Trumpnomics is Happening - Comparing Candidate Trump to President Trump on Economic
Trumpnomics is Happening – Comparing Candidate Trump To President Trump on Economic Policy…
Posted on January 27, 2017 by sundance
Almost a year ago we outlined a predictable approach President Trump would take toward domestic economic policy if he were to win the 2016 election. Almost three months after his victory we clearly see the economic approach is indeed exactly what he campaigned on.
Perhaps it is valuable to pause, look at where are today, and consider current progress against the prior prediction for where President Trump was heading …the economics.
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For the first time in many decades the chief executive of the United States walked into office concerned about the fiscal stability of the average American, without a single IOU on his Oval Office desk. For the first time ever, a titan of American Main Street is in the oval office.
Do not downplay the significance of this aspect. Money makes the world go ’round.
While they may not state so openly, every single global leader and politician is reviewing the U.S. election through their own domestic financial prisms. It doesn’t matter which country, the key prism is financial. Enter, the land of trade conversation, Samsung, Kia, etc, and national financial interests: The EU, The U.K., Mexico, Canada, China etc.
Immediately after the election, we stated: the U.S. media will attempt to frame international conversation through the prism of defense issues: South Korea feeling vulnerable to North Korea hostilities, Europe worried about NATO, Russia gaining influence in the Mid-East etc.
However, this view is an entirely false narrative. The reason for this intentional deflection is a necessary need for western media to marginalize President Trump. President Trump is an existential threat to years of globalist economic advancement.
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- Rule #1 – Everything is about the money.
- Rule #2 – Everything is about the money.
- Rule #3 – when pondering any information broadcast by corporate media about a global Trump effect, refer back to rules #1 and #2.
President Donald Trump is 100% pure MAIN STREET, never doubt that.
Witnessing President Trump bringing skilled labor union leaders into the White House on Day #1 is evidence therein. Meeting with manufacturing giants in the Auto industry is even more evidence. People can attempt to obfuscate it, but actions speak louder than words. Trump is Main Street, period.
Additionally, President Trump’s macro economic DNA outlook is compromised of American business interests at a micro-cellular level.
We also shared: “Senate Leader Mitch McConnell will be dispatched immediately if he attempts to bring his big Wall Street/K-Street lobbying friends into the Trump economic equation.” Evidence of that outlook surfaced immediately also. U.S. CoC President Tom Donohue was nowhere within any aspect of the first week’s dynamic economic activity.
The Historic Context – For the sake of brevity, we’re going to accept that most readers here are familiar with who funds and directs Mitt Romney, Paul Ryan, Jeb Bush, John McCain, Mitch McConnell, and in larger more consequential measures – the DC UniParty legislative team in charge of U.S. Policy, ie. Wall street.
During the January 2016 South Carolina debate, and in response to Trump pointing out a necessary shift in trade position (a shift to put American interests first – a shift to stop the dependency on cheap import goods – a shift to use China’s dependency on access to our market to OUR advantage), Jeb Bush came back with an example of Boeing manufacturing.
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Donald Trump, responded to Jeb’s Boeing example, and pointed out China is forcing Boeing to open a manufacturing plant in China. As would be typical from a candidate who is unfamiliar and poorly briefed on the issue, Jeb Bush looked back incredulously and said:
“C’mon man”…
There we saw it.
Right there was the disconnect.
However, almost everyone missed it.
There, in that exact moment, was the spotlight upon all that is wrong with a professional political class; globalists dependent on Wall Street best interest for their talking points.
Donald Trump was 100% correct.
But the issue is bigger.
Not only is China demanding Boeing open a plant in China, the intent of such a plant provides an opportunity to explain why Trump, and his approach, is vitally important – and time is wasting.
China is refusing to trade with (buy) Boeing products if the company does not move. Why? It’s not about putting Chinese people to work, it’s about China importing their research and development, Boeing’s production secrets, into their country so they can learn, steal and begin to manufacture their own airliners.
This is just how China works.
In time, Comac, a state-owned, Shanghai-based aerospace company will then use the production secrets they have stolen, produce their own airliners, kick out Boeing, undercut the market, and sell cheaper manufactured airplanes to the global economy.
Boeing, the great American company that Jeb Bush thinks they are, becomes yet another notch on the Asian market belt.
All of those Boeing workers, those high-wage industrial skill jobs that support the American middle class, yeah – those jobs lost. And the cycle continues.
Of course Wall Street will be invested in the cheaper Chinese aerospace manufacturing company Comac, as it emerges as a manufacturing power.
This reality within this story is a peek into the future of the fundamental disconnect between Wall Street (grows again) and Main Street (lost jobs/wages). The reality within this example is exactly what has taken place over the past three decades.
Wall Street entities like Goldman Sachs will be fine. Ted and Heidi Cruz will be fine; Jeb Bush, Marco Rubio, Nikki Haley, Carly Fiorina, Mitt Romney, John Kasich will also be fine – it’s middle America who suffers.
