In the appendix of that report on executive compensation and inequality that the Washington Post wrote about the other day, there’s an interesting chart comparing stock market indexes for the U.S., France, and Japan from 1981 to 2006. Check it out (figure 3, page 74):

First, applaud the fact that the authors adjusted stock prices for inflation. That’s almost never done. They did it here by prices for each respective country.

The authors cut off the stock chart at 2006 because that coincides with the tax data they were studying. Since then, the U.S. stock market has done a little less worse than French stocks. And it seems as if the researchers just used index averages and not dividends in their calculations, which could change the (while I can’t seem to find historical data on French dividend yields, I’d guess they’re at least comparable to American ones).

But the point is, the ascent of laissez-faire economic policies in the U.S. during the first quarter century following the Reagan Revolution wasn’t enough to outdo French stocks, which faced the heavy hand of government.

Take it for what a single datapoint is worth, but it’s interesting, non? You don’t and won’t hear much about this one in the American business press. And you don’t even want to look at truly socialist Sweden’s stock returns, which have outpaced even France’s.

Want to push back further, to the start of the Nixon administration? Here you go (note that I don’t believe these are apparently not adjusted for native country’s inflation unlike the previous chart):

The Markets Are God crowd always likes to tell us that the markets are telling us what we ought to do. What do they think the markets are telling us about “socialism”?


Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu.