Main Street Still Believes in Wall Street
Wednesday, March 4, 2009
Why America's business is still business.
American business has received a black eye in the court of public opinion but suggestions of impending doom and a total loss of faith in business and Wall Street are overblown. While there is no sugarcoating that Americans’ faith in business and in Wall Street has been shaken, lost among all the noise and dreary headlines is the fact that Americans’ core attitudes toward business remain positive.
According to a recent February 2009 survey by Harris Interactive, a majority of Americans, 54 percent, still believe that Wall Street and what it does benefit the country. This is remarkable considering that Wall Street has, rightly or wrongly, taken the brunt of the blame for our current economic woes. This figure is down from its last asking in 2006 and is at its historic nadir, but it is a story in and of itself that a majority of Americans still believe in the basic good of Wall Street.
The lowest rated institution in the Gallup Organization’s 2008 confidence index was not big business or banks but Congress.
Why do a majority of Americans still say that Wall Street benefits the country? The same Harris survey sheds some light—pollsters found that 62 percent of Americans believe that Wall Street is absolutely essential because it provides the money businesses must have for investment. Even in the halcyon days of the late 1990s, when Harris first started asking this question, Americans’ response was not significantly different, coming in at 69 percent in 1997. Americans’ faith in business has been strained, but it has not been broken.
Perhaps just as important as asking Americans their opinions about Wall Street is taking a step back to get some context from data on other institutions. Americans’ views are not just more negative about business but other institutions too. One shocking statistic: in 1991, when Gallup first started asking the public about its confidence in the institution of the presidency, 72 percent of those surveyed said they had a great deal or quite a lot of confidence in the presidency. Now, only 26 percent report that level of confidence. Additionally, the lowest rated institution in the Gallup Organization’s 2008 confidence index was not big business or banks but Congress. Perhaps this is why in December 2008, amid visions of Bernie Madoff and auto executives and their corporate jets, 53 percent of Americans still said the biggest threat to the country in the future was big government. Thirty-one percent said big business (up marginally from 25 percent in 2006) and 11 percent said big labor.
In 1991, when Gallup first started asking the public about its confidence in the institution of the presidency, 71 percent of those surveyed said they had a great deal or quite a bit of confidence in the presidency. Now, only 26 percent report that level of confidence.
Americans also do not seem to doubt the fundamental virtues of private enterprise. In February, CBS News asked Americans if they wanted the government to control and own the banks. Seventy-six percent said no and only 14 percent said yes. Compare that to 1937, when Gallup asked that same question. Forty-one percent said yes to government ownership of banks and 42 percent said no. Another CBS News question asked Americans whether increasing government spending or reducing taxes on business would do more to get the United States out of the current recession. Nearly six out of ten opted for reducing taxes on business, a valuable indicator of Americans’ instinctual feelings.
All this is not to say that Americans do not want strong political action. A December 2008 CNN/Opinion Research Corporation poll found that 59 percent of Americans said there is too little regulation of the stock market and financial institutions. But what that means and what action we should take is less clear. In the same survey, far less, 39 percent, also wanted more regulation of business and industry in general, but a mirror 39 percent stated there is too much regulation, and two in ten said we have the right amount now. So when headlines about the death of capitalism or the end of Wall Street come, take a deep breath and relax. America’s business is still business.
Adam Foster is a research assistant at the American Enterprise Institute.
Image by Darren Wamboldt/The Bergman Group.