Read this article. This was posted on DemocraticUnderground to demonstrate to everybody how socialism beats capitalism. The headline of the thread was "stocks of socialist countries outperform USA" or words to that effect. I want you to read this cartoon because it is the framework of the point I'm about to make.
The whole article purports to tell professional stock traders, you know, those people whose entire livelihood depends on knowing how to buy and sell stock, that they've been doing it all wrong for decades, and that in fact American stocks are *not* among the best you can buy. Instead, they suggest that "socialist" countries like Canada (?) are better investment choices. It's worth breaking this article down to see how an otherwise rational adult can choose to believe in something like socialism against all facts and reason.
The first paragraph points to a study which allegedly shows that stocks in "socialized" countries perform better than US ones. This comes from a single chart comparing France, the US, and Japan for the past twenty-five years. The same paragraph includes that old canard about the last twenty-five years being some kind of libertarian, laissez-faire free-for-all, where Milton Friedman personally wrote all US economic policy. In reality, the opposite is true, the government grew, more and more money has been spent, more laws passed, etc. A few changes to the tax code here and there or the odd deregulation here and there is paltry evidence of a libertarian revolution. If you were in court and had to prove that statement, you'd be screwed because the proof isn't there.
They also include this study, bringing other countries into the mix.
Both studies have the same big flaw, which can be gleamed from reading this article on just the S&P 500 but the principles of which can be applied to the other studies. The long and short of it is that the first two studies do not show what the authors of these articles purport to show, they do not show that France, Sweden, etc. have had higher-performing economies over the past twenty or forty years. Even adjusted for inflation (using a different metrix for each country) they only tell one small part of a much larger story.
Stock markets are one indicator of economic performance, and among lay-people they have become *the* indicator of economic performance, but there is more to how stock markets perform (and how a country's economy has performed) than just prices. As the article above showed, if you leave out dividends and the possibility/certainty of reinvesting them, you come up with a false picture of how the stock market has performed over time.
The article tries to "balance" at the very end by quoting some left-leaning economist pointing out how these European gains in the stock market can be chalked up to market liberalization, but then balances *that* out by talking up all of the welfare state programs he likes.
There are a few other points to add, all of which are speculation and would require further research to develop:
1) For a long time, European economies were not as dynamic as America's. Because they had less economic freedom, companies at the top could stay huge without much fear of smaller competitors (I'm speaking broadly), whereas in America we have not only the entrepreneurial mindset but also the capital markets that can make a no-name company like MicroSoft or Facebook become a world-conquering giant in less than a decade. But some years ago, Britain, Belgium, France, etc. got into the act with markets for smaller companies. This could account for a large portion of growth.
2) "Government intervention" hasn't been defined and thus this study is nothing more than a bunch of somewhat-adjusted data, for what that's worth.
None of this will come as news to actual stock market traders and other financial people or economists whose job it is to be experts on the ups and downs of stock markets around the world. When your career is on the line, you do not have the luxury of misinterpreting data or relying on a shallow statistic or taking something from a study out of context or reading too much into one particular fact all for the sake of your political views.
(not to mention that almost all of the countries in the latter study on stock prices appear among the top countries on the Index of Economic Freedom--hardly socialist. Notice Cuba, North Korea, most of Africa, pre-reform India and China never showed up very high on stock market ratings)
But the main thrust of my post is that most leftists will not take the pains to understand what studies like this actually mean, whether they tell the whole story, or just generally learn more about stock markets and economic performance. Rather, their thinking doesn't go much further than the headline itself. People are always asking me "why do liberals believe
It's easy to believe something that isn't so if you can find one manipulated set of data showing that it *is* so, no matter what every other expert has to say or how misleading that particular study may be. I think a lot of people treat "studies" as a kind of voodoo charm to ward off ideas they don't believe in.