|Institute for Public Accuracy
915 National Press Building, Washington, D.C. 20045
Wednesday, February 28, 2007
Stock Market Drop
DEAN BAKER, www.cepr.net
Co-director of the Center for Economic and Policy Research, Baker
said today: "A lower stock market is good for a lot of people. If corn
prices fell 30 percent, that would be bad for you if you're a corn
farmer, but good for you if you weren't and ate a lot of corn. Stock
ownership is highly concentrated; 75 percent of the population holds
little or no stock (including retirement accounts), so if stocks go down
and you don't own any, you're better off.
"When stocks plunge in value, it's similar to a situation where
there are trillions of dollars in counterfeit currency, held by a small
group of people, and the police seize and burn it. This is good news for
the rest of us because the trillions of dollars of counterfeit money
will not be bidding up the prices of things like houses and cars. Any
honest economist would have to concede this point -- it's elementary
economics, but many economists tend to cheer the stock market, in effect
favoring the wealthy at everyone else's expense."
Baker's most recent book is "Conservative Nanny State: How the
Wealthy Use the Government to Stay Rich and Get Richer."