On Why the Stock Market Doesn’t Matter

09/30/2025

They love to stand in front of the stock market like it is the holy altar of prosperity. They point to the Dow or the S&P as proof that America is booming and that ordinary people should clap along as though their lives just improved by magic. And wave those numbers around like scripture, and television anchors repeat them like gospel, never stopping to admit the truth that the stock ticker is not your paycheck. You cannot buy groceries with the S&P. You cannot pay rent with the Dow. The Nasdaq will not keep your lights on when the bill comes due.

For most Americans the stock market is not prosperity. It is a scoreboard for the wealthy, a casino where the top ten percent hold almost all of the chips and the rest of us are told to cheer when they win. The illusion that everyone shares in this wealth is one of the most successful cons in modern history. Politicians, Trump most of all, bank on you not knowing the difference between Wall Street’s numbers and your own bank account.

This is not a new trick. Ronald Reagan lit the fuse in 1982 when his administration deregulated stock buybacks. Before then, buying back your own stock was considered outright market manipulation. After Reagan, it became the norm. Corporations were suddenly free to use their profits, or worse, borrowed money, to repurchase their own shares. The result was not growth, not innovation, not new jobs or higher wages. It was a generation of accounting theater that made balance sheets look better while leaving workers behind. The 1980s gave us the gospel of “shareholder value,” a polite way of saying that the stock price mattered more than the worker, the community, or the product itself. The country has been spiraling downward in that logic ever since.

Here is how the trick works. A company’s performance is often judged by Earnings Per Share, EPS, which measures how much profit is assigned to each share of stock. When corporations do buybacks, they shrink the number of shares in circulation. That makes EPS rise even if total profits stay flat. It is called EPS manipulation, and it is a magician’s trick. No new wealth was created, no new jobs, no raises, no reinvestment. The pie did not get bigger, the slices just got smaller, and suddenly Wall Street cheers as though the pizza shop doubled production. CEOs get fatter bonuses because their pay is tied to EPS. Investors see their charts go up. And the workers whose labor actually built the company? They are told there is no money for raises, no budget for new equipment, no cushion for benefits.

This shift from wages and reinvestment to buybacks gutted the social contract. Once upon a time, companies like Ford and GE built not only products but also communities. Profits funded pensions, expansion, and research. Workers could build stable lives. By the 1990s and 2000s, the formula was reversed. Profits went to buybacks and dividends. Workers got pink slips. Communities got shuttered plants. Products got cheaper and flimsier. And every time the stock chart went up, politicians pointed to it as proof of national strength.

Trump’s 2017 tax cuts poured jet fuel on this fire. Corporate taxes dropped from 35 percent to 21 percent, promising that companies would use the windfall to invest in workers and infrastructure. Instead, corporations spent more than 800 billion dollars in a single year on buybacks. Workers got crumbs, CEOs cashed record compensation packages, and Trump waved the market numbers around as though America was back in its golden age. He built his entire claim of economic greatness on this illusion, ignoring that real wages remained flat, that healthcare and rent ate paychecks alive, and that the supposed “greatest economy in history” was propped up on financial tricks.

This is where the division between wage earners and asset earners comes into sharp relief. Wage earners live on what they work for. Teachers, nurses, mechanics, warehouse workers. Every dollar they earn is taxed immediately through payroll and income taxes. Wages are the most heavily taxed form of income in America. Asset earners live on what they own. Stocks, real estate, businesses, private equity stakes. Their wealth grows while they sleep, untaxed until it is sold, if it is ever sold at all. They borrow against it to live tax-free. When they do sell, they pay lower tax rates than the worker pays on a paycheck. This is the heart of the swindle. One group sweats for every dollar and pays full freight. The other group watches their money multiply and pays less tax than the janitor who cleans their office.

The wealthy have perfected this trick through what is called collateralized borrowing. When stock prices rise, they do not sell. Selling means paying capital gains taxes. Instead, they take their portfolios to a bank, pledge them as collateral, and walk out with billions in loans. Loans are not income, so no taxes are owed. They use these loans to live like kings, to buy more companies, to fund more investments, all without ever triggering a taxable event. You pay taxes on every paycheck. They live tax-free on money they never technically earned.

And when they buy companies, it is rarely to build them. Private equity firms have turned strip-mining into a business model. They borrow to buy a company in what is called a leveraged buyout, then load the company itself with the debt. They slash jobs, gut pensions, cheapen products, and pay themselves management fees. They sell off valuable divisions, drain every dollar of value, and when the company collapses, they write down the loss as a tax deduction. The workers are left jobless, the community is left hollowed, the brand is left in ruins. Toys “R” Us, Sears, Payless, and countless local newspapers all met this fate. Not because they could not survive, but because they were bled dry for quick cash.

All of this is only possible because the tax code has been built to favor the asset class. Capital gains, the real income of the wealthy, is taxed at rates of zero, fifteen, or twenty percent depending on income. Zero percent if your taxable income is under roughly forty seven thousand as a single filer or ninety four thousand for married couples. Fifteen percent up to about half a million. Twenty percent above that, with a small surtax for the ultra rich. Compare that to a teacher making fifty five thousand a year, who pays twenty two percent federal income tax on her wages. She pays a higher rate on her sweat than a billionaire pays on his fortune. And the billionaires rarely even pay that much, because they do not sell.

When they die, their heirs inherit stocks at current value through what is called the step-up in basis. This wipes away decades of untaxed gains. Trillions of dollars vanish from the tax rolls every generation while working families inherit little more than debt. And if companies borrow to fund buybacks, the interest is deductible. Workers cannot deduct credit card interest, but corporations can deduct the cost of juicing their stock price.

The human cost is everywhere. Nurses drowning in student loans. Teachers buying classroom supplies out of their own pockets. Warehouse workers grinding through twelve-hour shifts without seeing a raise in a decade while rent doubles. Families losing pensions after private equity gutted their employers. Communities watching anchor employers close their doors while politicians point to record highs on CNBC and call it strength. The market goes up when wages are frozen. The market goes up when jobs are outsourced. The market goes up when products are cheapened and communities are discarded. The market’s rise does not mean you are rising.

The stock market is not the economy. It is a con, powered by EPS manipulation, collateralized borrowing, and a tax code that rewards asset earners while punishing wage earners. The cycle is simple. Companies inflate EPS with buybacks. The wealthy borrow against inflated assets to live tax-free. They strip-mine companies, gut workers, and sell the scraps. They pass fortunes to heirs untaxed while workers inherit debt. And then politicians like Trump point at the Dow and say, look how strong we are.

But strength is not a stock chart. Strength is a worker earning a living wage. Strength is a family that can pay its bills. Strength is a community that still has its factories, its schools, and its dignity intact. Until we tax capital gains like wages, close the collateralized borrowing loophole, end the step-up scam, and outlaw debt-funded buybacks, the market will keep climbing while America keeps sinking.

And that is the point they do not want you to see. The stock ticker on CNBC is not your life. It is a neon sign flashing the size of someone else’s fortune. They wave it in your face to keep you quiet while they rob you blind. The truth is not complicated. If you are a wage earner, you are paying more in taxes than the men who own the country. If you are an asset earner, you are living in a world without rules, a world where debt is income and losses are profits. That is not capitalism. That is feudalism with better accountants.

So the next time Donald Trump, or any politician, points at the stock market as proof of greatness, remember this: they are not talking about you. They are talking about the yachts, the gated estates, the dynasties being handed down untouched. They are talking about their class, not yours. The market is their scoreboard, not your salvation. And until we stop mistaking their wealth for our health, they will keep laughing while we keep clapping. 

---Robert L Arnold

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