Shanker Singham is CEO of Competere and Chairman of the Growth Commission
On Tuesday, November 19th, my Growth Commission unveiled our memo to the President-Elect in Congress. It was a busy day as President-Elect Trump had fortuitously chosen that day to visit Congress in preparation for the vote for Senate Majority leader, Thune.
While we put most of our recommendations together prior to the election, they would have been the same regardless of who won the election.
The Growth Commission was established to change the trajectory of G7 countries who have experienced stalled economic growth for at least twenty-five years. At our core are two economic models that model both macro and micro-economic issues and correlate policy choices to GDP per capita growth. We can now tell policymakers with some degree of granularity what the household income effects of their policies will be, and we can tell the public how policies will impact their opportunities and life chances.
While U.S. economic growth has been more robust than equivalent G7 members over the last 25 years, it has still maintained an overall GDP growth rate which is substantially below the fastest growing regions of the world. The proposals presented in the Growth Presidency Memo – which have been subject to robust economic modelling – would generate the much-desired improvement in GDP per capita, which is the best measure of whether American families feel better off and more prosperous.
The policy proposals in the Growth Presidency Memo compiled by independent non-political international economists comprising the Growth Commission include:
- Reintroducing major portions of the Tax Cuts and Jobs Act of 2017 that were enacted on a temporary basis and are currently scheduled to be phased out, including:
- Restoring full immediate expensing for machinery and other short-lived assets
- Extending the benefits of full expensing to structures, including commercial real estate, plants, residential buildings, farm structures and transport infrastructure
- Restoring the expensing of R&D
- Reducing the corporate tax rate to 15 per cent
- Delivering a comprehensive programme of regulatory reform including:
- Reissuing the Executive Order that made executive branch agencies eliminate two regulations for each new one adopted
- Evaluating Biden-era executive orders that imposed excessive burdens on the private sector and fail a cost-benefit test for possible redrafting or total rescission
- Requiring “independent agencies” within the executive branch to consider cost-benefit analysis in promulgating any rules, regulations or other decisions from a competition standpoint
- Pursuing a trade policy which:
- Introduces forensic and targeted tariffs on products produced by countries like China where practices such as intellectual property theft, state subsidies and other market distortions for key industries have artificially reduced the cost of production and directly caused damage to U.S. firms
- Embraces a foreign-market-opening trade agenda, including deals with key allies such as the UK or having such allies accede to or “dock on” to the United States-Mexico-Canada Agreement
- Avoiding the energy policy mistakes of the UK and much of Western Europe whose attachment to Net Zero policies has resulted in soaring energy costs for consumers and businesses alike
Our recommendations, if adopted by President-Elect Trump could yield 42 per cent GDP per capita increases for the US over the next ten years. This equates in 2024 dollars to $110,000, meaning that every US state would become richer than the richest US state, Massachusetts ($105,000) now is.
The Growth Commission has also looked at the UK, and our analysis of the UK budget suggested a net drag on the UK economy of -8 per cent GDP per capita over the next twenty years. Already, the most recent figures suggests a drop in UK GDP per capita for the last quarter of 0.1 per cent. If these trends play out, then in ten years’ time, we can expect US GDP per capita to be $110,000, and UK GDP per capita to have reduced to around $47,000. Recall that UK GDP per capita was on average about 90 per cent of US GDP per capita in the early 2000s and would by 2034 be only around 40 per cent.
Since US costs are much less than those in the UK (especially energy costs which are already less than half), US families will have twice as much income and roughly half the costs of their British cousins.
All indications are that President-Elect Trump will implement many of these recommendations especially in the tax and regulatory areas, which unlocks most of the GDP per capita growth we are talking about.
The intriguing area is trade policy and the much-vaunted Trump tariffs. He’s already talked of imposing them swiftly on Mexico and Canada.
There are two potential scenarios here which could impact these numbers.
If Trump imposes tariffs on China and on other trading partners, then it is likely he will put deals on the table for these partners (likely to be based on some version of USMCA plus a commitment on China trade). Trade partners may take these or take the tariffs. For the UK, Australia and possibly Japan, this could also be an offer of a single integrated defence, AI and quantum production sector underpinned by very high levels of intelligence and security cooperation.
This would lead to a kind of bilateral plurilateralism where multiple countries have similar deals with the US as the centre, an expanding plurilateral agreement (CPTPP), regulatorily harmonised blocs like the EU and an expanding BRICs arrangement with a number of partner countries.
