Imagine… A Keynesian Wall Street

I have been following the resonance generated by the SCOTUS ruling on the ACA as I am sure many of you have done as well. The following article highlights several aspects of what is wrong with America today and why it is so important that a new consciousness and social awareness must take root on Wall Street and in the nation as a whole: http://www.bloomberg.com/news/2012-07-06/obama-health-care-assent-by-court-precedes-s-p-rally.html

One of the things that struck me was the trading on “our” futures which I’ve always known about but which has taken on such concrete dimensions due to the importance of the SCOTUS ruling on the ACA. At first, I was reservedly happy to see that Wall Street was “supporting” the ruling by buying into hospital chains and drug distributors in expectation of increased demand. Combined with the decline in investment for health insurers, the message seemed loud and clear. But under closer scrutiny and consideration of who’s doing the investing, I’ve become increasingly upset as to how such important rights as health care can continue to be viewed as investment schemes and left in investors’ hands. The following quotes summarize the problem:

“People have very strong political opinions and very weak analytical and investment opinions related to health care. The European summit that occurred that Thursday and Friday was far more important for global financial markets than the president’s health-care act. You saw that in the market’s reaction.” -David Kelly This bothers me on several levels.

1.    It’s obvious that investment has mainly been driven by speculation on profit-margins as with most other investment opportunities, historically speaking, and those making decisions are working from a framework mainly based upon micro-economic theory; i.e. the health care sector is an industry full of private businesses. Within this framework, macro- & socio-economic dimensions play only supporting and highly undervalued roles in these decisions; i.e. profit overrides the health and well-being of those using the services of these “businesses”. Through the redistribution of equity interests from health insurance companies to other health-care stocks, the money influencing and, thus, decision-making power over these other health care sectors will grow. Fundamental decisions affecting the health of you and me will continue to be controlled through short-sighted and ill-informed investors. This is why we must move away from a health care system that can formally be defined as an industry comprised of private corporations.

2.    As regards the 2nd part of the above statement, I can only say that the callousness reflected by these words towards the necessity in insuring every American is deeply discomforting. The health (as are the educational and skills levels) of a nation’s citizens is imperative in ensuring a productive “human capital” base which will, in turn, make the country competitive in securing and maintaining high-wage jobs.

“When you compare it to the debt crisis in Europe, when you compare it to worries about the labor market in U.S., when you compare it to the slowdown in the emerging economy, health care is just not as important to the market and you’re seeing that. That just took a backseat.” -Greg Woodard

1.    I don’t know Mr. Woodard’s personal views nor do I know Mr. Kelly’s for that matter. Statements such as these providing us with insight into the market’s values, however, further convince me that universities must integrate and/or place more emphasis on macro- and socio-economic theory in business/finance majors’ curricula in order to meet the demands of today’s world. More in-depth study of what contributes to a strong labor market foundation which, in turn, will attract high-wage and “future forward” jobs is becoming increasingly important and those with decision-making power must become not only more informed but responsible and constructively engaged socio-economically.

In short, what is necessary in theoretical economic terms if we are to reengineer America, is to move beyond our Milton Friedman-based “moneterism” mindset to a country which recreates itself through the rediscovery of the healing power of John Maynard Keynes-based principles and policies.

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Filed under Education, General Socio-economic & Socio-political Issues, Health Care, Women's Empowerment

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