Page 83 - TrumpsEconEra_Flat

Trump’s Economic Era

life expectancy is the main reason population has
increased from 3 billion 50 years ago to about 7 billion
people today! More children are surviving and living to
adulthood and old age. Thus we have to grow just to
stand still on a per capita basis.
Germany offers a compelling example of pro-
growth policies under Ludwig Erhard in the 1940s and
Gerhard Schröder in recent times. Ludwig Erhard
encouraged the elimination of price controls in
Germany after World War Two. The abolishment of
price controls allowed consumers to express their wants
to sellers, and the higher prices encouraged producers
to increase production. Along with currency reform and
decontrolled prices, the government cut taxes, paving
the way to a booming economy. Output continued to
grow after 1948, and by 1958, industrial production was
more than four times its previous annual rate. Gerhard
Schröder, who was German chancellor from 1998 to
2005, lowered and a simplified the tax code, eliminated
many regulations, revamped unemployment benefits,
and he streamlined labor laws.
These pro-growth policies were not to last.
Germany chose to adopt high-tax rates, generous public
spending programs, and policies that restricted
competition among corporations. Consequently,
incentives to hire new
workers, to invest in
When funding comes
from the government, n e w p l a n t s a n d
politics trumps growth. equipment, and to take
risks diminished.

Since the 1980s, there has been a drop in the
number of hours worked, in investments, and in the
development of new technologies. Restrictions that

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