There would be overlaps such as BRICS partners and the CPTPP, but it would be hard to see an overlap between the US bilaterals and any bloc that seeks to export its regulatory system (China, EU). The net result could be trade creative and generate GDP per capita, or if not handled well could lead to GDP per capita declining, leading to barriers between developed and developing world, leading to resource constraints and potentially hot conflicts in countries with significant raw materials and critical inputs (such as minerals) as supply is limited.
What we do know is the world is getting a lot more uncertain and potentially dangerous.
But to paraphrase Winston Churchill, if we know how to take them, the opportunities are magnificent. Let us hope the government does not allow its animosity to President Trump to snatch defeat from the jaws of victory.
Shanker Singham is CEO of Competere and Chairman of the Growth Commission
On Tuesday, November 19th, my Growth Commission unveiled our memo to the President-Elect in Congress. It was a busy day as President-Elect Trump had fortuitously chosen that day to visit Congress in preparation for the vote for Senate Majority leader, Thune.
While we put most of our recommendations together prior to the election, they would have been the same regardless of who won the election.
The Growth Commission was established to change the trajectory of G7 countries who have experienced stalled economic growth for at least twenty-five years. At our core are two economic models that model both macro and micro-economic issues and correlate policy choices to GDP per capita growth. We can now tell policymakers with some degree of granularity what the household income effects of their policies will be, and we can tell the public how policies will impact their opportunities and life chances.
While U.S. economic growth has been more robust than equivalent G7 members over the last 25 years, it has still maintained an overall GDP growth rate which is substantially below the fastest growing regions of the world. The proposals presented in the Growth Presidency Memo – which have been subject to robust economic modelling – would generate the much-desired improvement in GDP per capita, which is the best measure of whether American families feel better off and more prosperous.
The policy proposals in the Growth Presidency Memo compiled by independent non-political international economists comprising the Growth Commission include:
Our recommendations, if adopted by President-Elect Trump could yield 42 per cent GDP per capita increases for the US over the next ten years. This equates in 2024 dollars to $110,000, meaning that every US state would become richer than the richest US state, Massachusetts ($105,000) now is.
The Growth Commission has also looked at the UK, and our analysis of the UK budget suggested a net drag on the UK economy of -8 per cent GDP per capita over the next twenty years. Already, the most recent figures suggests a drop in UK GDP per capita for the last quarter of 0.1 per cent. If these trends play out, then in ten years’ time, we can expect US GDP per capita to be $110,000, and UK GDP per capita to have reduced to around $47,000. Recall that UK GDP per capita was on average about 90 per cent of US GDP per capita in the early 2000s and would by 2034 be only around 40 per cent.
Since US costs are much less than those in the UK (especially energy costs which are already less than half), US families will have twice as much income and roughly half the costs of their British cousins.
All indications are that President-Elect Trump will implement many of these recommendations especially in the tax and regulatory areas, which unlocks most of the GDP per capita growth we are talking about.
The intriguing area is trade policy and the much-vaunted Trump tariffs. He’s already talked of imposing them swiftly on Mexico and Canada.
There are two potential scenarios here which could impact these numbers.
If Trump imposes tariffs on China and on other trading partners, then it is likely he will put deals on the table for these partners (likely to be based on some version of USMCA plus a commitment on China trade). Trade partners may take these or take the tariffs. For the UK, Australia and possibly Japan, this could also be an offer of a single integrated defence, AI and quantum production sector underpinned by very high levels of intelligence and security cooperation.
This would lead to a kind of bilateral plurilateralism where multiple countries have similar deals with the US as the centre, an expanding plurilateral agreement (CPTPP), regulatorily harmonised blocs like the EU and an expanding BRICs arrangement with a number of partner countries.
There would be overlaps such as BRICS partners and the CPTPP, but it would be hard to see an overlap between the US bilaterals and any bloc that seeks to export its regulatory system (China, EU). The net result could be trade creative and generate GDP per capita, or if not handled well could lead to GDP per capita declining, leading to barriers between developed and developing world, leading to resource constraints and potentially hot conflicts in countries with significant raw materials and critical inputs (such as minerals) as supply is limited.
What we do know is the world is getting a lot more uncertain and potentially dangerous.
But to paraphrase Winston Churchill, if we know how to take them, the opportunities are magnificent. Let us hope the government does not allow its animosity to President Trump to snatch defeat from the jaws of victory.