Trumpian optimism

Like most of my fellow Bereans, I would wish for a different outcome for president.  Yet I awoke on Wednesday with some political hope for the first time in eight years.  Yes, there are significant dangers, and Mr. Trump will likely provide more embarrassment than usual. But perhaps politics will follow the fundamental rule of finance, that risk equals reward.

Considering his economics, I have both lauded and condemned Mr. Trump.  On the laudatory side, he rightly has questioned the Fed’s low-interest rate policy, he correctly notes the strangling regulatory approach of the the Obama administration, and he is correct–in my view–to question the benefits of the administration’s climate change agenda.  And yes, Obamacare is a disaster–especially so for lower-skilled laborers.  Finally, he correctly notes the dangers of the buildup of the national debt.  True, his plans don’t add up to make it better (do any politicians really?) but now the rubber hits the road and he’ll have to meet the budget realities.  On the negative side is his stance on trade and his belief that yet more infrastructure spending will somehow fix the economy.  So why am I on net very optimistic?  Because the most important things to do are the easiest to do, and the most harmful Trumponomics are very difficult to do.

On day one, Mr. Trump has promised to undo Mr. Obama’s outrageous executive orders.  He has the power and possibly the will to withstand the flack and just do it.  He has requested a special session of congress to repeal and replace Obamacare.  He has no plan to do so–but Mr. Ryan the House republicans have several ideas to choose from.  This is tough, but doable in my mind if he’ll spend the political capital and get it done.  He has pledged to get rid of Dodd-Frank.  This is tougher still, since its arcane and the American people don’t see the hidden problems it imposes on our economy. This will be easier for the democrat’s and their media allies to attack. He has promised to fix the corporate tax system, which everyone knows is broken, and both democrats and republicans know what to do (lower the rate and broaden the base), but he can get it done. This should bring a large amount of capital back to the U.S.   And he can put his own people in charge of the Department of Labor and the EPA.  These swamps will be especially hard to drain, but should at least stop the growth of leviathan.  He has promised to can the EPA’s rule on coal fired electricity plants.  I consider all of these huge economic boons.  We’ve been living with 2 to 2.5% growth because of the poor policy choices of the Obama administration.   I don’t buy the “secular stagnation” thesis, and think we can grow significantly faster.  Every one of our economic challenges–and there are many–will be easier to deal with if we are committed to growing.

For trade, even if we have acquiescence from the Congress, changing NAFTA is not going to be an easy task.  Given the integration of production operations for many industries, he can’t just rescind it.  I suspect he’ll publicly have some negotiations with our trading partners, but at the end of the day not much will change here. We might even add Great Britain now that Brexit is here.  TPP is dead (at least for the near term), but that just means we won’t get the benefits that we could have had.  We actually have worse problems in Asia, such as what will happen when China implodes from their bubble bursting?  So I think if we get the economy moving again with the positive things of Mr. Trump’s early agenda, it will lessen the populist furor over free trade.  So I’m actually hopeful on net.  And I think that is what we’re seeing in markets.

So today, I’m just a little bit more sanguine about the future.  And it feels really good to have a bit of economic optimism for a change.

35 thoughts on “Trumpian optimism”

  1. What level of economic growth is worth the harassment and bullying that minorities and Muslims have already started putting up with because this is “Trump’s America”?

      1. “This will be easier for the democrat’s and their media allies to attack”

        Jaw dropping here. What kind of academic dean at a university writes like this? I can see in the reply, but not a post. Seriously, looks like something my freshmen would do.

      2. You’re on a blog and you’re surprised that I would write something like that? You don’t doubt the veracity of what I said, do you? Or you just don’t like the tone?

    1. So…since Mr. Trump IS the president-elect, I suppose you’d rather continue the lethargic ~2% growth that leads to stagnating wages and no opportunity for the millions that voted for him?

      1. No opportunity? Where have you been the last eight years?

        Unemployment has been ticking down for years, and private employment has done better than that in government. Real estate and stocks–back. Debt levels–under control.

        The opportunities of 1956 are long gone. If you feel that the factories that used to produce televisions and manufacture clothing are magically coming back to the Rust Belt and Appalachia because Trump is now president, then you are as completely hopeless as the inhabitants in those forsaken towns.

    2. I condemn all violence both on the left and the right. You do know there has been a bunch of nastiness on both sides by fringe groups. Please be charitable not to extend to millions what is done by a few.

  2. Thankful for finally a somewhat positive look at the financial ideas of Trump. You should share these with his economic advisers.

  3. I enjoyed this post! It is good to hear positives outlooks on the next four years, especially economically.

  4. Almost certainly the national debt will balloon under Trump. Massive spending on infrastructure plus lower taxes on the wealthy (higher taxes for middle class, especially single filers with kids) will ruin the work done under the past eight years.

