For a lay observer in the US politics and economy, the end of Steve Bannon’s political career and the rapid rise of Dow Jones Industrial Average could be linked. It cannot be a coincidence that the DJIA jumped up 577 points. If someone assumes a connection, then that person is right.
Bannon, the conservative
Bannon was never liked by the United States trade establishment. He has a number of economic notions which could only be described as abnormal populism. The reality is that Bannon’s brand of economic justice can only be termed as an economic anti-growth. The former chief strategist believed that ultra-protectionism, cheap dollars, and steeper taxes will assist the middle class. Economists, however, disagree. They understand that these moves can only damage the US economy, with the lower and middle-class citizens suffering the most.
Bannon did not like the reduction in corporate taxes as well. He never believed the liberal argument that a tax reduction could only help small and large businesses. The truth is that everyone benefits due to this arrangement- the upper class, the middle class, and the lower class. The higher earnings pie only gets bigger. He also champions protecting the US economy from the vagaries of world trade. He likes higher tariffs and not the signing of any new trade deals. What he does not comprehend is that these actions will lead to a cheaper dollar.
Ending the influence
Although Bannon was thrown out of the White House just after the middle months of 2017, it was believed that he could still influence President Trump. It was for this reason that businesspersons and investors continued to worry. When the news was received about Bannon’s final expulsion, the markets naturally went up.
To ascribe everything to the Bannon influence will be wrong. At best, it will be an oversimplification. A number of positive factors are pushing shares up. The list of such factors includes the tax cuts made by the Trump administration and the anticipated upswing of business profits.
Truth be told, Bannon never advocated the tax cut plan as initiated by Trump. His solution to make a better United States economy was completely on the other side of the scale. He actually prescribed that high earners should pay more income taxes- from the present 40 percent to about 44 percent. Bannon was clearly unable to comprehend that punishing the rich with higher taxes will not help to create jobs or spur investment. Raising taxes on income leads to lower growth.
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