Inflation: What did cause it?
Yesterday I looked at popular explanations for America’s current inflationary woes and explained why they weren’t, in fact, its causes. So what did cause it? As I wrote last October,…
The shelves at Barnes & Noble are groaning under the weight of books about Donald Trump and his presidency. Some are very good, some not so much. Personally, I find that my opinion of him rises when I read a book by someone who doesn’t like him (Trump Revealed by Michael Kranish and Marc Fisher and Trump & Me by Marc Singer), and falls when I read a book by someone who does (In Trump We Trust by Ann Coulter). Written before his election, these books focused on his personality. Not much has changed since his election. Despite the hype – much of it generated by Trump himself – Michael Wolff’s Fire and Fury was a disappointingly thin serving of tittle tattle.
So it is a relief to finally read a book which looks at Trump and his presidency from the perspective of policy. Stephen Moore – who gave a talk called Trumponomics at our quarterly lunch forum last February – and Arthur Laffer have been part of the president’s economics brains trust. The president charged them with helping to develop an economic strategy which would boost growth from the anemic levels of the Obama years, back towards the 3% that the American economy traditionally enjoyed. This book tells how this was done any why.
Moore and Laffer outline three prongs to Trump’s growth agenda:
On all three, the administration has made good progress. The Tax Cuts and Jobs Act, though not perfect, went some way towards reducing complexity and boosting competitiveness. The deregulatory drive has been truly impressive. America’s exports of crude oil have been hitting new peaks recently. It is early days, but the numbers, so far, are encouraging, as Figure 1 shows. In the last six quarters of the Obama presidency, real GDP growth averaged 1.6%. In the first six quarters of the Trump presidency, it has averaged 3.0%. This is a figure many experts had said was unattainable.
Figure 1: Real GDP percent change from preceding period (annualized)
Source: Bureau of Economic Analysis
I can’t praise the book unreservedly. Sadly, I think the notion that we can rely solely on increased growth to keep America’s entitlement programs solvent is overly optimistic. And, while Moore and Laffer parts ways from Trump on trade to some extent, and quite rightly, they do not, in my view, go far enough. The line about trade needing to be fair as well as free is used, but if trade is free it will also be fair. People wouldn’t partake in it freely if they didn’t deem it fair.
But this book is worth a read. Now that the Trump administration has a few miles on the clock, we can start to assess it by its record, not the president’s Twitter feed.
John Phelan is an economist at the Center of the American Experiment.