Monday, March 22, 2010
Stock Market Rises in Response to Obamacare
The stock market continues to move up the day after Obamacare passed. However, gold went down. This is revealing. Stocks might go up if the market expects more monetary stimulus in response to additional deficit spending. But in that case gold would also go up. Gold's going down (as of 1:00 pm about .75% as per Kitco) suggests that the stock market is responding to cost shifting in Obamacare. In particular, the law shifts costs from corporate benefit plans to poor people. The poor are now compelled to purchase health care rather than rely on emergency care for which they do not pay and whose costs then fall on the corporate plans. In addition, doctors are now constrained from performing a range of procedures. This will make life worse for Americans but will save corporate plans money. Although Obamacare is presented as a way to assist the poor, this is at most partially true. It is a way to help the very poor who are added to Medicaid and for which the public will pay. But it is also a way to help corporate plans, which will benefit so long as corporate income taxes are not raised.