In mid-December, the Dow Jones1 and Nasdaq 1002 share indices reached new all-time highs. Shares in the DAX have also been more expensive than ever since last week.3 Instead of indicating a “perfect storm”, a scenario for a perfect stock market and economic crash, all signs point to “clear skies” or “plain sailing” in the USA: the inflation rate is falling, long-term interest rates are falling in unison. Unemployment is barely rising, the economy is growing steadily despite the enormous interest rate hikes by the Federal Reserve in the last two years. In short, all the signs point to a new high for the US stock markets. So is everything good? Stocks good, everything good? Is everything getting better and better? Are people getting better and better? A look behind the scenes tends to show the opposite.
Record levels of homelessness in the USA
Almost at the same time as news of new record highs in share prices, a new record in the number of homeless people was reported in the US.4 According to the Wall Street Journal, 2022 saw the biggest increase in homelessness since records began in 2007. The number of homeless people rose by 12% in 2022 to a new record of 653,000. This is roughly equivalent to the population of the German cities of Stuttgart or Düsseldorf.5 The official figures are generally considered to be too low. The very high corporate profits6, which are reflected in record-breaking share prices, obviously do not benefit all US residents.
Young families are finding it harder than ever before in recent US history to afford a home
Almost simultaneously with the new share price records, the Wall Street Journal reported that it has never been so difficult to afford a home in recent US history.7 House prices have risen so sharply and interest rates are so high that significantly fewer first-time buyers – around 33% instead of 38% previously – can now afford their own four walls. The average age of first-time buyers has risen significantly. So even among young families who are longing to own their own home, the equity boom does not seem to be taking hold – on the contrary.
Highest suicide rate in the USA since 1941
At the end of November, the Wall Street Journal reported under the title “U.S. Suicides Reached a Record High Last Year” that almost 50,000 people took their own lives in the USA in 20228, which is the highest suicide rate since 1941. The main reasons cited are too few people working in the social sector, easy access to drugs and the widespread use of firearms. One psychologist is quoted as saying, “There was a rupture in our economic health and social fabric.”9 How desperate do people have to be to kill themselves? So even with this tragic group of people, the stock market records don’t seem to be getting through.
New record for drug deaths in the USA
In May, the Wall Street Journal reported that the number of drug-related deaths in the USA had reached a new record in 2022. According to the report, the number of drug-related deaths in 2022 was higher than ever before at just under 110,000. By comparison, 58,220 US soldiers died in the Vietnam War.10 This means that the number of drug-related deaths in the US has more than doubled since 2015.11 Over the same period (from 2015 to 2022), the share prices of the S&P 500 have also roughly doubled.12 Share gains appear to be of little benefit to poor people who are addicted to drugs.
Shoplifting and burglaries are increasing dramatically
The Wall Street Journal repeatedly publishes articles about the sharp rise in burglaries and shoplifting. At the beginning of October, the business newspaper wrote that “shrink losses”, to which shoplifting and burglary in particular contribute, had risen by almost 20 percent to 112 billion dollars in 2022.13 More than two thirds of all retail companies say that shoplifting is becoming more aggressive and violent.
More recently, a new trend has emerged: “ram riding.” – “A new crime trend is crashing – literally – into American retail stores. Burglars are using stolen cars to break through store windows and then loot ATMs and other valuables.”14 The increase in burglaries has meant that some neighborhoods no longer even have grocery stores because retailers are pulling out of some neighborhoods completely due to the threat of crime.
The rising share prices do not seem to be boosting morale in the country either.
Frustration among the American population
Let’s summarize: Despite almost uninterrupted rises in share prices since 2009, homelessness, suicides, drug-related deaths, and shoplifting are on the rise in the USA, in some cases dramatically, and young families are finding it increasingly difficult to afford their own homes.
It is, therefore, no wonder that only 36% of Americans currently say that the “American dream” still applies, the dream of going from rags to riches, the dream that “anyone who works hard can get ahead, regardless of their background”. 15 No wonder, then, that half of people living in the US believe that life in the US today is worse than it was 50 years ago, while only 30 percent believe it is better than it was 50 years ago.
Less and less is reaching the lower half of the population
How can this be? Why are misery, suffering and crime constantly on the rise, even though shareholdings are increasing? The question is relatively easy to answer: Because very many people receive little or nothing from the increasing wealth, or even from the officially constantly rising national product. This is because the gap in unequal distribution is constantly widening: In the US, inequality has been increasing for many decades, at least since 1971.16 According to official US government figures, for example, in 2021 a full-time male worker who works all year round and is over 15 years old earned 61,180 dollars in median annual earnings adjusted for inflation, i.e. in real terms, practically the same as in 1974.17 Male workers in the US have therefore not had a cent pay rise in real terms in the last 47 years, according to official statistics.
According to the US Federal Reserve, real GDP per capita in the US increased by 127.5 percent from 1973 to 2022.18 However, real median household incomes only increased by 18.4 percent over the same period, according to the US government.19 In other words, most of the economic growth of the last 50 years did not reach the middle of the population, let alone the bottom half, but flowed upwards. No wonder many Americans feel they are being left behind or cheated out of the American dream.
