It's conventional wisdom in this country today that jobs are the cornerstone of a healthy economy. The unemployment rate is the most widely watched of all economic data, and in order to maintain consumer demand, workers needs to be employed and earn a paycheck so they can inject that money back into the economy.

Beyond its economic importance, in America we like to extol the "dignity" of a hard day's work and the meaning of getting up in the morning and reporting for duty at a desk or a post or on the factory floor. By contrast, our political cousins in Europe place greater value on leisure and family time, as one can see through their ample paid vacation time, strong labor unions, and generous retirement packages.

At least since the financial crisis, jobs and the economy have been the prime issue in our national politics. All the polls told us that jobs were the voters' biggest concern during the campaign, and President Obama and Mitt Romney sparred most frequently and bitterly over that issue. After all, Romney's campaign was mostly built on his business acumen as a private-equity "job creator," and President Obama continues to flog the job issue in his second term.

But while the media and our politicians seem to kneel at the jobs altar every chance they get, the market seems to have a different idea.

Sequestration, or sweeping budget cuts, are about to hit the federal government, causing millions to be furloughed and creating many other economic speed bumps such as longer waits at the airport and delays in food inspections, which could force prices up.

During similar recent crises, the market crashed. During the debt ceiling standoff of August 2011, which forced the downgrading of the U.S. credit rating, the Dow Jones Industrial Average (^DJI -0.98%) fell nearly 2,000 points as investors fled in response to congressional incompetence and the unthinkable threat of a default. Last November, with the fiscal cliff on deck, the Dow tumbled 1,000 points but quickly shot up once Congress avoided middle-class tax hikes. Because the fiscal cliff was essentially just sequestration plus the expiration of the Bush tax cuts, simple algebra tells us that the market's fears associated with the fiscal cliff were focused on the tax hikes, not the spending cuts.

Today, the Dow is flirting with its all-time high despite the harsh spending and job cuts that are sure to rock the economy. The nonpartisan Congressional Budget Office has said the sequester would slow GDP growth by 0.6% and force the loss of 750,000 jobs.

Despite that grave prediction, the markets couldn't care less. Investors seem to believe that their interest -- corporate profits -- is ultimately not related to job cuts.

This pattern becomes even more apparent when we look at individual companies.

Seeing the forest for the trees
If, as our politicians claim, jobs were the most important factor in our economic system, then you would think that the market would flee in response to job cuts. However, if anything, the market tends to cheer those layoffs, seeing it as a form of efficient cost-cutting that will boost productivity and streamline the company, ultimately enhancing profits. According to Wall Street, jobs can always be spared.

This week, JPMorgan Chase (JPM 0.15%) announced at its investor day that it would cut 17,000 jobs, or about 6% of its workforce, over the next two years due to a reduced need to handle mortgage defaults and improvements in automation. How did the markets react? JPMorgan shares jumped 3.5% in its biggest one-day gain in almost six months, even though the bank is one of the most profitable companies in the country and is trading at a 52-week high -- far from the type of struggling company which we expect to cut jobs.

Not surprisingly, the reaction is similar with beaten-down stocks. After Hewlett-Packard (HPQ 0.11%) announced last May that it would lay off 27,000 employees, or 8% of its workforce, as part of a restructuring plan to take effect by 2014, its shares gained 3.3%. Shares jumped again when HP raised the number on the chopping block to 29,000 in September. Here, the layoffs were seen as a necessary step in turning around the company and a sign that the PC maker was making some smart decisions.

Bank of America (BAC -1.07%) has announced job cuts several times over the last few years, while Wall Street has hardly flinched: B of A's stock has doubled in little more than a year. The banking industry as a whole has shed tens of thousands of workers over the past year, but its market value continues to grow.

The media tends to bemoan these job cuts, seeing them as bad news for individuals losing their jobs and for the country, as they only boost the unemployment rolls. The market disagrees, however, seeming to understand that capitalism is not a jobs program but a system that values the ruthlessly efficient allocation of capital above all else. By that logic, trimming the fat always seems a wise decision.

Foolish bottom line
Wall Street and Washington need to get on the same page. Our political leaders must stop reinforcing the myth that our economic system is intended to create jobs, and the public needs to stop believing it. Yes, full employment is necessary to a healthy economy, but markets are smart, and politicians pander. Capitalism, after all, is named after capital, not labor, and Adam Smith said nothing of workers of the world uniting -- only of the invisible hand efficiently matching supply with demand. As the market's reaction to job cuts indicates, labor is just one of many commodities needed to produce a good or service, and when businesses cut jobs, they do so intelligently and efficiently.

That lesson may be worth remembering on the eve of sequestration -- an event that was designed to be a mere bogeyman but has since become an occasion for taking a hatchet to the federal budget where the precision of a surgical knife is needed. Sequestration will make thoughtless cuts in government programs, decreasing military readiness, furloughing needed workers, and releasing illegal aliens from detainment, among a slew of other foolhardy scenarios.

The other lesson may be that Wall Street simply doesn't care.