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Posted by on Dec 18, 2014 in Politics | 46 comments

Why Stock Market Investors Vote Against Their Self Interest

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When I saw that James Carville had written an op-ed for The Hill entitled Why do people vote against their interests? I thought it was going to be another article along the lines of What’s The Matter With Kansas? by Thomas Franks. We have seen plenty of material on how lower income people vote against their economic interests in voting Republican. This includes people in places like Kansas, and the white working class voters across the country.  The answer comes down to a combination of 1) people voting on interests beyond economics, along with 2) voters being deceived by right wing propaganda. In this article, Carville actually looked at a different group, stock market investors:

I have no earthly idea why a stock market investor would vote Republican — all you have do is look at the numbers. The numbers are staggering, breathtaking and unimaginable. How anyone with even a penny in the market would vote for their interests and choose a Republican is unexplainable.

Well, let me put this in terms for those savvy stock investors: it is like having a discussion about Apple stock versus Lehman Brothers stock.

Before we begin, I would like to be clear that I am not even going to mention the president who presided over the greatest economic boom since World War II, whose brilliant strategy was a combination of tax increases on the wealthy, family and medical leave for working families, an increase in the minimum wage and adherence to Keynesian policies. While I would love to include my friend and former client Bill Clinton’s record in this piece, it really wouldn’t be fair. I don’t like watching my Louisiana State University Tigers play Sam Houston State and I don’t think you would like to read about such a staggering disparity — it would be a blowout. So, let’s focus on President Obama and former President Reagan.

Since Obama was sworn in on Jan. 20, 2009, Standard & Poor’s 500 index has gone up approximately 115 percent, the Dow Jones industrial average has experienced a growth rate of 146 percent and, perhaps most impressively, Nasdaq has grown in size by 188 percent. Two thousand days into his presidency, the major stock indexes under Obama have had average gains of 142 percent — compare that to the record under Reagan, who saw gains at 88 percent during that same time period.

Russ Britt of MarketWatch notes, “the average stock-market gain under four post-Depression Democrats through each one’s 2,000th day in office has outpaced the average gain of the four Republicans in the era by a factor of nearly 4 to 1. Democratic gains have averaged 133%, while Republican market advances have had a mean of 33%.”

Stock market investors are not uniform in their beliefs and some might vote Republican based upon social issues, but if the affluent voters I know are any indication, economic views are by far the dominant factor in influencing the political action of most. This leads to an exclusion of the first factor I mentioned above for the majority of them but the second still holds.

Of course this does not apply to all stock market investors. An increasing number of affluent voters are backing Democrats, often due to a combination of opposition to the social positions of Republicans, their hostility to science and reason, and the recognition that the economy does do better under Democrats.

The reasons that many stock market investors continued to be fooled by Republicans can be further broken down. One problem is that while Republicans are unable to govern, they certainly play politics far better than Democrats. They have been successful in spreading misconceptions that they are more pro-markets and better for the economy, while Democrats have done a poor job of pointing out that Republican support for plutocracy is harmful to a market economy. Some have tried with cries against income inequality, but using such words is counter-productive. We will always have income inequality in the sense that some will do better than others, and this is not the real issue. The real problem is the rigging of the system Republicans to benefit the ultra-wealthy at the expense of everyone else, including most stock market investors.

The specifics of policy are also greatly exaggerated by the right wing noise machine. Many affluent voters believe that they are better off voting for Republicans because Democrats support higher tax rates as they look to maximize their wealth by every dollar possible. The reality is that the increased marginal tax rates proposed by Democrats will still leave them with historically low tax rates. Most of us will make far more money, both due to a stronger economy and increased stock market gains, than will be taxed with a few point increase in the top tax bracket.

Carville concludes by saying, “With such glaring facts and evidence, I ask stock investors to reexamine, reconsider and reinvest their confidence in the Democratic Party.” I would suggest that he first concentrate on getting Democratic candidates to do a better job at explaining the record of their party and the economic implications of their policies. I hope that he is doing this when talking with Democrats.

Originally posted at Liberal Values

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Copyright 2014 The Moderate Voice
  • hidflect

    Is that why Madame Walmart is getting so much love from Goldman Sachs and other Wall Street banksters? She ain’t gonna win.

    • I think that the reasons for that are different from the issues in this post. It is more a matter of favoring politicians that they can influence as opposed to whether the market does better under Democrats versus Republicans.

