Donald Trump and Hillary Clinton offer Americans a clear choice on the economy. On international trade, taxes and business regulation, he advocates radically different strategies to fire up growth, whereas she would build on President Obama’s agenda.
Since ancient times, commerce has drawn nations closer together. The rise and fall of civilizations often has been determined by how effectively they exploit new technologies to achieve competitive advantages and governments support the process.
Sadly, through the Clinton-Bush-Obama years, federal policies have hardly been an ally of US-based businesses and workers.
President Clinton threw open domestic markets to Chinese goods and investment, anticipating equal access in China for American products and business. Instead, Beijing has systematically shut out US exports and required American investors to give away technology to Chinese joint-venture partners. Those are driving the biggest bilateral trade deficit and transfer know-how in history and are a big reason why the Chinese economy grows three times more rapidly than ours.
Mr. Trump is not threatening to start a trade war with his high tariff – we have been in one all along. Beijing arms its businesses with automatic rifles, while Washington hands out sling shots to American competitors.
Requiring China to end its mercantilist practices or face stiff tariffs is not a novel idea. Mitt Romney suggested much the same in 2012 and liberal economist and Nobel Laureate Paul Krugman has argued for a similar approach to finally pry open the Chinese market.
Mrs. Clinton says she would get tough with China – just like candidate Barack Obama promised in 2008 – but she and her husband have flipped so many times on trade that nothing she says can be taken as authentic or reliable.
The United States imposes some of the highest taxes on business in the industrialized world, and Mr. Obama has imposed a record number of tough, often conflicting regulations on private enterprise.
Consequently, weak business spending on new capital equipment and intellectual property threatens yet another recession. It is an important reason employment in the United States – as measured by the share of working adults holding a job – has not recovered to pre-financial crisis levels. It has in Japan, Germany and the United Kingdom.
Mr. Trump promises to lower corporate tax rates and eliminate wasteful credits and deductions, replace Dodd-Frank and Obamacare with less onerous approaches, and ease the overall regulatory burden.
Mrs. Clinton has not embraced business tax reform, but she has offered proposals ranging from federally supported day care to more heavily subsidized college tuition funded by higher taxes on businesses organized as limited liability corporations. The latter include about half of all US employers and some very large enterprises, such as Chrysler and Bechtel. Mrs. Clinton, careful to maintain the support of the anti-business wing of the Democratic Party, is a strong advocate of the Obama regulatory regime. Further, she promises putative taxes on private investments the Washington bureaucracy finds inconsistent with her social agenda and to generalize to the national level the California Fair Pay Act, which would force even the smallest employers to justify hiring and payroll decisions to the Department of Labor.
By establishing effective control over private investment and hiring decisions, Washington would have the kind of power over the allocation of labor and capital that made the old Soviet Union such a walloping economic success.
Mr. Obama claims his tax and regulatory policies have made Americans better off than when he took office, but the numbers simply don’t support this assertion.
Family incomes are down about $1,600 on Mr. Obama’s watch, whereas those rose by $4,800 during the Reagan years.
And the social indicators are terrible.
The middle class is shrinking, suicides and drug abuse are up, fertility has dropped precipitously, millions of college graduates are stuck in low-paying jobs and defaulting on education loans, and homeownership is at a 48-year low.
For many minorities, the situation is even worse. African-American family incomes are down about $2,200, the wealth and educational achievement gaps with whites are widening, and new regulatory pressures on banks reduce their access to home mortgages.