I recently introduced the authors of the American Human Development Report at a presentation and made the point that just as the GDP has been criticized for not reflecting how the economy affects everyday people, the last year has driving home how out of touch stock market performance is with most regular folks. As this chart from a Huffington Post article when the Dow Jones hit 10,000 a couple weeks ago shows, unemployment has continued to rise even as Wall Street has rallied over the last seven months.
In this vein, TIME’s recent cover story describes “What’s Still Wrong with Wall Street.” Allan Sloan writes:
Welcome to Round 2 of Main Street vs. Wall Street. The divide is the worst I’ve seen in my 40 years of writing about finance. In a new TIME poll, 75% of the respondents say they believe Wall Street will revert to business as usual, 67% want the government to force pay cuts, and 59% want more government regulation.
Main and Wall are never going to love each other. And they probably shouldn’t, because their interests aren’t identical. But if we’re going to get through this mess as a society and regain our prosperity, Main Street and Wall Street need to understand each other. And they don’t.
(To see some interesting poll data, as well as a telling graph from Thomas Piketty and Emmanuel Saez’s research on income inequality, check out the PDF version of the article.)
Sloan concludes with four ideas for fixing the disconnect, the first two geared toward policy makers, the latter two directed to you and me.
1) Break up institutions that are too big to fail so that we can allow them to fail.
2) Tell the truth, and play it down the middle.
3) Put not your faith in the Fed or Uncle Sam.
4) And for heaven’s sake, don’t put your faith in Wall Street.
To reinforce these points, I might add that Nancy Gibbs’s article in the same issue on “The Case for Modesty, in an Age of Arrogance” should be required reading for all of us.
Bill Pitkin 