Oren Cass's Bad Timing

The Dow Jones Industrial Average crossed 50,000 for the first time on February 6, 2026 — fittingly on the 115th anniversary of Ronald Reagan’s birth. When Reagan took office, the Dow was basically dead. The index stood at 950, down 20 points from its 1965 level. 

Taking the 70s-era “Great Inflation” into account, the Dow had shed around two-thirds of its value over the decade or so before Reagan’s inauguration. Capturing the dismal mood of many marketwatchers, BusinessWeek proclaimed “The Death of Equities,” in a famous August 1979 cover story that lamented the stock market’s “near‑permanent condition” of decline, “reversible some day, but not soon.” 

Reagan, of course, changed all that. Under his pro-market policies, the U.S. economy — and U.S. equities — roared back to life. The Dow more than doubled, launching a bull run that would stretch for decades and culminate in a milestone once unimaginable: 50,000.

The market’s decades-long rise hasn’t yet registered with the New York Times's editors. Rather than celebrate Dow 50k, the paper ran a long essay on the weekend following the historic day by American Compass economist Oren Cass, headlined “The Finance Industry is a Grift. Let’s Start Treating It That Way.”

Cass has little to say positively about the U.S. economy over recent years. “In the second half of the 20th century,” he writes, “America produced broad-based prosperity, constant technological progress and well-functioning democracy.” He blames “financialization,” which he defines as the elevation of “financial markets and transactions” into “ends unto themselves” for closing the curtain on the halcyon years of post-World War II economic progress. 

Cass’s critique misses the most telling point about today’s economy: U.S. companies are on top because they consistently outcompete their global rivals. The bull market started right around the time that America turned the page on the heavy-handed policies that Cass favors. In the 1980s, investors from around the world began flocking to the U.S. market as American businesses generated enormous profits, aided by tax and regulatory relief ushered in during the Reagan administration. Those profits didn’t come from financialization. Then, as now, they have come from the disciplined work of delivering more products that consumers want. 

Since the supply-side revolution led by President Reagan and British Prime Minister Margaret Thatcher, it has been clear that free markets drive economic growth. Forty years ago, German economist Herbert Giersch decried “Eurosclerosis,” his term for the continent’s onerous tax and regulatory policies. Giersch was prophetic. While progressives in the U.S. were clamoring for the adoption of European-style market controls, he understood that governmental micromanagement flatlines innovation and economic progress. 

As the U.S. slashed red tape and boosted investment incentives, Europe moved in the opposite direction. The Eurosceloris that Giersch diagnosed forty years ago got only worse. Europe’s economy went from being the same size as the U.S. economy in 2008 to around half its size today. 

Reagan’s pro-growth agenda set the wheels in motion for a drastic turnaround of America’s corporate sector. In the late 1970s, capital flowed into hard assets, fine art, land, not the shares of U.S. companies. Over the ensuing decades, the U.S. policy climate fostered innovation, new technologies, and creative destruction. Eight of the world’s ten largest publicly-held companies by market capitalization are U.S. firms. None of them existed when the Dow broke 1000 in 1972. 

U.S. publicly-traded companies are worth $70 trillion today, more than three times the value of all E.U. public companies ($16 trillion) and ten times the value of Japan’s public companies ($7 trillion). Openness to economic dynamism explains much of the gap. From 2008 to 2021, 30 percent of EU startups valued at more than $1 billion left the bloc because of the bloc’s anti-growth policies. The retailer Home Depot is worth more than all the new businesses created in the EU in the past five decades. 

U.S. policymakers, to be sure, have made their share of mistakes over the past few decades. In the wake of the 2008 housing meltdown, the Obama administration cranked up the regulatory dial, imposing nearly $1 trillion in new administrative burdens. Overregulation and anticompetitive corporate tax rates led to the weakest recovery from a recession since World War II. Establishment economists like disgraced Epstein confidant Larry Summers provided air cover for the persistently tepid growth rates, explaining that the problem lay in “secular stagnation,” not bad policy choices. 

The first Trump administration’s combination of regulatory rollbacks and corporate tax rate reductions delivered broad-based economic progress. Real hourly wages rose, and median household incomes jumped by over $4,300 percent in 2019 alone, a greater percentage increase than any year in record and twice the amount that incomes rose during the two Obama terms. Minorities saw the highest income gains. 

So far, Trump 2.0 has delivered higher GDP growth, stronger job gains, and lower inflation than analysts expected. The same policy successes of the first term are the reason: coordinated, across-the-board deregulation and pro-growth tax policies. The Dow soared by 30 percent — 12,000 points — after the president pulled back on his “Liberation Day” tariff announcements. 

The solution to Cass’s concerns about American living standards is not to rail against “financialization.” America needs more financialization, rightly understood. The last fifty years have been tremendous for U.S. stockholders. The country needs more shareholders. The longer it waits, the wider the asset gap.  Consider that in 2005, President George W. Bush suggested allowing younger Americans to invest some of their Social Security benefits in U.S. equities. It’s too bad that they never got that opportunity. Since then, the Dow’s up 400 percent. 

Last summer’s tax bill took a step in the right direction by creating Trump accounts. These accounts are already proving to be a powerful vehicle for mobilizing private-sector resources to give children from every income level a nest egg. While only children born from 2025 to 2028 are eligible for federal seed money, parents, relatives, and philanthropists can fund Trump accounts up to $5,000 per year for any child under 18. Employers may also contribute up to $2,500 per year to accounts for employees’ children, without the contributions being treated as taxable income to the parents. According to a Council of Economic Advisers (CEA) report, if maximum contributions are made, a child born this year would have an account worth over $1 million at age 28 under an average return scenario.   

Michael and Susan Dell are giving $6.25 billion to fund 25 million accounts. JPMorganChase and Bank of America recently announced they are matching the $1,000 federal seed grant for eligible employees, joining numerous companies from Chipotle and Steak n’ Shake to BlackRock and Schwab participating in the program. Still more employers are expected to sign on once the Treasury Department finalizes the program’s rules this summer.  

Combined with a sweeping expansion of 529 plans, Trump accounts could extend long-term, tax-free investing in low-fee equity indices to millions of Americans.

Micromanaging financial markets won’t help society prosper. Keeping the economy open so businesses can grow and helping every American own a piece of them is the answer. Maybe then, even Cass will celebrate Dow 100,000.   

Michael Toth is the Research Director of the Civitas Institute at the University of Texas at Austin.