Political talk shows on TV are usually just shouting matches among journalists, academics, former politicians and others. Their “debate” is usually filled with clichés, not substance. This is especially true when discussing the economy, which “experts” tend to mystify rather than clarify, as though the economy operates on supply-and-demand auto-pilot, instead of being shaped by the decisions of corporate leaders, large-scale investors, and government officials.
But the debate between Stiglitz and Moore about the stock market — brief as it was — was important. And Stiglitz nailed it. The stock market is not a good indicator of the effectiveness of public policy, especially in response to announcements by government officials about new initiatives. The reliance by TV and radio newscasters, newspaper reporters and columnists, and quick-with-a-conclusion pundits on the stock market to assess the merits of a policy prescription, or even the health of the economy, is incredibly misleading.
Yet every night on the evening TV news, on National Public Radio, and elsewhere, we get reports on how the Dow Jones, S&P 500 and NASDAQ indices are doing — as though that tells us something about the strength of the economy. All it tells us is how stock traders and speculators are reacting to something they haven't had time or inclination to find out about. It's no accident that, according to the thesaurus, “speculation” is just another word for “rumor” and “gossip.”
The obsession with the stock market as an indicator of economic health reflects the problem that Obama identified in his speech to Congress:
“We have lived through an era where too often, short-term gains were prized over long-term prosperity; where we failed to look beyond the next payment, the next quarter, or the next election.”