An economy under Trump has a better chance of success than under Harris
Mark Twain, if he were alive today, would likely update his famous refrain to “Lies, damned lies, statistics and politics.” I want to state emphatically that I am not “political,” and this is not one iota an attempt to be “political”. Being a Canadian resident and citizen, I am not even eligible to vote on November 5th .
So, love or hate him, and there are a ton of folks in the latter camp, as I say, the facts are still the facts. His policies fostered a +4% annualized trend in volume capital spending compared to sub-3% under the current administration, even with the Chips Act and an array of other subsidies, which goes to show that there is no antidote for growth in the productive capital stock other than good old-fashioned reductions in top marginal tax rates.
Third, I find it amazing that the Democrat ticket is suddenly so concerned about inflation. The inflation their party helped create, no doubt. Cheering over the fact that inflation is now below 3% is a small consolation since this 3% inflation rate compounds off a price spiral from 2021 to 2023 that has completely eroded real purchasing power for the working class.
Speaking of fiscal policy, both parties share the shame of bringing the United States into a state of budgetary incompetence. The national debt under Trump from 2016 to 2020 surged nearly US$8 trillion and that was then matched by what Joe Biden accomplished in his near-four-year term. Neither party can claim high ground on this issue — just run up the debt to stratospheric levels and pray that the U.S. doesn’t sleepwalk into a fiscal crisis like Canada did in the early 1990s.
The view that his immigration curbs would lead to an inflationary spiral ignores two realities: this never happened in his first term, and at 6.0 million, the number of unemployed nativeborn Americans is +15.5% higher today than it was pre-COVID and that represents a homegrown source of labor supply which undoubtedly will be tapped. Outside of the COVID-19 spike, this is one of the largest amount of domestically-based idle labour since 2017.
So, even with all these Robin Hood policies that seem so positive on the surface, by triggering the onset of a negative profits cycle, and considering that wages are paid out of retained earnings, there is going to be a huge offset from the various tax credits via compression in organic work-related income — which represents 60% of total disposable earnings in the personal sector.
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