Dow Blog

The Dow Jones Industrial average is an index that measures the stock values of some of the largest publicly traded firms in the United States. It has had a rough year, largely because of the coronavirus. The threat posed to businesses by the virus is straightforward: people spending more time inside leads to less consumption. If people can’t go outside, how will restaurants stay open? If people have no need to drive, who will buy gas? When everyone stays home, money in the economy ceases to change hands, and the Dow, at least to some extent, reflects this. Its lowest point was March 23rd, which was over 35 percent down from the all time-high. Since then, however, it has slightly recovered. This is primarily due to governmental relief, which has been especially generous to big businesses. 

This brings up questions and issues of power. Boeing, for an example, which has spent exorbitant amounts on stock buybacks in recent years, has received a hefty sum from the federal government, all while adamantly refusing to give up any stake or control. This, to me, is ridiculous; buying back stocks is a risk, and they must accept the consequences. Why should the government bail out such a monolithic firm without receiving anything in return, especially when they have engaged knowingly in risky business practices? The longer the cycle of boom, bust, and a government blank check continues, the more large firms will rely on government bailouts. To whatever extent that the private sector has failed to protect itself against a foreseeable catastrophe, it must give up power. If we are going to live in a society dictated by the rules of the market, it is only fair that they apply equally to all. As Martin Luther King Jr. famously said: “We all too often have socialism and rugged free market capitalism for the poor.”

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