    The two presidents who did the most in the past four decades to increase the federal debt as a percentage of GDP were Ronald Reagan and George W. Bush.

    I don’t think we’ve seen anything yet.

    1. How did Ronald Reagan increase the national debt? Was it due to increased spending or decreased revenues? Try answering this without looking at the data. I’m curious what you “know” to be true.

      1. I don’t claim to know anything until I look at the data first. I suppose you are different.

        Spending increased much faster than the receipts. People forget that Reagan increased many taxes while cutting capital gains tax rates (lucky for him there was a bull market!). I fear Trump will be much, much worse than Reagan. After all, Trump’s business career has been all about using debt and then getting out intact before he suffers. I see the same thing happening.

        As for my comment about that one statement that dropped my proverbial jaw, you really don’t know what was wrong with that, do you?

      2. I’m guessing your making fun of the extraneous possessive. Or maybe that I should have capitalized democrats. If that’s your biggest complaint, then I’m a happy camper. I didn’t look too close, I thought you were concerned about something serious.

      1. I don’t claim to know anything until I look at the data first. I suppose you are different.

        Spending increased much faster than the receipts. People forget that Reagan increased many taxes while cutting capital gains tax rates (lucky for him there was a bull market!). I fear Trump will be much, much worse than Reagan. After all, Trump’s business career has been all about using debt and then getting out intact before he suffers. I see the same thing happening.

        As for my comment about that one statement that dropped my proverbial jaw, you really don’t know what was wrong with that, do you?

      2. Please don’t take this the wrong way. I am not just speaking to you…

        Relax and breathe? What if one is being harassed and intimidated by Trump supporters giddy about the election?
        Haven’t you read the news? Blacks, Hispanic children, law abiding Muslims, and transgender people have been victims since Election Day.

        At times like these, Christians like to smile sweetly and say, “God is in control.”

        Over the long term, yes; but let’s get this straight: God didn’t vote for Donald Trump. Around 4 out of 5 evangelicals did. They comprise the lion’s share of Trump’s elevation to the highest office of our country.
        They knew exactly who this man was while they held your noses and covered their eyes and endorsed him anyway.

        Stop passing the buck to God. And holding one’s nose does nothing to get rid of the blood that stains your hands.

        God isn’t defacing prayer rooms.
        God isn’t taunting gay teenagers.
        God is not bullying kids on buses.
        God isn’t threatening Muslim families.
        White Christians are.

        Those evanglicals who rightfully decry such violence need to do more than just say it’s wrong. Use your pulpits and pews and a voice and influence and social media, including blogs.

        Pray how to respond, and then just do it already. This kind of violence against others needs to be condemned from the pulpit. Sunday. THIS Sunday.

        Hopefully it won’t be too late to prevent some major violence that takes lives.

      3. Your point works for both sides. However a majority of those committing these acts are probably not going to be in a church service Sunday to hear these condemnations. When a mother threatens to throw her child out of the house cause he voted for Trump in a mock school election it is very sad. He said he had seen him on TV alot and that’s why. Just so you know, Trump or Clinton do not condone these reactions personally and never have. Yes they could and should say more.

        To your point about evangelicals voting for Trump, I can’t say how many were for this reason, but many voted for Trump because if Hillary Clinton won it would have guaranteed a hard left shift on the supreme court that would have impacted the next generation or more. Out of 120 million votes for the two combined I wouldn’t be shocked if 70-80 million or more were just to keep the other one out.

      4. Actually Trump did condone the actions of the left. He has not condoned or condemned the Trump supporters though.

      5. @ Jeff Adams
        Why is it that we are repeatedly told that we can’t ascribe to all Muslims the violent actions of a few, and yet you tell us that Christians that voted for Mr. Trump are responsible for other Trump supporters who are being jerks? Are you responsible for the violent protesters that are denying the legitimacy of the election? Can we have a wee bit of consistency?

      6. “Haven’t you read the news? Blacks, Hispanic children, law abiding Muslims, and transgender people have been victims since Election Day.”

        Yes, I have seen the news. What I see are riots in the big cities, beatings of Trump supporters, threats to assassinate both the President-elect and the Vice-President-elect, and vandalism, which ironically, in the big cities, is most likely only hurting people who agree with the protesters. The violence by Trump supporters giddy about the election seems to be really only a few high profile cases some of which have been proven as fake (i.e. Muslim woman who claimed hijab pulled off). Most actual violence, right now, is coming from the anti-Trump factions, not the pro-Trump ones.

  5. The simpleminded ideas are not much better. Ending the regulations on coal-fired plants will increase other costs, especially in health care, and will then crowd out entrepreneurship in renewable energy. This is not 1974 any longer.