The economic consequence, yet again, creates disparity between those insulated by Wall Street and the rest of the U.S. This is how our current political oligarchy is growing out of control.
And so they, as professional politicians, historically propose solutions – their solutions. However, their solutions are actually the preferred solutions of their campaign contributors, ie. Wall Street. The same Wall Street that funds lobbyists, like the U.S. Chamber of Commerce, to set the economic legislative priorities of congress.
Meanwhile the non-import market, your visit to the grocery store, food, energy etc. sees prices increasing at jaw-dropping levels. This is what happens when a production economy becomes a service economy.
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In 1984 a name brand polo shirt would cost around $45, a really good 26″ TV around $600 to $1,000, a decent couch $1500, and a pair of name brand sneakers around $100. However, eggs (.49), milk ($1.79 gal), and store bread (2 loaves for $1).
Electric bill $100, water bill $20, phone bill $50.
In 2016 an imported name brand polo costs around $20, a really good 42″ TV $300 to $400, a couch for $500 and a pair of sneakers $50 – All imported, all Asian, all about half of of what they cost in 1984.
However, eggs ($1.99), Milk ($4.50+), and store bread ($2+ each). All domestic products and all double or triple 1984. Electric bill $250, Water bill $100, phone bill $100+. Again domestic consumables, again double, triple or even more.
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We consume and spend more on domestic goods such as food, energy, fuel, than we do purchasing imported durable goods. As a consequence, depending on lifestyle, the net out-of-pocket is essentially the same to a little more.
However, the income opportunity, the jobs, the good paying jobs, well, those are gone because the durables are no longer part of the domestic production.
To keep the unemployed pitchforks at bay, government policy (now directed by Wall Street globalists and corporations) subsidize the income gap. Ergo EBT, WIC and food stamp assistance necessarily increasing.
The pitchforks are dropped, but economic independence turns to dependence. With government policy adjusted accordingly – deficits necessarily explode. Stopping those deficits would require an actual budget. There hasn’t been a federal budget since ’07…. “Omnibus”,… Sound familiar?
Yes, under Donald Trump’s proposal the cost of some “durable” goods -at least those we import- will increase. Your iPhone might cost $800 instead of $600. However, the North Carolina apparel, clothing and furniture manufacturing market will have an opportunity to revitalize – and with it, jobs. In addition, we have already seen FoxConn positioning themselves to manufacture those iPhones in the U.S.
Consider the inflation chart we have used to show this dynamic:
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This chart is great for showing how “durable goods” have dropped in price and highly consumable goods have increased almost exponentially.
In the short term, the expressed and directed economic policy of Donald Trump will predictably flip this chart above. Domestic products will drop in price, and some imported durable goods will increase – – > until such a time as the bottom of the chart durables become manufactured domestically; then they will balance.
There’s going to be a period of pain as U.S. manufacturing finds it’s footing and begins to restart. I call this “the space between” two disconnected economies, the new dimension.
The distance between the Wall Street economy and the Main Street economy will eventually narrow. How long it takes for this to take place is up for debate. However, regardless of how long, in the aggregate term the narrowing is a shift from “dependency” to “independence” created by Trump’s America-First economy.
Those who were fully matriculated independent adults prior to 1984, when the two economies uncoupled and traveled in different directions, know exactly what needs to be done.
We battle-hardened warriors know what was laying on the end of the previous path, feudalism. Our Freedom was dependent on this election. Thankfully we succeeded; we elected Donald Trump as president, and we avoided this:
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♦ Outlook On Social Security – Unlike many candidates Donald Trump did NOTcalling for rapid or wholesale changes to the current Social Security program; and there’s a very good reason why he was the only candidate not proposing wholesale changes.
With the single caveat of “high income retirees” (over $250k annually), which Trump is open to negotiating on, President Trump does not consider these programs as “entitlements”. The American people pay into them, and the federal government has an obligation to fulfill the promises made upon collection.
President Trump understands stewardship. To fully understand how President Trump views the solvency of Social Security, you must again understand his “America-First” economic model and how it outlines growth.
The issue with Social Security, as viewed by President Trump, is more of an issue with receipts and expenditures. If the aggregate U.S. economy is growing by a factor larger than the distribution needed to fulfill its entitlement obligations then no wholesale change on expenditure is needed. The focus needs to be on continued and successful economic growth.
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What you will find in all of Donald Trump’s positions, is a paradigm shift he necessarily understands must take place in order to accomplish the long-term goals for the U.S. citizen as it relates to “entitlements” or “structural benefits”.
All other Presidents began their economic policy proposals by accepting a fundamentally divergent perception of the U.S. economy than Trump. They were working with, and retaining the outlook of, a U.S. economy based on “services”; a service-based economic model.
While this economic path has been created by decades old U.S. policy, and is ultimately the only historical economic path now taught in most business schools, President Trump intends to change the course entirely – And he is making it happen.
Because so many shifts -policy nudges- have taken place in the past several decades, few academics and even fewer MSM observers, are able to understand how to get off this path and chart a better course.
