Last week, presumptive Democratic nominee Joe Biden unveiled his economic platform in Pennsylvania, calling for an end to the “era of shareholder capitalism.” It seems that Jack Lew, former treasury secretary and a member of the Biden brain trust, neglected to tell him that more than half of U.S. families are invested in the stock market. An end to shareholder capitalism means an end to a secure retirement, home ownership, college savings and middle-class aspirations.
According to Pew Research, 52 percent of U.S. families have direct or indirect investments in the stock market, mostly through retirement plans. The median savings of these fat cats is $40,000. Even among those with annual family incomes of less than $35,000, one-in-five have money in the market, with a median savings of $8,500. By race, nearly one-third of African Americans are in the market, with a median savings of $12,000, while more than one-quarter of Hispanics have a median savings of $10,800. Whites, at 61 percent, have a whopping median savings of $51,400.
For these families, the stock market is one of the rare bright lights during this time of pandemic, civil unrest, unemployment, bankruptcies, and school closures. Their nest egg is holding up — the S&P 500 Index is down less than 2 percent for the year. And for those who have 401(k) plans, should they lose a job, the money still belongs to them, and they can even borrow from it if they have to.
Biden’s goal of ending shareholder capitalism also includes raising the corporate tax to 28 percent. At 35 percent during the Obama/Biden years, Pres. Trump dropped it to 21 percent to create a level playing field with other developed countries. Raising the corporate rate would goes against declining worldwide trends over the last decades. In 2000, the average corporate tax rate was 31.6 percent and has since fallen consistently to the current level of 21.9 percent according to the Tax Foundation. Raising the corporate tax rate would mean the return of the old “new normal” of anemic growth of the Obama/Biden years.
But leave it to Biden to carry on what most free-marketers find most disappointing about Trump’s economic policies – protectionism. Biden rolled out a $700 billion manufacturing and innovation plan that will focus on U.S.-made products. “Let’s use this opportunity to make bold investments in American industry and innovation so the future is Made In America — and in all of America,” Biden said. His plan also includes $400 billion for industries whose products and materials the U.S. needs – or at least what a Biden administration thinks America needs. Watch for crony capitalism to be on the rise as shareholder capitalism comes to an end.
And let’s not forget the green theme, Biden is promising $300 billion for R&D in technologies that include electric cars and 5G. Unfortunately, taxpayers can expect more Solyndras under Biden.
“If I am fortunate enough to be elected president, I’ll be laser-focused on working families, the middle-class families . . . . Not the wealthy investor class. They don’t need me,” said Biden. They certainly don’t. That’s because only the one percenters can afford to insulate themselves from his economic plan.
Rowena Itchon is senior vice president of the Pacific Research Institute.