    Any increased economic growth under Trump will likely come with massive debt increases as well as inflation increases.

  6. An economy which is free to make its own decesions is a better econonmy. Perhaps Trump will relax regulation enough that things can get better.

  7. “Why is it that we are repeatedly told that we can’t ascribe to all Muslims the violent actions of a few, and yet you tell us that Christians that voted for Mr. Trump are responsible for other Trump supporters who are being jerks?”

    Millions and millions of evangelicals (not just a few) basically put the man, who had the active indeed fervent support of the Ku Klux Klan and other hate groups–in the White House, and the violence has stemmed as a result of it. Voters are indeed partially responsible for it. They were the ones who abandoned their biblical principles in support of a mean-spirited anti-capitalistic bigot who ran anti-Semitic ads in the waning days of the campaign.

    As I wrote, let’s see on Sunday. Let’s see how many churches condemn hate crimes in the pulpit. More importantly, let’s see what actually gets done other than just talk. That said, I expect little to nothing from the church, which largely has become irrelevant in a world that needs hope. Far too many so-called believers are conservatives first, and they voted for someone whose beliefs went against their faith.

  8. This article was both encouraging and discouraging. However, it is better to know both sides and prepare for the worst rather than to have it hit you unexpectedly.

  9. I agree with Dr. Haymond when he says risk equals reward. In business this works if the risk pans out. Trump is a business man and the American government is a big business. Trump is not afraid to take risks and I hope and pray they will come out on top and gain a big reward for the US government and the US in general. Thank you for the positive and negative sides of the Trumponomics. This helps me to see views I didn’t see before and helped me to distinguish between my own personal beliefs.

  10. This post was a nice divergence from the negativity that has been nearly impossible to avoid over the past 5 days. Trump certainly has some weaknesses, but thank you for pointing out the potential he has to truly help our country. He has the opportunity to actually Make American Great Again, and he has the willingness to take the risks to make it happen.

  11. It is interesting to read the comments on your blog and other news sites from the rabid left. I actually had a family member state that she hopes Trump’s policies will “fail miserably” even if that means her family will personally be financially less secure in four years. There are a minority of people who are fanatics and their comments just simply need to be ignored.

    Personally, I hope that the economy is better four years from now and all US citizens have seen an improvement in their prosperity. That will be a win-win for everyone.

  12. I really enjoyed this post because a lot of people are hoping that Trump’s policies fail, however they fail to realize that they are aboard the ship. And if his policies do not do their job, we all sink. There is always something positive to find, and I appreciate how you have found it economically.

  13. I feel that already there has been a change in tone between President-elect Donald Trump and campaigning Donald Trump, the former seeming to be more presidential and less divisive than the latter. Hopefully this is a taste for a solid four years where Trump becomes the leader America needs. I’ll remain optimistic until there is reason not to be.

  14. So I entered “protests after election” into Google and looked three pages deep without one article talking about things Trump voters might have done to muslims, blacks or hispanics. But there were lots of references to riots, looting and vandalism. I was a participant of Tea Party demonstrations and never once saw anyone do the above. I don’t even remember seeing news coverage that implied any of the mentioned behaviors. Look up “riots in the US” in youtube. They are almost exclusively liberal/progressive groups (going back to the ’60s) with a smattering of anarchists. Only one, the Oregon/Bundy could remotely be associated with conservative groups.

    I once heard someone say, conservatives don’t have time to protest. We are too busy taking care of family and earning a living.

  15. Very appreciative of this post because there are many positives to Trump’s policies, but people only like to see the negative. This post was very helpful in informing me of Trump’s economic plans because I only ever hear the negative side of what he wants to do.

  16. I agree that the best, and the only, thing that we can have is hope. Fortunately, like you said, Mr. Trump gives the most amount of room for hope as compared to other outcomes.

  17. I think in many ways, Trump is headed in the right direction economically. Hopefully his risk taking will pay off and our economy will be able to grow at a faster rate with fewer corporate taxes and regulations.

  18. I agree that although Mr. Trump probably will bring much embarrassment because of what he may say or do he could very well help our economy. Although I am not thrilled to say Donald Trump is going to be our next president, I agree there is some hope for our future.

  19. It’s sad, to say the least, that our elect-president has no background in politics. He is often seen as a crude and crafty business man who offends other whenever he opens his mouth. I’m afraid he doesn’t realize how serious foreign affairs can be and how dangerous his words can affect our nation. My expectation for him as president is that I hope that he will help our economy at the very least during his term as president. I do believe with Mike Pence as vice president and along with a good group of advisors, Mr. Trump can be guided to lead well or so I hope.

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