Wednesday 15 August 2018

Trump can show G7 his pro-growth reform is working

US President Donald Trump waves to photographers as he arrives to attend the G7 Summit in Charlevoix. Photo: Reuters/Leah Millis.
US President Donald Trump waves to photographers as he arrives to attend the G7 Summit in Charlevoix. Photo: Reuters/Leah Millis.

Comment: Lawrence Kudlow

US President Donald Trump travelled to Canada to attend his second Group of Seven summit as the leader not just of the largest and fastest-growing G7 economy in the world but also as the most important pro-growth reformer of our times.

The cynics and the doubters said it couldn't happen. But just 500 days into his presidency, he has demolished the fashionable and fatalistic theories of permanent secular stagnation. The US economy has been growing close to 3pc over the past year - a rate once thought impossible - and is on track for even more growth in the second quarter. Business is booming as corporate spending on new capital equipment has surged in 2017 and 2018. Hiring and wages are rising, too. Household net worth has soared to an almost unimaginable level of $100trn (€85trn).

The most recent jobs figures show extraordinary job growth and an unemployment rate of 3.8pc, the lowest level since 2000. Since the president took office, three million new jobs have been created, including more than 300,000 manufacturing jobs. The share of the workforce filing new unemployment claims is at a record low. Small-business confidence stands near 35-year highs.

The impact on American society of all this economic growth is profound. The unemployment rate for African Americans is at the lowest level ever recorded. Before December 2017, that rate had never fallen below 7pc; it is now below 6pc. The Hispanic unemployment rate is near an all-time low. And the unemployment rate for women is at the lowest level in almost 65 years. Almost three million people have been lifted off food stamps since the election.

Thanks to the president's leadership, America is entering a new era of economic growth and prosperity that promises to be larger and longer than we have seen in decades. The remarkably strong US economy holds some key lessons for other economically advanced democracies.

First, it shows that President Trump's economic policies are working. Tax cuts, regulatory reduction and increased energy development are proving to be a powerful combination. These policies encourage hard work and entrepreneurship rather than punish them. The war against success has ended. The world has heard President Trump's simple message: America is open for business, and is committed to being the most competitive economy in the world. As a result, trillions of dollars of investment capital from all parts of the globe are pouring into America once again.

The second lesson G7 leaders should take from America's comeback is one the president has emphasised from the start: economic security is national security. American strength at home means American strength abroad. What is true for the United States alone is also true for the alliance of democratic nations as a whole. If Western democracies are to confidently stand for freedom and civilisation, for strong values and for strong families, then they must have societies sustained by robust economic growth.

Third, US friends and foes alike should recognise that President Trump has been remarkably faithful in keeping his campaign promises. From massive tax cuts to historic regulatory reduction to forcefully challenging one-sided international agreements, he has done exactly what he said he would do. There's a simple lesson in President Trump's record of achievement: believe him.

Nowhere is this lesson clearer than when it comes to President Trump's passion as a trade reformer. He supports a vision of free trade that is fair and reciprocal. As a pro-growth reformer, he understands fair and reciprocal trade can knock down barriers, open up export markets and increase investment, which is the path to lasting economic growth.

Lawrence Kudlow is Donald Trump's assistant for economic policy and director of the US National Economic Council

Irish Independent

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