STEPHEN MOORE: From Dow 800 to 50,000–Reagan, Trump and the supply-side miracle

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When I first arrived in Washington in 1982, the Dow Jones hit a low of 800.You may not believe that, so feel free to look it up.

If anyone had predicted that in a little more than four decades the Dow would surpass 50,000, they might have been admitted into a mental institution.ButU.S.stocks have grown60-fold (not counting inflation).Even accounting for inflation, the Dow is up about 12-fold.We have lived through the greatest period of wealth creation in perhaps the history of the world.

No other nation has come even close in modern times.Consider thatAmerican publicly traded companiesare now worth more than $70 trillion.

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Is China catching up?Yes, but they’ve got a lot of work to do despite having four times more people than we do.The market cap of all Chinese companies is estimated at roughly $11 trillion.The market cap of all European Union countries is roughly $16 trillion.Japan’s companies are worth $7 trillion.

We are worth roughly as much as the rest of the world combined, even though we only have 5% of the world’s population.THAT should get you out of your chair shouting, “USA, USA, USA!”

We have lived through the greatest period of wealth creation in perhaps the history of the world.
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This wealth spurt didn’t happen by accident.It’s the triumph of good economic policy — including the steep decline in tax rates and tame inflation bookended by two of our greatest pro-business presidents, Ronald Reagan andDonald Trump.

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Rewind to 1981 when Reagan came into office:Inflation was runningat about 12%, thetop income tax ratewas 70%, the corporate rate was 46%, the estate tax was 70%, and the capital gains rate was 28%.The economy was in a state of collapse.

Today, inflation is roughly 3%, the top income tax rate is 39.6%, the corporate rate is down to 21%, the estate tax is 40%, and capital gains taxes are taxed at 23.4%.

Supply-siders like Steve Forbes, Arthur Laffer and Larry Kudlow should take a bow.They were right about lowering tax rates and inflation, igniting growth and prosperity.The income redistributionists were wrong that the rich would pay much less taxes.They pay more.The top 1% now pay roughly 40% of the income tax.

created an exodus of millionairesand billionaires out of the state.

Meanwhile, back inWashington, D.C.,Trump is predicting the Dowwill reach 100,000 by the time he leaves office.That’s a bit of a moonshot, for sure, but the last four decades prove supply-side miracles can come true.

A noted economist and expert on the intersection of law, economics and public policy formation, Steve Moore is the co-founder of Unleash Prosperity Now, an organization that promotes policies fostering economic growth and job creation.