>Clinton and co want to prevent the collapse of the
>“new economy” which has delivered large, I believe
>historic?, returns from stock market investments.
What's historic about the U.S. bull market that began in August 1982 is its longevity; there hasn't been a deep, sustained bear market since 1973-5. Gains in the 1840s, 1920s, and the 1950s were bigger than the 1980s, and the 1840s and 1920s beat the 1990s.
>We know money is being consolidated in the hands
>of the few. The richest one percent of households
>now control 40 percent of the nation's assets,
>twice what they had 20 years ago.
Part of that is just a reflection of increasing stock prices.
> Since 1983, the
>value of the stock market has increased 13-fold
>but less than half of the population owns any form
>of stocks, and the vast majority of those who do -
>some three quarters of stockholders - have less
>than $5,000 invested in the market. The richest 10
>percent of Americans own 88 percent of stocks and
>90 percent of bonds.
>
>Is there anything out there which shows how much
>stock market gains (increase in personal wealth
>for the few) have contributed to the "economic
>boom" ? I'm not sure what form such a tabulation
>would take-- a percentage maybe?
That's really hard to say. After controlling for macro variables like interest rates and cash flow, the stock market offers no additional explanatory value for real investment. Over the long term, the relation to consumption is also hard to prove. In other words, it's hard to say how changes in fictitious values influence real economic behavior. But the last few years have been so off the charts, bubblewise, that maybe normal relationships don't apply. And, as Minsky says, the stock market passes judgment on leveraging and other financial practices; the bull market has probably made people a lot more confident about borrowing and investing than they would otherwise have been, but I'm not sure how you'd quantify that.
I can think of some areas where the bull market has had big real world effects, though. Wall Street money has created a nutty real estate market and more gentrification in NYC - this cycle looks like it'll take significant steps in the g'fication of Harlem. (Walking around NY these days is a big reminder how the bourgeoisie plans - the transformation of Harlem has been in the works 20 years or more, and the transformation of the lower Hudson waterfront is older - a culmination of the whole scheme of pushing development westward.) Cities where IPO money has flowed - SF, Seattle, Portland - have seen similar booms, as far as I know.
And then there's the ideological effect, stimulating popular approval of capitalism, esp the U.S. kind, and increasing its prestige.
Doug