CNBC host Larry Kudlow, writing in the National Review, has some advice for those of us trying to make heads or tails of the conflict in the Middle East: Turn off your TV, hide your newspaper, don’t even think about listening to the radio; just watch the stock market ticker. If the market is strong, then the world is right.
He puts it this way: “And while you might not know it from today’s magnified headlines about war, terrorism, higher oil prices, and rising interest rates, the stock market message is one of reasonable hope, confidence, and optimism about the state of the world.”
This column really has to be read in full to be believed. For starters, Kudlow breathlessly races through a series of arbitrary indicators that the economy is doing well. Stock markets are up all over the world, from Brazil to Japan. Here at home, GDP grew by 5.6 percent in the first quarter. There are signs that we need not worry about inflation. And, to top it all off, he writes, “along with lower tax rates, strong profits, and ample bank credit, the entrepreneurial-driven growth model of the eminent classical economist Joseph Schumpeter is alive and well.”
Hear that, Schumpeter is alive and well. The guy must not live in Beirut.
Leaving aside the wisdom of the economic analysis, the claim that stock market investments are some kind of marker of how people feel about Israel’s campaign against Hezbollah is beyond weird. Every journalist reaches a point when he has covered a beat for so long that he begins to think his subject matter—whether it be the stock market in New York or a Pygmy tribe in Africa—is what makes the world spin. Usually, that’s about the time when the journalist gets institutionalized, or at least moved to a place where he can do less damage.
Kudlow’s argument gets no more sophisticated then this: “Think of it: On the world stage, there is more capitalism, free trade, and economic interconnectiveness than ever before. Because of this, literally hundreds of millions of share-owning investors are voting daily on the great issues of war, peace, prosperity, and hope for the future. And their vote is optimistic.”
So let’s see if we have this straight. The capitalist system and globalization have not collapsed in the two weeks since Hezbollah first attacked Israel, ergo the system must favor the war. Or is Kudlow suggesting that the citizens of the world—each one presumably plowing his and her spare cash into the stock market—are actually expressing their satisfaction with a possible Hezbollah victory? After all, most analysis of the conflict sees the terrorist group as having won a pretty big battle at least in the publicity war.
Kudlow’s contention seems to be that there is some elite, super-prescient investor class, smarter than the rest of us slaves to the media, who get it, while we stay glued to Wolf Blitzer’s mug. “For a long two weeks Israel and Hezbollah have been going at it hard, and world stock markets have chosen to climb,” Kudlow writes. “The backward-looking media pessimists won’t see this, but the real world, real money votes of the global investor class should be noted and digested by all the rest of us. Indeed, I believe world investors are thankful for Israel’s courageous efforts in the cause of freedom, independence, security, and hope for the future.”
The really scary part about all this, as Jonathan Chait reminds us at The Plank, is that Kudlow is “not just some raving nut sitting in a windowless room. He writes about economics for National Review and hosts a talk show on CNBC. In other words, he’s a raving nut who enjoys prestigious platforms to disseminate his views.” Well, seeing how predictable the Middle East is, maybe we should just try Kudlow’s suggestion and plaster the front pages with stock quotes. It would sure as hell beat dead children.