The notion that companies are people is patently absurd. I don't care what 5 ideologues in black robes or even Mitt Romney have to say on the subject. Companies are very far from people... though I've been wondering, if Walmart went bankrupt, would it go to Hell? But, for this post, I'll stipulate for my conservative friends that soulless and bodiless companies are people.
So, if companies are people, presumably they get to vote (once they turn 18 -- sorry, Facebook). And, if they get to vote, I think it is clear that the majority of them would vote to re-elect President Obama. And if you don't believe me, ask an impartial arbiter: "the free market."
Huh? I thought Republicans were in the party of free markets. Every Republican stump speech ever drafted includes a section about supporting capitalism and removing burdensome regulations from business. Conservative pundits and news media drone on and on about their love of free markets and Democrats' proclivity towards socialism. You see it on social media, in blogs, even in the email signatures of "Real Americans." Clearly, free markets would favor Republicans... except that they don't.
What do I mean? Well, the interesting thing about free markets is that over the long term, they're not driven by ideology or propaganda. They don't care what Larry Kudlow or Rush Limbaugh says. They don't watch CNBC. Free markets move by Adam Smith's invisible hand. Supply and demand, company fundamentals, technical analysis, prospects for growth, the effect of inflation, currency fluctuations, trade balances, consumer confidence, corporate profits, etc... are what actually move free markets. When equity markets go up, it means they think American companies are doing fine and have good prospects for future growth. When they go down, the opposite is true.
Now here is an important distinction -- the traders on Wall Street certainly pay attention to the neo-con chest-thumping and finger-pointing. After all, they're real people. And as a result, their large chunk of political contributions is flowing into Republican coffers. But, when it comes time to actually make a trade 0- when it's time to make a decision to buy or sell, hold 'em or fold 'em 0- they forget the distraction and make a "true business decision"... or at least enough of them do that the market generally is efficient.
So what have the markets been telling us? Well, the equity markets are pretty clear. Since the day that Barack Obama became president, the Dow has risen over 62%. The S&P 500, a broader index, is up nearly 69% adjusting for dividends. On an annualized basis, the equity markets are up about 19% a year. That's pretty darn good. How does that compare to their opinion of George W Bush? Well, the markets fell about 6% a year during his administration. The markets hated W. So what? Everybody hated W.
What did the markets think about previous presidents? Well, during Clinton's presidency the markets grew at an annualized rate of over 15%. Hmmm. How about under Bush I? Well, they only grew at 10.86%. Well, while people liked him more than his son, he was nothing to write home about. But, Reagan... that's another story.
Obviously, the markets loved Ronald Reagan, right? If companies were people, they'd be lining up to marry him. I wonder what Rick Santorum would think about that? I can see the reality TV show now starring The Gipper as The Bachelor. I bet he'd give the rose to BP... Anyway, it's a safe bet that the markets liked Reagan more than anyone ever, no? Actually, NO. In his 8 years in office, the S&P rose around 10.25% a year. Control for inflation, and Reagan looks even worse.
What does this mean? It means that market forces are telling us that companies have been better off and have better prospects for future growth since Obama's been in office than during the administrations of Bill Clinton, either Bush, or even Ronald Reagan. And, why not? US corporations continue to post record profits, the President has shown he is willing to support key industries like manufacturing in times of trouble, and he's actually written fewer regulations than his predecessor through his first three years in office. What's not to like?
I think it's clear that assuming they were rational and voted in their own self-interest, if companies were people, they'd vote overwhelmingly to re-elect Barack Obama. Of course, if they were people, who's to say that they'd be rational?
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