  • dduck12

    The market does what the market does, presidents come and go. James Carville seems to a nice well meaning guy, but his economic/market reads have no gravitas, IMHO. He is like a lot of doctors I have dealt with over the years. BTW, as a group, doctors are a little better at “playing” the market than the worst group, engineers. No, dear readers, I can’t cite any studies to back up, what are just personal observations, but if you talk to some “financial professionals”, they may have similar opinions.

    • Carville is just repeating what has been well established in the past. Even Fox agrees that the stock market, GDP, and corporate profits have historically been better under Democrats:

      http://www.foxbusiness.com/investing/2012/09/04/history-shows-markets-gdp-outperform-under-democrats/

      Bloomberg agrees:

      http://www.bloomberg.com/news/2012-02-22/stocks-return-more-with-dem-in-white-house-bgov-barometer.html

      So does Forbes:

      http://www.forbes.com/sites/adamhartung/2012/10/10/want-a-better-economy-history-says-vote-democrat/

      These are just the first few links which came up when I did a Google search on the subject.

    • Slamfu

      “The market does what the market does, presidents come and go.”

      Perfect example of the problem, unless I misunderstand your quote. But seems that you are implying that markets and presidential administrations aren’t linked powerfully, that like the weather what happens happens and no one could have predicted or changed it. Markets don’t just do things randomly without any direction given by national fiscal policy, and Presidents have strong effects on their direction. The difference between GOP and Dem administrations is stark, and the change happens fast. I’ve seen some comments that financial markets take 4 years to react to a new administration, which is laughable after even a cursory glance at major metrics timed with new administrations. That or its one of the biggest and repeatable coincidences ever. You change income taxes, interest rates, deficit spending, the changes happen fast.

      • It would be more reasonable to argue that it takes a year or two (as opposed to four years) to fairly attribute economic conditions to a new president. I have seen analyses which take this into consideration. The Democrats still come out ahead of the Republicans on the economy.

      • dduck12

        That’s what I’m saying.

  • Slamfu

    He almost gets to why people vote against their interests. It’s a calculated and widespread campaign of misinformation designed to trick voters. People are generally ignorant enough of these issues, unless they work in politics or the financial fields. Even then most often they only understand their little piece of the pie and not the whole thing. I’ve actually heard some shockingly ignorant assumptions come from people that really should know better. One person I know who’s worked as a stock broker his entire adult life had absolutely no idea that banks were pressuring mortgage brokers into pushing more sub prime loans for them to be rolled over into securities. None whatsoever. He also thinks that banks should be allowed to do whatever they want.

    My brother hammered home a point with me the other day, one that I’d not given a lot of thought to. I’ve heard the term “factoid” before but not its real definition which is something that everyone knows is true, but which really isn’t. People naturally fill in gaps in their knowledge with factoids. We make assumptions. Propaganda people are well aware of this fact(oid). So it really doesn’t take much to steer people certain directions if you alter what they are hearing or seeing. When you’ve got a population that has only so much time and inclination to learn about all the facts which they can’t possibly know, you’ve got a good opportunity to mislead them into doing your bidding, and the GOP has certainly done this. What is shocking isn’t so much that they did it, but that its been so effective for so long. There is ample evidence to discredit a lot of their platforms, but the lies persist in the public conscience long after there is published information to the contrary.

    In fact the GOP has taken it to the next level: outright lying about things. The torture report is a good example. The report clearly says that torture was not effective. The GOP keeps saying it was critically effective. There are more examples, but the point is, misinformation seems to outnumber information these days. Once you clue into it, its actually helps you triangulate who is BS’ing us and who isn’t. HINT: It’s the GOP.

    • dduck12

      Huh.
      I agree, there are some dumb stock brokers.

      So this has devolved into what the bad Reps have done.

      • This has nothing to do with stock brokers. It is about how the market and other economic indicators perform in response to which party is in power, and how the Republicans get people to vote for them contrary to their interests. It hasn’t devolved into what the Republicans have done. It was about what Republicans have done from the start.

        • dduck12

          Who appointed you chief interpreter of what “it’s” about. Just because you started this thread, doesn’t mean you get to control the discourse. Slam mentioned a stock broker, “chastise him”, or else let the thread expand.

          • Are you reading the same discussion I am? 🙂
            The anecdote about the stock broker fits into the rest about GOP misinformation–so again it was about what Republicans have done from the start and it hasn’t “devolved” into what bad Reps have done.

          • dduck12

            Oh, I see, it was a Rep stock broker. Are you understanding along with reading, I am 🙂

      • The fact-check websites are far harder on Republicans because they subscribe to their own set of “facts” fed by right-wing media (Fox News and talk radio). The right responds to this in their normal fashion: accusations of “bias” but offering no basis for the accusation. Again, I can provide figures and links if you would like.

