Saturday, January 14, 2006

Tao of the Dow

The salt industry shares with other engines of the economy the role of adding value to our common enterprise -- our products, jobs/wages, and the taxes we pay (there, that validates a salt connection for these thoughts). This past week, the Dow Industrial Average reached 11,000 for the first time since 9/11. It has risen from 8,601 since May 2003 when the Bush Administration's tax cuts became effective. Since May 2003, then, the growing value of equities reflected in the Dow has added $5 trillion in shareholder value. The increase in shareholder value is equivalent to all federal spending in the same period, by my calculations; I haven't seen any commentary to that effect. If my numbers are right, they illustrate a larger point beyond the value of low tax rates: federal spending is the "tail" of the economy's "dog." It is the private sector that adds value to our common enterprise. Swings in the health of the private sector have consequence far beyond the allocation of $2 trillion a year in federal spending (about half of it for just three programs: Medicare, Medicaid and Social Security).

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