Donald Trump’s economy, as defined by his campaign positions and post-election actions defies most proven economic principles and concepts. His obstructionist plans for businesses moving overseas violate free market enterprise. His isolationist leanings regarding foreign trade don’t recognize the global market. And, his tax cuts and hefty government programs ignore the national debt problem. Yet, ironically, he is surrounding himself with the greatest economic minds the nation has to offer.
Adam Smith, considered the father of our free market economy, said that there were only three purposes of the federal government: protection from foreign invasion, certain public works, and administration of justice. He explained that administration of justice includes the protection of property rights and assurance of equilibrium between the market and the just price. Other writings by Smith recognized that this balance of market and price maintained by natural laws of economics can fail due to regulations, taxes, and greed.
Our American economy, the most successful in the history of mankind, is rooted in the principle of “laissez-faire,” allowing the free market to take its own course without government interference. Over the years, of course, our government has tempered that purist beginning by having to enact certain restrictions on business actions as a result of recession, inflation, monopolies, and corrupt business practices. However, our status as the highest GDP nation in the world is still due to our reliance on natural market forces and being relatively unencumbered by the government. But, we may be about to see that challenged “big league” by the next president.
It seems rather contradictory that the new president who was supposed to be the answer to economic recovery and the champion of business is going against the grain of basic economic foundations. Before the Electoral College has even voted, President-elect Trump has intervened in the business strategies of Carrier and Ford corporations. He is laying out his battle plan for raising tariffs on imported goods and services. He wants to combine tax cuts and increased government spending which would likely increase the budget deficit and national debt. To any economist, these objectives produce the recipe for economic chaos.
However, while pushing these agenda, Mr. Trump is bringing into his closest circle some of the most traditional conservative business and economic icons available. This week, he tapped Gary Cohn, President of Goldman Sachs, to be his Chief Economic Advisor and Chairman of his National Economic Council. He has established an ad hoc Strategic and Policy Forum made up of about 20 CEO’s of the biggest corporations in the country. Not one of these corporate superstars has made his or her fortune by ignoring proven economic concepts. All of them would insist on adherence to the principles that have been proven in the crucible of corporate America. Therein lies our hope.
I have not been a huge supporter of Donald Trump. Of the two alternatives, though, I am very pleased that he won. My skepticism remains high regarding his personal positions on managing the economy. His former micro-economic world is quite different from the macro-economic world he now faces. Yet, I find myself cautiously optimistic about America’s economic future considering the brain pool of business prowess that will be forming an economic guardrail around the oval office. The president’s proactive involvement filtered through his capable appointed advisors might just be a viable formula for making America great again.