What a Lack of Facts Does to the Economy by Drew Tomek

We were in class, using the efficient market theory to calculate the value of stocks.  We were using standard calculations to arrive at the stock prices.  The only thing I took away is that these models are not getting us to the stock’s price, not even close.  We looked at the Beta of several stocks, and even though there was extreme fluctuations and trends opposite the market, their Beta’s were somehow half that of the markets.  How can this be?  One answer, the market is not efficient.  While I believe in the inefficient market hypothesis, I would go further, suggesting that societies move away from facts is taking us away from reality.

We live in a world where facts don’t matter to the Democrats.  This was blatantly obvious in Kavanaugh’s trial.  While neither side has been proven right, Kavanaugh used facts to argue his side.  Ford had no corroborative evidence, yet the left was outraged that the Senate did not immediately terminated Kavanaugh’s nomination.  This birthed the #Ibelieveher movement, which is extremely dangerous.  I know for a fact that sexual assaults happen, I’ve seen the aftermath of several.  But that’s not why this movement started.  This movement began because “we need to believe statements, even if not a single fact backs it up.”  I use this example because it is the most recent and obvious, but this ideology has been going on for years with Democrats.

Flash forward a few days later.  I was having a conversation about taxes and how the tax system is broken and the rich don’t pay enough taxes.  My favorite argument was brought up: “Warren Buffet’s secretary pays more in taxes than Warren Buffet does.”  I love this argument because it is simply not true.  The first part of this that Democrats, and most of society, gets wrong is that the argument actually states the Warren’s effective tax rate is lower than his secretary’s.  The second point is that Warren pays a ridiculous amount in taxes, but capital gains is taxed at a much lower rate than income is.  Which brings up the third point, Warren does not pay much in income taxes, but his secretary does.  While I do not want any taxes raised, I am going to answer the Democrats plea for higher taxes: raise the capital gains tax.  The wealthiest CEO’s and individuals do not take a salary, they get paid through dividends.  Why?  Personal income can be taxed at 37%, while capital gains are taxed at a maximum of 20% (2018 numbers).  The rich aren’t cheating the system, they are smart enough to look at their options and pick the best one.  Democrats will argue that raising the personal income tax rate will hurt the rich, but, in reality, all it hurts is the poor and middle class.

This kind of thinking is what is present in our economy.  Especially in the stock market, we see that there is irrational behavior behind most trades.  People will speculate on which stock will appreciate, rather than looking into the stocks true value.  This is one of the reasons we have bull and bear markets.  There are also many people who have no idea how the healthcare system truly works, and make these crazy, almost communist suggestions.  As someone who works in healthcare, I know that most of the ideas the Democrats push out will not work in our free market.  The scariest thing is that these people, who don’t use facts, have power in our government.  I’m terrified to see what happens if the left actually gains majority control of the government.  We saw what happened with Obama, where he forced individuals in a free country to sign up for bogus healthcare or face penalties.  Imagine what chaos they would bring to this great country if they regain control and force socialist ideas with no facts on this world…

Drew Tomek, Rockhurst University

Drew runs the Instagram page for The University Conservative media and has been a critical aid in the business-aspect of the publication. We are thrilled to be able to share his business insights with the ultimate, conservative-thinking network.

Instagram: @theuniversityconservative

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