Inequality has also been increasing in Germany for decades. According to the latest distribution report published by the Hans Böckler Foundation’s Institute of Economic and Social Sciences (WSI) at the beginning of November 2023, inequality in disposable household income in Germany increased between 2010 and 2022. The conclusion of the trade union-affiliated researchers is: “The clear conclusion on poverty rates: The proportion of people affected by poverty has been growing for years.”20
Unproductive, pointless, inefficient or purely conservative work is increasing dramatically
In addition, a large part of the officially reported economic growth of recent decades has not actually increased prosperity in any way, on the contrary. In the USA, for example, healthcare expenditure as a proportion of gross domestic product rose from 5 percent in 1960 to 18.3 percent in 2021, and in Germany from 10 percent in 1997 to 13.2 percent in 2021.21 Currently, at least one sixth of the total economic output is spent on healthcare expenditure in Germany (in an expanded definition by the Federal Ministry of Health)22 and in the USA. As important and beneficial as these activities often are, which are usually carried out by employees in dedicated work, they in no way increase our real prosperity. On the contrary. It is an attempt to restore a state – of health – that used to be there on its own when people were much less affected by the diseases of civilization. The sicker we get, the poorer we become.
Other examples of unproductive activities are advertising, tax consultancy, accountants, lawyers, security services, security products etc. etc23. As important as some of these activities may be – with the exception of advertising, advertising is de facto completely nonsensical in economic terms24 – and as dedicated and sincere as many people work in these sectors, they all have one thing in common: they do not increase our real prosperity, but reduce it.
Rising share prices do nothing to change this.
Conclusion
Despite new price records on Wall Street and new share price highs, many people in the USA are not really feeling any better. The same applies to Germany. On the contrary, many indicators suggest that poverty, suffering and misery are increasing for many people in the USA. This is because share profits flow to a small upper class. None of it reaches the majority of the population. This also applies to the economic growth of recent decades. Stock market profits and officially reported economic growth are becoming increasingly detached from people’s everyday reality. The US Nobel Prize-winning economist Joseph Stiglitz answered the question of who benefits from current economic theories and the economic policy rules derived from them relatively simply back in 2012: “Of the 1%, for the 1%, by the 1%“25 – the wealthiest 1% of society.
- washingtonpost.com/business/2023/12/13/dow-jones-stock-market-record-high-economy-interest-rates/ ↩︎
- boerse.de/nachrichten/Nasdaq-100-mit-neuem-All-Time-High/35576232 ↩︎
- tagesschau.de/wirtschaft/finanzen/dax-17000-rekord-100.html ↩︎
- wsj.com/us-news/record-homeless-united-states-2023-ef86f904?mod=Searchresults_pos1&page=1 ↩︎
- de.wikipedia.org/wiki/Liste_der_Gro%C3%9F-_und_Mittelst%C3%A4dte_in_Deutschland ↩︎
- multpl.com/s-p-500-earnings oder fred.stlouisfed.org/series/CP ↩︎
- Wall Street Journal 11.Dez.2023: wsj.com/finance/home-ownership-mortgage-interest-rates-122a272f: „It is now less affordable than any time in recent history to buy a home“ ↩︎
- wsj.com/health/healthcare/americans-suicide-highest-level-2022-02eb10ea ↩︎
- There was a rupture in our economic health and social fabric“ ↩︎
- de.wikipedia.org/wiki/Vietnamkrieg ↩︎
- nida.nih.gov/research-topics/trends-statistics/overdose-death-rates ↩︎
- tradingeconomics.com/united-states/stock-market ↩︎
- wsj.com/articles/not-your-fathers-shoplifters-rule-of-law-breaks-down-in-cities-new-york-seattle-73d45164 ↩︎
- Wall Street Journal 18.11.2023: wsj.com/us-news/brazen-burglars-are-crashing-vehicles-into-stores-04a3ebcf ↩︎
- WSJ 24.11.23: Voters See American Dream Slipping Out of Reach, WSJ/NORC Poll Shows
Fewer believe that anyone who works hard can get ahead
wsj.com/us-news/american-dream-out-of-reach-poll-3b774892?mod=hp_lead_pos1 ↩︎ - pewresearch.org/social-trends/2020/01/09/trends-in-income-and-wealth-inequality/ ↩︎
- census.gov/library/publications/2022/demo/p60-276.html ↩︎
- fred.stlouisfed.org/series/A939RX0Q048SBEA ↩︎
- census.gov/content/dam/Census/library/publications/2023/demo/p60-279.pdf ↩︎
- WSI Report 90: wsi.de/fpdf/HBS-008729/p_wsi_report_90_2023.pdf ↩︎
- de.statista.com/statistik/daten/studie/76458/umfrage/deutschland-entwicklung-der-gesundheitsausgaben-seit-1997/; statista.com/statistics/184968/us-health-expenditure-as-percent-of-gdp-since-1960/ ↩︎
- bundesgesundheitsministerium.de/themen/gesundheitswesen/gesundheitswirtschaft/gesundheitswirtschaft-als-jobmotor.html, Stand January 2023 ↩︎
- Vgl. Kreiß, Christian, Das Ende des Wirtschaftswachstums – die ökonomischen und sozialen Folgen mangelnder Ethik und Moral, tredition, Hamburg ↩︎
- Vgl. Kreiß, Christian, Werbung nein danke – Wie wir ohne Werbung viel besser leben könnten, Europa Verlag, München und Berlin 2016 ↩︎
- Stiglitz, Joseph (2012): The Price of Inequality, London, S. xi. In Anspielung auf die Rede von Abraham Lincoln von 1863; „the government of the people, for the people, by the people“: en.wikipedia.org/wiki/Gettysburg_Address ↩︎