With Trump, Amer­ica is open for busi­ness again

The Denver Post - - PERSPECTIVE - By Ross Kamin­sky

Fol­low­ing Pres­i­dent-elect Don­ald Trump’s in­ter­ven­tion with Greg Hayes, the CEO of United Tech­nolo­gies, which owns Car­rier Cor­po­ra­tion, Car­rier an­nounced it would keep hun­dreds of jobs in the United States that it had planned to send to Mex­ico.

You might not have known from Trump’s crow­ing, but Car­rier is still mov­ing more jobs to Mex­ico than it’s keep­ing in In­di­ana, and has an­nounced an in­crease in the price of some of its HVAC equip­ment. The an­nounce­ment can’t be a co­in­ci­dence. As Mil­ton Fried­man put it, pro­tec­tion­ism is very good at one thing: pro­tect­ing con­sumers from lower prices.

On Tues­day, Trump ap­peared in the lobby of Trump Tower with Masayoshi Son, CEO of the Ja­panese in­vest­ment be­he­moth SoftBank, to an­nounce that “Masa” plans to in­vest $50 bil­lion in tech star­tups in the United States, aim­ing to cre­ate 50,000 Amer­i­can jobs.

You might not have known from Trump’s crow­ing, but SoftBank ac­tu­ally an­nounced at least $25 bil­lion of this in­vest­ment in Oc­to­ber, so while this may be a mod­est ac­cel­er­a­tion of the com­pany’s plans, Trump did not mag­i­cally con­jure $50 bil­lion out of one of the world’s best in­vestors, at least not yet.

The me­dia and other Trump op­po­nents will fo­cus on th­ese ex­ag­ger­a­tions. They’ll say that Trump over­stated what th­ese “great deals” ac­com­plished for the coun­try and for the econ­omy. They’ll crit­i­cize tax in­cen­tives as crony­ism and Trump’s di­rect in­ter­ven­tion as “un­pres­i­den­tial.” And th­ese crit­ics are ab­so­lutely right.

But in a much more im­por­tant and fun­da­men­tal way, such crit­i­cisms miss the big eco­nomic pic­ture, a pic­ture which is far brighter than it was on the morn­ing of Nov. 8, when bet­ting odds were still on Hil­lary Clin­ton be­com­ing the next pres­i­dent of the United States.

Whether the short-term im­pacts of th­ese head­line-mak­ing deals are enor­mous or small, whether they rep­re­sent real change or are sim­ply old news in a new frame, the real mes­sage com­ing through Trump’s words and deeds, his per­sona, his in­creas­ing pol­icy speci­ficity, and his Cab­i­net and ex­ec­u­tive agency picks, is that this ad­min­is­tra­tion, un­like that of Barack Obama or what might have been un­der Hil­lary Clin­ton, be­lieves in cap­i­tal­ism and profit, and knows that govern­ment is harm­ful to both.

In the month since Don­ald Trump was elected, the S&P 500 (the world’s most im­por­tant stock mar­ket bench­mark) is up 5 per­cent in an­tic­i­pa­tion of in­creased cor­po­rate earn­ings due to ex­pected re­duc­tions in tax rates and reg­u­la­tory bur­dens. That means in­vestors, prob­a­bly in­clud­ing your pen­sion fund or 401(k), in just those 500 com­pa­nies have seen their as­sets in­crease by a to­tal of about $1 tril­lion in one month.

What’s par­tic­u­larly in­ter­est­ing is that this rally oc­curred at the same time that the yield on the 10-year U.S. Trea­sury Note spiked from about 1.8 per­cent to nearly 2.4 per­cent in that same time frame, some­thing that would nor­mally func­tion as an enor­mous head­wind to stock prices.

The bond mar­ket is scream­ing about “eco­nomic growth,” shout­ing “you’ll fi­nally be able to make a de­cent re­turn on in­vest­ment cap­i­tal so you bet­ter not tie it up in bonds earn­ing un­der 2 per­cent!”

The mes­sage of fi­nan­cial mar­kets is that the ar­rival of Trump is a wildly ben­e­fi­cial turn in Amer­ica’s eco­nomic path. A state with an econ­omy as di­verse as Colorado’s — from high tech to en­ergy to agri­cul­ture to tourism — is par­tic­u­larly well-po­si­tioned to ben­e­fit.

De­spite Trump’s un­nec­es­sary ex­ag­ger­a­tion, oc­ca­sional anti-trade rhetoric, and ju­ve­nile Twit­ter dis­trac­tions, our next pres­i­dent’s eco­nomic mes­sage is re­mark­ably clear. As he tweeted a week ago, “Amer­ica is open for busi­ness.” Now let’s go make some money. Ross Kamin­sky is host of “The Ross Kamin­sky Show” week­day morn­ings on 630 KHOW.

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