Donald Trump campaigned on the Promise to Make America Great Again. A promise which believe it or not, is entirely within the range of power and authority of the President of the United States of America. Doing so, simply requires a basic and fundamental understanding of economics.
A economy, or society that produces nothing collapses. That my friends is it in a nutshell. The shortest possible translation of economics in existence. For an economy to survive or grow, it absolutely must produce something. Forget all of the fancy elegant mathematical economic models, if you do not get this part right, none of them matter in the slightest. Those fancy elegant mathematical economic models have their time and place, but only if you have at a bare minimum, a semi functional economy.
To get a little less existential, for an economy to function, it has to manufacture something. That something has to be tangible and of real physical value. In direct contravention to Marxist economic theory, economics, i.e. “Money” is not a zero sum equation. There is not a fixed amount of wealth on earth. To make a dollar does not equate to taking a dollar from someone else. A service economy cannot and will not survive or grow. It is a simple mathematical impossibility. Even the most basic agrarian societies fall under this rule.
All of those fancy elegant mathematical economic models come into play as a economy becomes larger more complex and robust. Velocity of money equations are meaningless if there is no money in circulation. Inflation and deflation equations likewise are meaningless if their is no exchange of good and services. An economy based entirely on intangible intellectual property is as doomed to failure as a service economy. No matter how much money the 1% of the intangible intellectual property creators earn, they will never have enough money or needs to support the other 99% of their economy.
There are three fundamental requirements for an economy to function.
1) The regulatory burdens on manufacturing must protect the worker and the environment from exploitation without crippling manufacturing’s ability to be profitable. No business exists to service its employees, it exists to make a profit. This is an involute rule of economics.
2) Taxation rates must be sustainable for the whole of society, they are not a piggy bank for Government or Politicians. The wealth of the individual members of society, is just that, the wealth of the individual members of society, it absolutely is not the wealth of the government or politicians temporarily being held by the individual members of society. Economist Arthur Laffer calculated that the optimal taxation rate was 13.9 percent.
3) Energy absolutely must be both cheap and abundant. Without cheap and abundant energy, resources cannot be translated into a tangible manufactured products without creating a wealth draining spiral.
President Trump began his administration by addressing the first two legs of the economic stool.
1) Cut regulation by 75%
2) Reduce taxes to 15 to 20%
The third leg to the triumvirate required to Make America Great Again, will actually be the most difficult for Trump to pull off.
1) Cut Regulations a bare minimum of 50%
2) Lower Taxes to the Laffer Curves apogee of 15%
3) Reduce Energy cost by a bare minimum of 70%
Of these three legs to this economic recovery stool, reducing the cost of energy is going to be the most difficult. Reducing taxes and regulations on energy production distribution and consumption will create an environment where the potential for substantially lower energy costs exists. the problem will be in getting the energy producers to pass the saving along to their customers rather than soaking them up as windfall profits.
In the manufacturing process, human beings are a resource. One which management and ownership have traditionally considered the most burdensome and troubling. Management and ownership have for centuries been attempting to limit and reduce their dependency on their human resources. Machines do not go on strike and demand higher wages and compensation. They do not demand time off or reasonable work hours or safe work environments.
Automation is a blessing and a curse for manufacturing. It lowers the cost of manufacturing (i.e. higher profits for management and ownership) and enables a higher degree of quality in the production of products. But at the same time, it is the killing of the goose that lays the golden eggs problem. While the goose is alive, it lays golden eggs, once dead it no long does. It does absolutely no good what-so-ever to manufacture products, if nobody can afford to purchase your products.
Economics is not a zero sum equation, wealth is created by manufacturing physical tangible goods for which their is a market place demand. Without a demand, no physical tangible or intangible intellectual property item has any value what-so-ever. Gold has zero value to a man who has neither food nor water because there is none to be had.
Also among President Trump’s first actions are the elimination of the Trans Pacific Partnership, and the North American Free Trade Alliance. Both of which were profoundly damaging to the above principals because despite their incessant references to “Free Trade” neither engaged in, provided for or encouraged actual Free Trade. They did not, could not and never will for the simple reason, that they both are predicated on the fallacious Marxist Economic Theory. The bedrock foundation of Marxist Economic Theory is, that Economics is a zero sum equation. That all the wealth on earth is a fixed and immutable amount that can only be transferred back and forth between nation-states and the subjects of those nation-states.
In order for there to be actual “Free Trade” no government, corporation, or organization can be placing their thumb on the scales. If any government is intervening through the application of subsidies or tariffs, or quota’s then you do not have “Free Trade”. Free Trade does not mean the ability of goods to traverse international borders. Free Trade is defined as international trade left to its natural course without tariffs, quotas, or other restrictions. Those “Other Restrictions” include governmental intervention through the application of subsidies and tax incentives specifically designed to create a unnatural advantage to specific industries.
By eliminating TPP and NAFTA, President Trump is forcing the other nations of the world to take their thumbs off the scales, or have America place a equally but opposite weighing thumb on the scale for anyone wishing to do business with America. President Trump’s understanding of the bedrock fundamentals upon which all economies really function on clearly far exceeds that of anyone who has ever resided at 1600 Pennsylvania Ave.
Without first correcting these basic fundamental principals, there will be no possible scheme, measure or economic equation that can deal with America’s $200 Trillion dollar unfunded liabilities or $19 Trillion dollar deficit. While the size of those financial liabilities may at first glance seem beyond any capacity to manage let alone correct, the situation in reality is not as bad as it seems.
A) Reduce Government Spending to 85% of revenue incoming.
B) Reduce taxation to Laffer’s 13.9% maximum revenue intake percentage rate. (People are more willing to pay their taxes, and pay them on time, when they believe the taxation rate is fair and it is being used in a Constitutionally appropriate manner)
C) Reduce business and investment deterring regulations (this includes fines licensing fee’s and other governmental regulatory hurdles that cripple lawful commerce).
D) Increase the percentage of legal American Citizens in the workforce.