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Presidential Issues: Economic Growth

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Joe Biden Doesn’t Understand How Stock Markets Work – Nor Politics Apparently

September 29, 2016

By Tim Worstall

Joe Biden, the Vice President, has taken to the pages of the Wall Street Journal to lecture us all on the perils of short termism. Two things quickly become apparent. The first being that the current Vice President is remarkably confused about how this politics game works. He has been in office for the past 7 1/2 years. The time to start making prescriptions about how things ought to be done was 7 1/2 years ago Joe, not now, when you’re rapidly approaching that first most welcome pension check. The second is that the VP seems to have no idea at all about how stock markets work. It’s not just that stock markets are long term institutions by definition, their valuations always but always being of that long term, it’s that the changes in CEO pay over the decades have made CEOs much more closely aligned with that long term than the short. To believe otherwise is to get the entire system upside down.

But here’s Joe:

Short-termism—the notion that companies forgo long-run investment to boost near-term stock price—is one of the greatest threats to America’s enduring prosperity.

The notion could certainly be dangerous if anyone believed it of course. For it’s always dangerous to believe things that ain’t so.

Read the full article at Forbes.com: Joe Biden Doesn't Understand How Stock Markets Work - Nor Politics Apparently

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