I happened to be channel surfing the other day when I
stopped on a PBS station. The Nightly
Business Report was on and the hosts were putting their best spin on the latest
"non-event" Apple announcement ( 2
new versions of the same old phones).
Financial correspondents understand charts, trends and
indicators. None of which have any basis
in reality. Well, at least not to anyone with a net worth of
less than 7 figures. They have their own
reality and it doesn't involve keeping the lights on or the kids fed.
That's why Wall Street is a farce. That anyone treats it as an economic
indicator is laughable. That is, unless
you consider1% of the population a reliable demographic.
I almost switched the channel after suffering clueless commentary
about yet another tech bauble. I stopped
when I found that following story concerned 3 companies being dropped from the
Dow Jones Industrial Average (DJIA.)
The DJIA
supposedly reflects a cross section of American based companies publicly traded
on the stock market.
It's the "I" in the industrial average that's
amusing. The 3 companies that didn't
make the cut were:
Alcoa Bank of America HP
No love lost for B of A but what replaced them were:
Nike Goldman Sachs Visa
The criteria for membership in the exclusive DJIA club is simple, share price. The highest performing and generally most
expensive stocks make the cut so long as they continue to "perform."
Performance is measured in a consistently high share price. Often brought about by ruthless worship of
the bottom line; many of these companies reflect the worst in corporate
pandering to shareholders.
Much has been made of the inequity of the index affecting the
entire market with just a handful of "representative"
stocks. Regardless, the DJIA is still
the daily number most reported and most relied on as the de facto indicator of
the economy.
If that's true then perhaps a name change is in order. Perhaps something more along the lines of the
DJFI
or Dow
Jones Fantasy Index. Think of it
like fantasy football except you lose real money when you pick the wrong
team...
God knows most people with 401K's see it that way...
When the DJIA
first came about in 1896 there were only 12 companies that represented the
nation's industrial sector.
They were:
General Electric,
American Cotton Oil, American Sugar, Chicago Gas, Distilling & Cattle
Feeding, Laclede Gas, National Lead, North American, Tennessee Coal, Iron and
Railroad, U.S. Leather and United States Rubber.
What's the common thread?
They all actually made something tangible.
Let's look at 2013's class...
3M, American Express,
At&T, Boeing, Caterpillar, Chevron, Cisco Systems, Coca-Cola, Dupont,
ExxonMobil, GE, Goldman Sachs, Home Depot, Intel, IBM, Johnson & Johnson,
JPMorgan Chase, McDonald's Merck, Microsoft, Nike, Pfizer, Procter &
Gamble, Travelers United Health Group, United Technologies, Verizon, Wal-Mart,
Walt-Disney
Look at that list closely.
Only a handful of the constituent parts of the DJIA are companies that
actually produce any kind of tangible product and of those most of them produce
their wares somewhere other than U.S. soil.
The rest is comprised of mostly banks, insurance companies,
big pharma and other followers of the cult of
the bottom-line.
It's all about the money but it's not about reality unless
you think that an economy driven by outsourcing, medication and interest
charges reflects its "Industry."
McDonald's and Wal-Mart, low price leaders known for low
wages and substandard products. Often
the butt of jokes from those concerned about a failing career.
Visa and JPMorgan Chase known for questionable financial
products and poor treatment of their customers.
Intel and Microsoft, tech pioneers but respectively proponents
of offshore labor and unfair business practices that harm consumers and
workers alike.
Insurance companies whose bottom line is best served by
denying coverage even if the result is death.
Pharmaceutical companies who lobby congress to artificially
inflate profit margins and force the elderly to choose between medication and
food.
If this is a cross section of American industry we might as
well give up. Nothing is being produced
but misery and to celebrate the practice is madness.
You can't blame globalization for the decline in American
industry. We are where we are because of
the lesser parts of our nature. Avarice,
ignorance and ego, Global markets have
just allowed us to nurture the darker sides of our ambition. Worse, we aspire to dwell in some corner
office atop the glistening skyscraper producing nothing but the wages of our
own sins.
We value those whose success was built on exploitation and
dismiss all others.
Change may have come to America but real change involves a
change in values. Hard to do when
popular media continually drives home the edict, "Greed is
Good." Openly we reject it but secretly we hold it to be true.
That's why we fail.
