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Andrew Tobias
Andrew Tobias

Money and Other Subjects

Stocks Do SO Much Better Under Democrats

April 26, 2016April 25, 2016

I’ve long made this case . . . for example here in 2008: a New York Times infographic by Tommy McCall showing how $10,000 invested in the S&P since 1929 only under Republican presidents would have grown to $11,733 but to $300,671 under Democrats.

In 2012, I went back four more Republican years, to 1925, to match the four more Democratic years we’d just had, which changed the results to “less than $30,000” under Republicans but “more than $300,000” under Democrats.

(All these numbers exclude dividends.)

So with a new election looming, I’ve tried it again, this time going back yet another four Republican years, to 1921, to balance the four more Democratic years since 2012 — 48 years each — and this time I used the Dow instead of the S&P because the data were easier to come by.

Drum roll, please?

As of Friday’s close, your $10,000 would have grown to $41,380 under Republicans but to $575,324 under Democrats.

Vote blue, boys and girls.

Because as I’ve argued before, it’s not one of those flukes without causation — like the way you could seemingly predict the market depending on who won the Super Bowl. Republicans and Democrats have different governing philosophies that cause different economic outcomes.

Republicans promote inequality, thinking that the wealthy — being the “job creators” — should be lightly taxed while unions are busted, the minimum wage held low, Medicaid expansion rejected, and Pell Grants cut back.

But as Nick Hanauer so wonderfully explains, it is the middle class — the consumers — not the wealthy who are the job creators.  Democratic policies that boost the bottom 95% have repeatedly proven to grow the economy better than Republican “trickle-down economics” designed to advantage those already best off.

What’s more, Republicans are by nature conservative — and so, for example, blocked the American Jobs Act that would have revitalized our infrastructure: a terrific engine for economic growth. Democrats are by nature progressive — more apt to invest in the future.

Stock market performance seems to confirm that, over time, and in broad strokes, one governing philosophy serves most of us better than the other.

 

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John Kenneth Galbraith, The Age of Uncertainty

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