Where Are U.S. Economic Policies Taking The World?

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Where Are U.S. Economic Policies Taking The World?

Anxiety has hung over the stock market in 2018 and it was increasingly apparent during the fourth quarter.  After decades of linearly evolving economic policies, many analysts see threats around every corner.  Meanwhile, policy makers, as well as many investors and business managers are afraid of exponential change. 

Whether we’re talking about

  • renegotiating global trade agreements,
  • deregulating business,
  • reforming tax policies;
  • encouraging technological and business model innovation; or,
  • limiting the low-end immigrant labor-supply so as to raise blue-collar wages, too many so-called experts assume the worst.  And it’s clear from monitoring the financial press that they over-rate the threat posed by rising of debt while underestimating the potential of new technologies and misread the implications of demographic trends.

But we believe this conventional wisdom is simply the latest case of “strategic myopia,” a common malady throughout American business history.

In fact, the current situation reminds the Trends editors of the situation facing retailers Montgomery Ward and Sears Roebuck after World War II.  Fearing a return to prewar recession, Montgomery Ward retrenched and refused to invest.  Meanwhile, Sears saw the demographic opportunity of the baby boom, the huge savings and pent up demand from the war years, and the war-enabled productivity leap caused by technology. 

Today, too many decision-makers are asking, “What if things return to the “new normal” of the Obama years?  What if productivity does not surge?  What if global trade collapses?  And, what if companies and governments can’t service their debts?”  Those are all reasonable questions and they are exactly the same kinds of questions that dominated the thinking of management at Montgomery Ward as the economy slowed in 1948. 

But those are not the sorts of questions that will make investors and managers successful going forward.  We suggest a whole different set of questions inspired by forward-thinking economist, Edward Yardeni.  Consider just five of them:

  1. What if Trump’s “trade war” leads to less protectionism and more global prosperity?
  2. What if Trump’s deregulation of business unchains the “animal spirits” of businesses, especially smaller ones, that arguably have been more stymied than large ones, by regulations?
  3. What if jobs actually do come back to the U...

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