The election of President-elect Donald Trump last month has awakened, what some people are calling, the “animal spirits” of capitalism.
Anyone with a 401k or money in the stock market could tell you that things are going very well at the moment. The election of President-elect Trump and conservative, pro-market Republican majorities in the House and Senate represents a turning of the page from eight years of growing tax burden, government spending, and red tape.
The Trump Rally, as some pundits are calling it, has resulted in the Dow Jones Industrial Average jumping 1,600 points since 2016’s election day. Such a large jump — well up into the nineteen thousands — has many market watchers discussing the prospect of the Dow breaking 20,000 points. The result has been nearly two trillion dollars in wealth generated for the tens of millions of Americans with money in the stock market.
After the election of President Obama and the Republican revival in state governments that followed, conservative policy thinkers have had a rally of their own. The result has been an abundance of ideas concerning what to implement under a unified Republican government. The public support for the Republican trifecta seems to have provided Congressional Republicans with wide latitude to deal with the lingering economic struggles facing the country.
Hope for Change
The two simplest areas of cooperation between President-elect and Congressional Republicans are on the issues of tax cuts and the Affordable Care Act, or Obamacare.
Tax reform is a decades-old entry on the bipartisan to-fix list. Today’s tax code penalizes savings, investment, and work, leading to slow growth in productivity, wages, and the economy at large. America’s tax system has led to a huge competitive disadvantage for companies wanting to plant roots here. In other countries, profits from exported goods are exempt from domestic corporate taxes. This is a clear disadvantage for American manufacturers and exporters.
Obamacare has also been a lag on economic growth. The law has harmed prosperity in three ways. First, it hurt growth due to the increase in taxes. Large swathes of the country hadn’t, and still haven’t for that matter, recovered from the Great Recession when Obamacare instituted trillions of dollars in new taxes.
The law also imposed a still-growing regulatory burden falling on the healthcare industry — a huge chunk of the economy. By both penalizing employers for not providing insurance and increasing the cost of insurance, Obamacare made hiring workers above the arbitrary mandate limits a losing proposition for businesses.
These issues in particular have long been viewed as obstacles to long run economic growth. It’s not hard to see why the Trump Rally in the market is seen as a general giddiness among economic thinkers. And how many believe these well-known burdens of government may soon be eliminated.
Beyond the stock market, Americans have also felt a renewed confidence in the economy.
Gallup’s Economic Confidence Index found the United States eleven points underwater before the election. According to the latest installment of that same index, which was produced during Trump’s transition, as he commits himself to lifting the burden of government on the private sector, the course has been completely reversed. Now, confidence stands at a positive: a net shift of twenty-two points.
Beyond his commitment to right-sizing government’s impact on the economy, the President-elect’s own actions have no doubt played a role in the Trump Rally. Positive responses to his cabinet picks and his highly public involvement in protecting American middle-class industrial jobs have also caught headlines.
Whether the trend holds remains to be seen, but one thing can definitely be established: America is ready for economic freedom and the President-elect, along with Congressional Republicans, seem ready to deliver.