Sunday, October 4, 2009

Down with the Dow!

The American news media are addicted to the Dow Jones Industrial Average. Radio and television stations seems to believe that reporting the Dow (and, often, the NASDAQ) is an essential part of any news cast. Even NRP includes a mention of the intra-day progress of the Dow repeatedly throughout the day. CNN is the worst. It displays the Dow constantly in a corner of the screen. Watch CNN, and you will see ever little movement, refreshed every few seconds. What a waste of electrons!

These constant updates on the stock market are worse than useless. The fact that the market is up 0.4% on a given day is utterly meaningless to the vast majority of people. The stock market's daily, and even weekly, drift is no indication of the direction of the market, let alone of the economy. Even a relatively large move in the market, say a rise or fall of 3% in one day, is not meaningful. There is nothing that any intelligent person can or should do in response to it, nor does it change anyone's life.

Reporting the Dow is, at best, a colossal waste of time. At worst, such reports create paranoia and fuel speculation. People who listen to the news, with its moment-by-moment reporting on stock values, could reasonably infer that these reports mean something. The Dow is down -- the economy must be in trouble! The Dow is up -- things must be improving! But that is not true. The Dow is up 0.4% today as a result of random drift, not because "bargain hunters are snapping up shares," as ABC reported.

Worst of all, the reporting of the market's small random drifts encourages people to speculate. The true value of stocks, over the long term, is based on the value of the businesses. More specifically, the value of stocks is based on the dividends that they will pay. Therefore, the value of a stock does not go up or down on an hourly basis, absent some important event, e.g., Merck's latest drug obtaining FDA approval. In any market, however, there will always be an element of speculation as well, people who buy solely for the purpose of finding a greater fool who will pay more. They do not care what the stock is worth, only what others think it is worth. Focusing on ultra-short term fluctuations in the market encourages people to focus on what the market will bear, not on the value of what is being traded.

Finally, although this is really beside the point, the Dow is a poor measure of the value of stocks, as it takes into account just 30 large companies. If you need to measure the value of the stock market, look to the S&P 500 or the Wilshire 5000, which take into account the broader market.

Thursday, October 1, 2009

State Funded Religion in America

Approximately half the funding for churches in the United States comes from the government. The Federal government allows its citizens to take a tax deduction for money they give to their church (or synagogue or mosque). So do States that have an income tax. In addition, churches are exempt from property tax, and some of the money their pay to their ministers is also tax free. Add up these tax benefits, and approximately half of the money given to churches comes from our tax dollars.

This government funding is available to all religions, regardless of whether they preach love or hate. The government pays, whether or not the religion treats blacks, women or gays as full human beings. The government pays, which means you pay. So, if you are an atheist, you pay for Catholic churches. If you are a Baptist, you pay for Muslim's mosques.

Some have claimed that the First Amendment guarantees the freedom of religion, and that it would therefore be unconstitutional to tax churches. That is an obvious fallacy. The constitution also guarantees free speech, but that does not mean that money you spend on books or newspapers is tax deductible, and it does not stop the government from requiring book stores to pay property taxes, income tax and sales tax. Hospitals pay property tax. Private schools pay property tax. But churches do not. And our taxes therefore have to be higher to make up the difference.

Freedom of religion means that there should be no laws designed to discourage religion. If you want to have a church, you should be free to do so. The government should not tax or otherwise burden something just because it is religious. On the other hand, the government should not be in the business of giving benefits just because something is part of a religion. That is forcing people to fund religions in which they do not believe and, ironically, violating the rights of the religious, as well as the atheists and agnostics.

What I have written here is hardly new. No one who studies law seriously disputes it. Yet, one rarely hears anyone complain about it openly. I want to go on record saying that I am outraged that the government takes my money through taxes, then gives it to anyone and everyone who runs a church.