Why the Stock Market is Going Up

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Liberals don’t want to admit this, but President Trump is one of the best things to happen to America, economically speaking. We’re having to look back to the 80’s and earlier to find comparable examples.

Economics isn’t a hard field to understand. Once you get that it’s made up of a bunch of actors who are simply trying to make the most money they can, you can see what effect economic policies have.

For instance, in a free market, where people can buy, sell and trade as they like, you would get the maximum increase in wealth. Wealth is defined as people having the things they want, and cannot be measured in terms of dollars or anything like that, since people don’t necessarily want dollars: they want the things and services dollars can buy. It’s easy to see why, when people are free to buy and sell and trade they end up with more of what they want than any other system.

In the United States, we don’t have a free market and we certainly don’t have anything close to it. You might find free-er markets in other parts of the world. But as far as it goes, we’ve got it pretty good, and as long as you have a good lawyer and tax advisor, you can make pretty good decisions. You’ll quickly find there are four big things that hold you back from getting everything you want, though.

  1. Technology. Or rather, the lack of fantastic technologies. I want flying cars, right now! But more importantly, technology changes the rules of production. Every technological advance means more options to make things better or more cheaply.
  2. Foreign trade, or restrictions on it. There are things in Japan and Germany and China that I want, but I am not free to bring them here, and that means I get less of what I want. It also works the other way: There are people in Japan and Germany and China who want my stuff and my services, but they are not able to get it, at least not at a decent price.
  3. Taxes. Taxes literally increase the price of everything, oftentimes making certain things unprofitable and thus completely shutting down huge sections of our potential economy.
  4. Regulations, the bad kind, the kind that businesses don’t want. These regulations don’t make trade and commerce regular, they outright forbid it.

These things are easy to fix, if we simply had the stomach to fix them.

  1. Technology is often limited by pointless regulations. You can see for yourself as Uber battles local cabbies for permission to do what should be every person’s right. My wife asked me a few days ago why she can’t buy a new car online, and I explained there are similar stupid regulations that say you must buy from a dealership. These kinds of things, and a million more, make innovation difficult if not impossible.
  2. Trade barriers only hurt people, moreso the people they were designed to help. Although President Trump is no free-trader, his proposals aren’t really that radical and don’t really change much.
  3. Taxes are literally killing our economy because we are one of the most heavily taxed countries in the world, and we spend a fortune trying to comply with tax regulations. An overhaul here is long overdue, and hopefully, a dramatic lowering of the tax rate, which should dramatically increase tax revenue as less money is spent on compliance and more flows into the government’s coffers.
  4. Regulations are literally the stranglehold on our economy. Any hint of lightening the regulatory burden is great news for innovators and most businesses, even the regulations that are supposed to grant semi-monopoly powers to big corporations.

President Trump has signaled a willingness and the willpower to overhaul the tax code and dramatically reduce regulations. Although he is on the wrong side of the trade issue, his ideas are really not all that bad, and in some cases, might improve our situation making the US an even more central hub to world trade. What President Trump cannot control is innovation in technology, but reducing regulations should free the economy to innovate on its own. Certainly, throwing mountains of cash at government-sponsored technology programs has lead to very little real innovation, as history has shown time and again.

The fact that the stock market is rising, so rapidly and so strongly, is a sign that people are pouring money into the market. This is because they would rather have their money there rather than anywhere else. While some of this might be fueled by erroneous speculation, I am sure a great deal of it has to do with the idea that if the president continues on the path he has started, we’ll be seeing the profits of these companies rising. That is, after all, the only value in a stock: what people think the company will do in the future.

The stock market crashed in 2008 as we saw our choice was narrowed down between Obama and McCain. The economy knew that neither was good news, and the better Obama did the worse the market did. Sure, when he took office the market was already crashed, so even after we figured out Obama and learned to hunker down for the next 4-8 years, the economy improved, but have President Trump win election means something very significant has changed, in a very unexpected way.

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