Politics & growth

Trump pledges 4%/yr economic growth (but says his economists don’t want him to). His economists are right – political tinkering with growth is a fantasy:

usa_gdp_ppp

Source: Maddison

The growth rate of real per capita GDP in the US, and all leading industrial nations, has been nearly constant since the industrial revolution, at about 2% per year. Over that time, marginal tax rates, infrastructure investments and a host of other policies have varied dramatically, without causing the slightest blip.

On the other hand, there are ways you can screw up, like having a war or revolution, or failing to provide rule of law and functioning markets. The key is to preserve the conditions that allow the engine of growth – innovation – to function. Trump seems utterly clueless about innovation. His view of the economy is zero-sum: that value is something you extract from your suppliers and customers, not something you create. That view, plus an affinity for authoritarianism and conflict and neglect of the Constitution, bodes ill for a Trump economy.

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