Trump’s push for smaller government is having global benefits

“What is good for the United States is good for the rest of the world,” has been Treasury Secretary Steven Mnuchin’s mantra. Americans know how stock prices have exploded in the United States since President Trump’s election, but stock prices started rising at the same time around the world.

To the shocks of Trump’s American opponents, he was greeted by the international elites at the gathering in Davos, Switzerland as almost a conquering hero. Meanwhile, George Soros told people at the meetings that he thought that Trump was a “danger” to the world.

So many people view economics as a “zero sum” game. If the United States wins, others must lose. But a wealthier US turns out to be good news for the entire world.

{mosads}Since the 2016 election, the Dow Jones Industrials Average has soared by over 8,000 points, or 44 percent. In the year prior to the election, under Obama, the increase was only two percent. The post-election gains are equal to 93 percent of those made in the entire eight years following Obama’s 2008 election. America has gained $7.7 trillion in wealth, or about $24,000 per American. The market hasn’t performed so well since 1975.

But Nov. 8, 2016 wasn’t just a magical date for U.S. stocks. Stocks around the world started soaring at exactly the same time, and have now grown by 34 percent since the election. In the preceding year, world stocks rose by only three percent. The timing of the worldwide stock market matches perfectly the change for the U.S. 

This growth has occurred in more than a few national stock markets. Japan (29 percent), Hong Kong (44 percent), India (35 percent), South Africa (23 percent), England (12 percent), France (22 percent), Germany (21 percent), and Spain (23 percent). have all seen hefty increases that started right at the US election. Only the English FTSE 100 stock market index saw an added real increase prior as a result of their Brexit vote prior to the US election.

So those who don’t like Trump’s policies have a problem. If they don’t think that Trump was responsible for this suddenly soaring stock market, they have to explain what else suddenly changed on Nov. 8. And there is nothing of significance that comes to mind. 

The fact that Trump’s election victory came as such a surprise helps explain the sudden jump in stock prices. If investors had thought that Trump was going to win, his anticipated policies would have already been accounted for in stock prices prior to the election.

As President Trump explained in his speech at Davos, the recipe has been a simple one of getting government out of the way of companies: reduced regulations and cutting taxes to make US companies competitive with companies in other countries. The cost of US regulations and taxes hasn’t just been lower incomes for American workers. It has hurt people, including those living in poor countries, around the world.

Stock price increases in China, Mexico, and Canada as well as the United States are hardly consistent with fears of Trump starting trade wars between the US and those countries. Investors never believed all the scaremongering about Trump.

When George Soros tells the people at Davos that the “Trump administration [is] a danger to the world” and has “set on a course towards nuclear war,” it is clear that few investors anyplace in the world share his concerns.

The huge increase in global wealth is also hard to reconcile with those predicting economic disaster from climate change, especially with the US’s withdrawal from the Paris accord. Last June, Time magazine warned: “Climate change will wreak havoc on the U.S. economy, leading to as much as a three percent decline in national GDP by the end of the 21st century if left unaddressed.” In November, the IMF declared climate change would weigh on economic growth. Yet, one looks in vein to see the any ill effects on global stocks from the US withdrawal from the Paris accords. Indeed, the opposite appears true. 

These stock prices represent trillions of dollars in additional worldwide wealth and will do more to end poverty than all the foreign aid packages put together by all past presidents. The push for fewer regulations and less taxes in the United States is having global benefits.

John Lott is the president of the Crime Prevention Research Center and the author, most recently, of The War on Guns.