        • dduck12

          The Rep, being the “out” guys, commit more gaffes and other lies and distortions, no need to make it more complicated than that. This “their own set of facts” is a smear tactic, as is the one that the Dems are all soft headed. 🙂

          • It has nothing to do with them being the “out” guys. They were every bit as dishonest when they had the White House and controlled Congress.

            Having their own set of facts is not a smear tactic.It is a statement of fact. Republicans regularly ignore the facts in determining their policies, and regularly ignore science where applicable.

            This is seen regularly from them. It includes all the lies about Obamacare, which you regularly repeat. It includes their claims about torture working. They ignore science on issues ranging from climate change to abortion and contraception. Their economic policies are based upon Voodoo economics, such as with claims that tax cuts pay for themselves, along with their dishonesty in blaming Democrats for the deficit which they caused.

          • SteveK

            I believe ‘soft headed’ is but one more of the rights “own set of facts” as are:
            › The economy is better when Republicans “lead”
            › The Republican Party IS inclusive.
            › Global Warming is a fraud
            › etc. etc. etc. ad nauseam

          • “This “their own set of facts” is a smear tactic”

            No, it isn’t, according to the fact-check websites. Let’s take a look:

            According to Politifact.com, 61% of the claims made by Fox News pundits were largely false while 21% were largely true.

            http://www.politifact.com/punditfact/tv/fox/

            Politifact rated Rush Limbaugh as even more fact-challenged (82% largely false to 7% true).

            http://www.politifact.com/personalities/rush-limbaugh/

            Despite this abysmal record on the facts, most conservatives rely on Fox News and right-wing radio for political information.

            Polls regularly show that more self-identified Republicans subscribe to factually incorrect political notions than either independents or Democrats. This reliance on fact-challenged right-wing media for information is why.

            Care to back your claim up with some data?

          • dduck12

            No need for data, common sense and a pulse is all I need, and please no insults or prodding, it will be appreciated.
            Added: You might want to check the link to a study by the University of California given in this NYT article:
            http://www.nytimes.com/2014/10/25/upshot/americans-dont-live-in-information-cocoons.html?abt=0002&abg=0

            And look what this article says are the most trusted:
            WSJ romps: http://www.businessinsider.com/here-are-the-most-and-least-trusted-news-outlets-in-america-2014-10

            And FOX romps here:
            http://www.businessinsider.com/chart-fox-is-the-most-trusted-tv-news-source-in-america-2014-6

            And, I won’t say anything about MSNBC (the Al Sharpton network), it’s too embarrassing.

            BTW, Like many other Reps, I get my main source of news from the NYT, but I also get my hate Rep stuff right here on tilted TMV. 🙂

          • Your links actually prove my point. They show that conservatives trust Fox News and right-wing radio (Limbaugh, Beck, etc.) to give them accurate information.

            However, you seem to be confusing “trusted” with factual accuracy. They are not the same. All of the conservative media outlets that conservatives “trust” make a lot of claims and statements that the fact-check websites have ruled are false. Fox (61% false), Limbaugh (82% false), Beck (59% false) all take a beating from the fact-checkers. It seems clear that these media outlets value telling their conservative audiences what they want to hear over factual accuracy.

            The false beliefs held by conservatives that are constantly reinforced by right-wing media form what Julian Sanchez of the libertarian Cato Institute calls “epistemic closure.”

            “Conservative media, Mr. Sanchez wrote at juliansanchez.com — referring to outlets like Fox News and National Review and to talk-show stars like Rush Limbaugh, Mark R. Levin and Glenn Beck — have “become worryingly untethered from reality as the impetus to satisfy the demand for red meat overtakes any motivation to report accurately.”

            http://www.nytimes.com/2010/04/28/books/28conserv.html

          • dduck12

            The links show that more people trust the WSJ and for some reason a high percentage of all folks watch FOX (25% of ALL Americans). Plus the study shows we consume a lot of centrist stuff:

            “Partisans from both sides were most likely to consume news from outlets that were estimated to be relatively centrist, such as network morning
            shows and evening news broadcasts.” (Read the whole study, I can’t copy it.)

            You said: “The fact-check websites are far harder on Republicans because they
            subscribe to their own set of “facts” fed by right-wing media (Fox News and talk radio).”
            Hence my “data”. If you’d like to think there is no smear campaign, go ahead. However, I will NOT contribute to the Rep smear campaign that says the Dems want to control our lives from birth to death.

          • I would be willing to bet that most of the 25% who say they “trust” Fox News are conservatives.

