Trump’s gamble on the economy might make sense

first_imgHe’s allowing the government to run large budget deficits — some of the largest ever outside wartime or recession — in the hopes that this will somehow put growth on a higher trajectory.Irresponsible as that might sound, it actually makes some sense.In the long run, economic growth is a function of two variables: population and productivity.For decades, America had plenty of both. Birth rates were ample, and any additional labor could be attracted from elsewhere.From 1947 to 2007, workers’ output per hour grew at an average annual rate of 2.3 percent.So for the most part, American presidents could focus on improving rather than reviving growth.But since the last recession, the picture has changed. In advanced economies, central banks have the tools they need to fight it.Slow productivity growth, by contrast, has become a real concern, especially as countries seek the resources to take care of aging populations and still invest in their futures.Republicans and Democrats may disagree on the best way to create deficits, whether it be tax cuts and military spending or investments in infrastructure and education. But the balance of risks leans toward trying this experiment.Be it the Trump administration or the next, someone was eventually going to take the gamble.Conor Sen is a Bloomberg View columnist. He is a portfolio manager for New River Investments in Atlanta and has been a contributor to the Atlantic and Business Insider.More from The Daily Gazette:EDITORIAL: Find a way to get family members into nursing homesEDITORIAL: Urgent: Today is the last day to complete the censusEDITORIAL: Thruway tax unfair to working motoristsEDITORIAL: Beware of voter intimidationFoss: Should main downtown branch of the Schenectady County Public Library reopen? Categories: Editorial, OpinionPresident Donald Trump is conducting a risky experiment on the U.S. economy. So the whole game becomes a big bet that deficits — created by the government’s tax cuts and spending plans — will boost productivity growth. Treasury Secretary Steven Mnuchin suggested as much last week when he said that the Trump administration’s policies could lead to wage growth without inflation, and that people shouldn’t worry about the forthcoming deficits.Ironically enough, this policy was espoused by the Bernie Sanders campaign (as my colleague Noah Smith has noted).The idea is that by running the economy hot and making labor more expensive, the government can induce businesses to do more investment than they would in a normal economy.Ever since the financial crisis, a weak economy has discouraged businesses from investing, leading to weaker productivity growth — so why not try the opposite? It’s a theory that hasn’t been tested in recent decades, but an intriguing one.What are the potential risks and rewards? Sticking with the status quo promises more of the same underperformance — annual real GDP growth of about 2 percent. The deficit experiment has two possible outcomes.In the best case, the U.S. gets some form of productivity miracle. In the other, rising inflation forces the Fed to raise interest rates to cool off the economy, triggering a recession.Most policymakers, economists, and investors aren’t worried about a period of inflation like what the world experienced in the 1970s. Labor-force growth is slowing as baby boomers retire. For a variety of reasons, some understood and some not, productivity has decelerated as well.The Obama administration largely accepted the new reality: In a 2016 report, it projected inflation-adjusted gross-domestic-product growth of just 2.2 percent for the next decade, and offered fairly traditional ideas such as immigration reform, more cross-border trade, infrastructure spending and education investments.Trump has taken a very different approach, aiming for annual growth of 3 percent over the next decade.This certainly won’t come from population, particularly given his administration’s attitude toward immigration.That leaves productivity, which some of his policies don’t do much to encourage, either.Tariffs on imports such as steel and aluminum will serve largely to make output more expensive.Tax cuts might prompt companies to make more productivity-enhancing investments, but the effect will likely be modest given uncertainty about how long the cuts will remain in place.last_img read more

Summer’s last music bus in the city

first_imgResidents of Fort St. John have one last opportunity to be serenaded while riding public transit.The summer’s third and final ‘Music that Moves You’ will be happening Wednesday evening.Anyone can hop on the bus travelling the Northside Route, starting at the Cultural Centre, for free.- Advertisement -Mayor Bruce Lantz said earlier in the summer that the event reaffirms Fort St. John’s position as ‘Music Capital of Northern B.C.’ and promotes the city’s public transit system in the process.The event will run from 7 to 9 p.m.last_img read more

Record Donegal entries for Best Young Entrepreneur competition

first_imgThe Local Enterprise Office (LEO) Donegal has announced that a record number of participants have entered the ‘IBYE’ competition this year, for a chance to share in a local investment fund of €50,000.The 65 Donegal local entries, all aged between 18 and 35, are among the 1,842 entries from around the country competing this year.The next stage in the €2 million investment fund competition is the business boot camps, which Local Enterprise Office Donegal is hosting in mid-November. Boot camps play a major role in the IBYE competition, as participants benefit from business advice, mentoring and help with perfecting their business proposals and enterprise pitches. The LEO-run boot camp has modules such as: business strategy and revenue models, performance measures, financial planning and sources of finance, designed to help more young entrepreneurs develop their business or business ideas.When the boot camps come to an end, the next stage in the competition after judging is the county final, which will be held on November 30th in the Silver Tassie Hotel , Letterkenny. Local Enterprise Office Donegal has an investment fund of up to €50,000 to award to up to six young entrepreneurs in the area across three categories – Best Business Idea, Best Start-Up Business and Best Established Business.Now in its third year, interest in the competition is increasing every year. The total number of entries nationally was 1,842 this year, compared with 1,398 entries last year, which is up by 32%.The significant rise in entries has been welcomed by Minister for Jobs, Enterprise and Innovation, Mary Mitchell O’Connor T.D: “Young entrepreneurs are the employers of the future. I am delighted to see that more young entrepreneurs than ever before have entered the IBYE competition this year. Through IBYE, I want to ensure that their innovation, vision and drive, results in successful businesses that will create new jobs in the economy, and in all regions. IBYE provides a fantastic opportunity for aspiring and established young entrepreneurs to compete for investment funding, avail of expert business advice and form invaluable peer networks in enterprise boot camps where experience and knowledge can be shared”.“The Local Enterprise Offices around the country are an excellent resource for anyone thinking of starting or growing their business.  I look forward to meeting these young entrepreneurs during the competition.” she added.Michael Tunney, Head of Enterprise with the Local Enterprise Office in Donegal County Council said “the level of entries to IBYE this year nationally is the highest on record and reflects the potential that exists amongst younger age groups that needs to be nurtured. Our focus now is to select the young entrepreneur entrants who will go forward to the boot camps and in making the boot camp relevant to te participants and their businesses.  Everyone who participates in the IBYE boot camp will have access to expert business guidance, training and mentoring which will help them face and overcome the challenges in developing their business.”Further details on the competition and supports available to young entrepreneurs are available through www.localenterprise.ie and from the IBYE website at www.ibye.ie.Record Donegal entries for Best Young Entrepreneur competition was last modified: October 26th, 2016 by StephenShare this:Click to share on Facebook (Opens in new window)Click to share on Twitter (Opens in new window)Click to share on LinkedIn (Opens in new window)Click to share on Reddit (Opens in new window)Click to share on Pocket (Opens in new window)Click to share on Telegram (Opens in new window)Click to share on WhatsApp (Opens in new window)Click to share on Skype (Opens in new window)Click to print (Opens in new window) Tags:BusinessdonegalLEOlast_img read more