The politicians in the era before Trump held no comprehensive understanding of Main Street economics; they all relied on advisers. President Trump is a businessman, an entrepreneur, a massive employer and a successful builder of Main Street.
Within President Trump’s economic outline he is proposing less dependence on foreign companies for cheap goods, (the cornerstone of a service economy) and a return to a more balanced U.S. larger economic model where the manufacturing and production base can be re-established and competitive based on American entrepreneurship and innovation.
The key words in the prior statement are “dependence” and “balanced”. When a nation has an industrial manufacturing balance within the GDP there is far less dependence on the economic activity in global markets. In essence the U.S. can sustain itself, absorb global economic fluctuations and expand itself or contract itself depending on the free market.
When there is no balance, there is no longer a free market. The free market is sacrificed in favor of dependency, whether it’s foreign oil or foreign manufacturing, the dependency outcome is essentially the same. Without balance there is an inherent loss of economic independence, and a consequential increase in economic risk.
No other economy in the world innovates like the U.S.A., President Donald Trump sees this as a key advantage across all industry – including manufacturing and technology.
The benefit of cheap overseas labor, which is considered a global market disadvantage for the U.S., is offset by utilizing innovation and energy independence. Think about it this way:
If technology (robots etc) reduces the need for labor, then why are companies taking their manufacturing jobs overseas for cheap leader? Both of these common statements are diametrically in opposition – yet few people ever call it out.
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BIGLY ENERGY – The third highest variable cost of goods beyond raw materials first, labor second, is energy. If the U.S. energy sector is unleashed -and fully developed- the manufacturing price of any given product will allow for global trade competition even with higher U.S. wage prices.
But President Trump doesn’t just think of developed energy from the perspective of independence; oh, heck, no. Trump thinks BIGLY. President Trump sees the energy sector as an export commodity, a U.S. industry that can profit from selling energy to other nations. Think about that as a paradigm shift.
In addition the U.S. has a key strategic advantages with raw manufacturing materials such as: iron ore, coal, steel, precious metals and vast mineral assets which are needed in most new modern era manufacturing.
President Trump has continually proposed we stop selling these valuable national assets to countries we compete against – they belong to the American people, they should be used for the benefit of American citizens. Period.
EXAMPLE: Currently China buys and recycles our heavy (steel) and light (aluminum) metal products (for pennies on the original manufacturing dollar) and then uses those metals to reproduce manufactured goods for sale back to the U.S. – Donald Trump is proposing we do the manufacturing ourselves with the utilization of our own resources; and we use the leverage from any sales of these raw materials in our international trade agreements.
When you combine FULL resource development (in a modern era) with with the removal of over-burdensome regulatory and compliance systems, necessarily filled with enormous bureaucratic costs, Donald Trump proposes we can lower the internal cost of production and be globally competitive.
In essence, President Trump changes the entire economic paradigm, and we no longer remain on a failing path as a dependent nation left only with a service driven economy.
The cornerstone to the success of this economic turnaround is the keen capability of the U.S. worker to innovate on their own platforms. This simply cannot be emphasized enough.
Americans, more than any country in the world, just know how to get things accomplished. Independence and self-sufficiency is part of the DNA of the larger American workforce.
In addition, an unquantifiable benefit comes from investment, where the smart money play -to get increased return on investment- becomes putting capital INTO the U.S. economy, instead of purchasing foreign stocks or bonds. Lowered corporate tax rates to be more in line with international competition, creates the basis for economic nationalism. This leads to the repatriation of off-shored corporate holdings, and corporations would no longer be considering inversion simply to avoid taxes.
♦ Infrastructure – With all of the above opportunities in mind, this is how we get on the pathway to rebuilding our national infrastructure. The demand for labor increases, and as a consequence so too does the U.S. wage rate which has been stagnant (or non-existent) for the past three decades.
As the wage rate increases, and as the economy expands, the governmental dependency model is reshaped and simultaneously receipts to the U.S. treasury improve.
More money into the U.S Treasury and less dependence on welfare/social service programs have a combined exponential impact. You gain a dollar, and have no need to spend a dollar – the saved sum is doubled. That is how the SSI and safety net programs are saved under President Trump.
When you elevate your economic thinking you begin to see that all of the “entitlements” or expenditures become more affordable with an America-First economy that is fully functional.
As the GDP of the U.S. expands, so too does our ability to meet the growing need of the retiring U.S. worker. We stop thinking about how to best divide a limited economic pie, and begin thinking about how many more economic pies we can create.
Simply put, we begin to….
…..Make America Great Again !
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Authors note: If I absolutely did not believe this economic model was doable, I would never expand the concept and place advocacy upon it. I am an absolute believer that we can, as a nation, reignite a solid manufacturing base and generate an expanding middle class.
Yes, in the short term durable goods may cost more, that’s to be expected. However, these are durable goods, not disposable goods. As consumers we may have to spend a little more on maintenance and repair to offset an increase in durable goods, but that’s a small price to pay to make the U.S. manufacturing base great again.
