Jobs and stock market -- two separate economies.

Two economies in one.


Today on November 24th 2010, the concept of two economies in one has begun to come together in my mind quite clearly.  I must explain this concept as simply as possible at first so that more people than I can consider its significance or lack of significance.  

Simply, there's the money economy and there's the people economy , the financial and the social running side by side like two elongated tubes or two blood vessels. They are separate but in many ways have sometimes become mutually dependent.


If this is actually the case, it explains why the money side of things, Wall Street especially, seems to be doing rather well and the people side,  job opportunities only seem to be beginning and rather slowly.


So the two are not interdependent, at least not at this point in time. Values of stock on the market are determined by mere perspective and speculation and even manipulation. Jobs are created by the actual need for a human being or human beings to perform productive functions where there os actual need for workers.


Reduction in jobs as an efficiency function may increase profits and the value conception of that stock.  But a re-arrangement of jobs in a firm may be aimed merely at increasing the production or efficiency function and not necessarily affect the profit element nor the jobs situation.  


Therefore, the availability of jobs and conceived stock values should be expected to function independently.


On the other hand, past experience shows that increased spending may increase demand and job opportunities my be directly related to that demand. But without increase in demand and production, what accounts for rising stock values? Expectations? On what realities are expectations based?


Increase in production cannot be the result of speculation alone as it best functions with real increase in demand. It follows, that while we can have no increase in production and perhaps decline, expectation or perception can cause stock to rise in value which may be based on mere speculation.


The people side, jobs for example has a reality that the stock market does not have. Therefore, the money side of things runs more on speculation than on the real affect of production of things which may or may not involve job opportunities. Therefore what I call the money side and people side  may function as two separate and often independent entities.


A rising stock market may put more money in the hands of stock holders but may have little or no effect on the jobs market. Therefore we can not use the stock market as a barometer, especially when we expect increase in the activity of the whole economy. We've learned to study the stock market and what it does and that may now psychologically affect our feelings about the future.


The direct rise in value of the stock of a firm that is increasing its sales and production and creating more jobs has more reality than a mere speculation of events that might occur within a particular firm at any time in the future.


The sales, production and job creating features of the economy have more of a base in reality than the speculative price of stock. Most economists and dealers on the stock market know most or all of this or may not accept some or all of these notions.


But the point that I want to make here is, that there is a strong indication that we must view the national economy as two separate entities, one heavily related to money and the other as a real social element. A job is not merely a physical thing but the quantity and the opportunity for jobs involves and functions as a part of the whole society.


The money economy and the people economy often operate rather closely and affect each other but we can not judge the future of one by speculating on the future of the other.


We seem to have strong evidence that each entity functions separately.  Will  the new congress know this?   


And how is it going to handle the "Jobs" side of things, by "trickling down" on the workers or merely by praying at the alter of "tax cuts," tax  cuts, tax cuts? 


Will addition money in the hands of the wealthy go into buying stock, investment abroad or into the creation of jobs. 



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