            What do you say to the fact that better than half of the statements coming from Fox, Limbaugh, Beck, et al are rated “false” by Politifact.com?

          • “have become worryingly unteathered from reality…”

            For National Review it is nothing new. I remember first reading National Review and Human Events as a teenager, many years ago. My initial impression was that they were presenting information not available in other publications. I very quickly figured out that they were often making things up to promote their ideological views. Now we have so many more outlets for this right wing propaganda.

            At least, with all his flaws, Buckley did keep some of the more extremists elements like the Birchers out of the mainstream conservative movement. Now the extreme elements are increasingly dominating both the movement and the Republican Party.

          • What does MSNBC have to do with this? When MSNBC has someone on giving their opinion, they don’t claim they are being fair and balanced as on Fox. When people on MSNBC give opinions, they back them up with facts, while people on Fox rely upon lies to promote right wing views.

            When bringing up the WSJ you once again fail to distinguish from their news section and the opinion pages. The WSJ is a useful source for information. Their opinion pages regularly put out outright lies to spread right wing views.

          • dduck12

            Same old, same old. I am merely citing links. Don’t like what they say. That’s Ok.

    • JSpencer

      Take the facts that fit your fancy while ignoring the rest, arrange them to fit your existing point of view, and defend them with single-minded purpose. That’s a pretty good working definition of intellectual dishonesty.

      • dduck12

        Who does that?

        • JSpencer

          I was dovetailing Slamfu’s comment. I have no idea what you are looking for with your question. Examples of intellectual dishonesty are all around us these days.

          • dduck12

            Yep.

  • The_Ohioan

    Republicans and Tea Party groups will tell us it is their efforts to control spending that has given the markets confidence. And their ability to give Corporate America every advantage to again practice “irrational exuberance”.

  • JSpencer

    “They have been successful in spreading misconceptions that they are more pro-markets and better for the economy”

    Add that to other popular and lingering misconceptions about republicans: Better at foreign policy, more pro-family, more patriotic, etc. Great at talking the talk, lousy at walking the walk. In otherwords, good at spreading lies and fooling the flock. This is why I tend to view the political right as a borderline cult. Suspension of disbelief in the face of facts is their forte.

    • dduck12

      You forgot the horns and cloven feet again. 🙂

      • Slamfu

        Republican policies don’t work, they clearly screw the average American while shifting money to an already bloated upper class, they have gone out of their way to keep the recovery from going faster, and yet they keep pushing them. That’s about as close as it gets to cloven hooves in politics really. Actually, considering the torture scandal now it could be and is worse. Point is though, the GOP routinely makes stuff up to back their talking points and I’m sick of their BS being treated as if it’s a legitimate counter argument. BS is not another point of view or an alternative idea to consider, its just BS.

        • dduck12

          Too bad the troops, i.e. the voters didn’t realize that in the last election, cause they live on the Dem version of BS. 🙂

        • JSpencer

          C’mon slam, where would the GOP be without their BS? Easier to joke about horns and cloven feet than to look behind that curtain.

          • dduck12

            Also, easier to live in a non-nuanced world with only one “right” tribe.

          • JSpencer

            I’m fine with nuance dd. It’s the BS I get tired of.

          • We are not talking about one right tribe in terms of opinions. We are referring to matters of fact when there are facts which can be proven to be true and claims which can be proven to be false. You can have you own opinions. You cannot have your own facts.

          • JSpencer

            Bingo. Try convincing the devout though. 😉

          • dduck12

            RC and JS, if you don’t think this is tribal, then keep up the Liberal BS. That’s OK, there is enough to go around, just don’t get all holier than thou and decide what or what not we are talking about or what is or isn’t OK in your minds. Devout this. i!I

          • There is no liberal BS here. But yes, it is tribal. The tribe is conservatives who deny reality, ignoring science and ignoring any pertinent facts, when the facts conflict with their views.

          • dduck12

            No liberal BS. Thanks for the big laugh on this solemn day for me.
            And my tribe is better than your tribe cause I can drag in anything at any time.. Nan a nan a (whatever little kids say).

          • The problem is that you are interested in defending your tribe and attacking others. We are interested in finding the facts, and developing policy based upon the facts.

          • dduck12

            Bless you.

          • JSpencer

            “keep up the Liberal BS”

            Liberal schmiberal. While we are inundated with tribal reactions these days, facts are distinct unto themselves.

  • archangel

    Dear All, return to the topic of the post only, not each other. Our Commenters Rules are also our Writers Rules–

    If you want to go at each other, take it offline. We pay our hard earned money here to keep our comments area for thoughtful comments about the topic of the post.

    Thanks.

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