Much of the country was preparing for another Clinton presidency, which explains the resulting chaos and outrage from the left on the internet, and, sadly, in the streets after Donald Trump won the election. Even though more emphasis is put on Trump’s social views than on his economic views, it is still important to recognize the impact of the economic policies that Trump may implement.
Some of the policies Trump wants to carry out within his first 100 days include renegotiating the North American Free Trade Agreement (NAFTA), withdrawing from the Trans-Pacific Partnership, lifting restrictions on the production of American energy reserves and reducing federal regulations.
One of Trump’s biggest campaign promises was that he was going to protect the American worker from the harmful effects of free trade. Although an effective campaign strategy, withdrawing from free trade agreements hurts both the American economy and the foreign country’s economy.
Trump is not completely wrong when he says free trade hurts American workers. It does hurt some workers by subjecting them to fiercer competition, but that same competition provides Americans with cheaper and better products. What makes free trade a tough sell is that those who benefit from free trade, although more numerous, are dispersed across the country, while those who suffer from free trade are usually concentrated in one sector, such as the auto industry in Detroit.
What is important is that the positive gains of those benefiting from free trade outweigh the losses from those negatively affected by free trade.
One of Trump’s better economic policies includes lifting restrictions on American energy reserves, including shale, oil, natural gas and clean coal.
Cheap energy is the engine of the economy and the driver of technological progress. Our modern way of life would be impossible to conduct if we did not have access to electricity.
Renewable energy resources do not compare to the reliability and cost-effectiveness of fossil fuels. Because of its intermittent nature and the inability to store energy, grid operators must constantly adjust grid energy levels to adapt to the constantly changing energy inputs from renewable energy, which puts unneeded stress on the grid, therefore increasing the risk of blackouts.
More importantly, lifting restrictions on fossil fuels increases the supply of energy, thereby reducing the price of energy. This brings down the cost of living for every American and the operation costs for every American business.
A commonly forgotten issue is that increasing energy prices disproportionately affects poor families because a greater percentage of their income goes to pay their electricity bill than those of wealthier families.
In Germany, average energy costs are three times those of the U.S. because of Germany’s recent implementation of renewable energy. Approximately 800,000 Germans, which is about 10 percent of Germany’s population, have recently had their power cut off.
Another policy Trump wants to implement is one which requires two regulations to be eliminated for every new regulation passed. Although I am doubtful of the possibility of this rule being made law, it would be an effective solution to the over-regulation of the U.S. economy.
In 1936, there were 2,620 pages in the Federal Register — the daily journal of the federal government in which all newly proposed rules are published along with final rules, executive orders and other agency notices. In 2015, there was an astonishing 80,260 pages. These regulations put an excessive burden on businesses, large and small. In addition, most of them end up hurting the people they are trying to help.
In 2010, Congress passed Dodd-Frank, which was a bill that increased regulation on the financial industry in response to the Great Recession in order to prevent another one. Between the year Dodd-Frank was passed and 2015, only three banks have opened, which is unbelievable considering that in previous years around 100 new banks opened up per year.
The compliance costs for regulations put heavy burdens on start-up banks, which do not have the resources of bigger banks to comply with heavy regulation. These regulations, in combination with low-interest rates from the Federal Reserve, have negatively impacted small banks and, consequently, have reduced competition and consumer choice.
Overall, Trump is a mixed bag when it comes to sound economic policies. While correct on tax and regulation policy, he still has a lot of room for improvement on trade policy.
If one compares his economic policies to those of Hillary Clinton, his are substantially better.
Despite this fact, we still must hold Trump accountable for his economic policy decisions, as well as his social policy decisions in the coming years.