Two Suspicions:The Dow Jones Average and the Jobless Recovery

You know, it was really interesting to see all the stories last week about the Dow Jones Average reaching the "magical" 10,000-point level, and how that meant that the "Great Recession" was probably already behind us. If black people could quote South Carolina's infamously disrespectful Congressman Joe Wilson, they'd say that was a "lie."

In January, the Obama administration announced that the country needed a "stimulus plan" to boost the U.S. economy and to ensure that the national unemployment rate would remain below 8 percent.

The idea, I imagine, was that an 8 percent unemployment rate would be such a frightening prospect that the Congress and the American people would do almost anything to avoid it -- including passing and accepting a $787 billion "stimulus bill."


I describe that whole scenario as "interesting" for two reasons: First, I no longer believe, at all, that the "Dow Jones Average" has any valid connection, whatsoever, to the true condition of the U.S. economy. Secondly, after a year of virtually no meaningful black participation in the Stimulus Program, we black folks seem to have become a little too comfortable with our ongoing status as "second-class economic citizens," for my taste.

We clearly feel the disproportionate economic pain in our households, and the substantially higher unemployment rates for our community, and yet, we seem to quietly accept it all, and seem content to wait for economic inclusion to "trickle down" to our level.

That's tragic.

The fact is that, even as the president and his advisors were proposing the "Stimulus Bill," black unemployment already stood at 11.9 percent. Indeed, black unemployment actually reached and surpassed the 8 percent point, climbing to 8.3 percent--twice the national white unemployment rate--as early as 2007.

And now, here we are, nine months after having been economically "stimulated," with a national black unemployment rate that has climbed above 15 percent, as compared to about 9 percent for white Americans.

As early as 2005, according to the Economic Policy Institute (EPI), the median black household earned only 60.2 percent of the median white household, .7 percent lower than in 1995. Even worse, the poorest 20 percent of black households earned just 43 percent of the wages earned by the poorest 20 percent of white families (Wow, even poor white people are rich by black standards).

In the midst of all of this negative economic news for black people, the Dow Jones Average's climb to 10,000 was presented, last week, as a signal that all is right, again, with the U.S. economy -- even though there were still 15.1 million unemployed Americans, even though those people were staying out of work longer. After all, the news accounts carefully explained, "jobs are a lagging indicator" and the economy ALWAYS recovers before jobs come back. That was usually the part of the story when they would bring up, again, the concept of a "jobless recovery" -- as if such a thing could be possible, at all.


With the "10,000+ Dow" as justification, the Los Angeles Times reports, J.P. Morgan has allocated $21.8 billion for "bonuses and other compensation," for its employees and managers, including almost $354,000 for every one of the 24,828 employees in its investment banking division.

As if that's not outrageous enough, Goldman Sachs, another investment firm, is preparing to pay more than $770,000 in bonuses to each of its 30,000 employees.

Let me remind you that while all of this is going on, mortgage foreclosures have hit record levels; the FDIC, the agency that is supposed to guarantee the safety of your bank deposits, has announced that it expects to be operating "in the red," at least until 2012; more than 100 commercial banks have already failed in 2009 and the U.S is seriously "in hock" to the Chinese government.

As I implied earlier on, I'm also growing increasingly suspicious of the activities, composition and accuracy of the entire Dow Jones Industrial Average. The "Dow Jones," along with the Wall Street Journal, has been owned, since 2007, by Rupert Murdoch's News Corp., the same media company that also owns the FOX Cable News Channel and the rabble-rousing tabloid, The New York Post. It's fair, I think, to check very carefully the motives and accuracy of that entire group, given the reputation of its ownership.

It's not that the Dow Jones wasn't originally conceived to serve a valid purpose back in 1884, when Charles Dow and Edward Jones developed the concept. It was intended to be an index, or a microcosm, of the entire stock market, based on a sampling of companies that would represent a cross-section of the nation's major businesses. There were 11 railroad and industrial stocks included in the original index. Now, there are 30 companies, all hand-picked by the editors of the Murdoch-owned Wall Street Journal.

Curiously, today, no matter how poorly the overall economy seems to be doing--jobs, housing starts, consumer spending, foreclosure rates, unemployment levels, U.S. exports, federal, state and local deficits-- the only true and acceptable measure of the country's economic well-being, we are led to believe, is whether or not the Dow Jones Industrial Average has moved up or down during the day.

Even casual observers, however, have recently been surprised to see, on days when virtually every one of those factors has been negative, the Dow Jones Average show an uptick -- no apparent reason, no logical basis, but an improvement, nevertheless.

That's a great deal of influence and power for a single economic indicator -- especially one that is owned and operated by the same people who bring you Glenn Beck, Bill O'Reilly and the "Tea Parties."

If the Dow Jones Industrial Average is so fundamentally important to our overall economy, explain to me, please, why, less than two months ago, Murdoch, himself, let it be known that he might very well be interested in selling it, and that his company had retained Goldman Sachs, the same guys who are about to give $770,000 bonuses to nearly 30,000 of their favorite employees and managers, to identify likely purchasers and to handle the transaction.

Here's another thing that raises my suspicion: With "the Dow" just having completed, since March, its most rapid seven-month increase in value since the 1930's, why is it that, over the past nine months, the "smart money" people on Wall Street, according to the Bloomberg Report, moved $254.6 billion into bonds, and only $14.5 billion into the hands of stock managers?

But, perhaps, this is the most worrisome thing of all to consider: Can we be absolutely sure, in a market characterized by unethical and illegal business practices, by excessively high fees, usurious interest rate levels and astoundingly high executive salaries and bonuses, that the Dow Jones Average, itself, is not being manipulated?

It's an unsettling thought, but one we simply have to consider -- whether we are a black factory worker in Philadelphia trying to restore the value in his or her 401-k or the President of the United States, in Washington, D.C., trying to restore domestic and international confidence in the U.S. economy.

And, finally, seriously, how can we ever have a true economic recovery without creating new jobs? Without jobs, people can’t buy cars, houses, clothing or anything else that used to drive the U.S. economy. Without jobs, it’s hard to imagine people qualifying for the bank loans that the Obama administration keeps saying we need.

The great hypocrisy is that all of the high-powered economists and all of the president’s advisors clearly understand that. They also understand that our country's current business model includes absolutely no incentive to businesses to increase human resource-related expenses. Until that happens, jobs will not be created, especially by the companies that are “too big to fail”and that are currently laying people off in droves.

Instead, we'll continue hearing the empty jargon of the "jobless recovery," from people who clearly know better but don’t have the “guts” to make the systemic changes the country needs to place a real priority on job creation. In the meantime, there will continue to be ongoing free access to “the vault” by the captains of the financial services industry, and even more economic marginalization for the nation's underclass and black people.

Dear Mr. President, please, say it ain't so.


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