we ignore it or not: Capital is dependent upon, and secondary to, labor. What we manufacture – what we build – is the true measure of our strength. As we’ve off-shored industries, we’ve weakened America in every measurable way. But the clever sods in the corner offices – the people doing the weakening – don’t want us to recognize the fact so they’ve very carefully replaced the industries of the Dow Jones Industrial Average with financial services companies and the nightly reports of the success of “the Dow” continue to this day. And…oh my god, the thing has shot through the roof.
22,000 points and climbing. Yet, Americans from sea to shining sea are struggling and suffering in this “gig” economy. We don’t manufacture like we used to. People don’t have good jobs in stable industries enabling them to provide for their families. We don’t maintain our infrastructure. We’re just not – by and large – building. Most of us can look around and see that the average American is not doing as well as his or her parents did. But look at “the Dow.” It’s off the charts. How can that be?
The answer is that the Dow Jones Index doesn’t measure America’s overall economic strength anymore. All it indicates is the happiness level of certain CEOs. That’s why some large company can lay off 4,000 workers and “the Dow” goes up. Laying off 4,000 workers is harmful to the overall economy but often temporarily good for bottom line of the company laying them off. The stock price goes up, the dividend will be higher, the CEO is happy, “the Dow” goes up.
So can we, please, all stop arguing about how well the country is doing based on “the Dow” and whatever number we’re breathlessly fed by the daily infotainment programs? We already know that the CEOs of the Fortune 500 financial services companies are happy and doing quite well, thank you very much. Now all we need is some indicator as to the overall strength and health of America. I don’t know, some kind of…industrial average, perhaps?