The selection of J.D. Vance as Republican Vice-Presidential candidate to Donald Trump raises the question of what economic agenda a successful Trump/Vance ticket might implement. The two have different backgrounds and intellectual histories, yet there are themes common to both men that suggest an economically sound agenda as set out below might play to both men’s strengths and fulfil their goal of Making America Economically Great Again.

Vance made his name with his 2016 bestseller “Hillbilly Elegy” and as Senator from Ohio has intensified the populist thrust of Trump’s policies. Both men can be expected to roll back regulation vigorously, a key driver of renewed economic growth in Trump’s first term. While Trump supposedly favors yet another corporate tax cut and the real estate mogul is fond of artificially low interest rates, Vance is focused on the ill effects those rates have had on younger people’s ability to buy a house, settle down and form a family.

Both men are united in deploring the explosion of illegal immigration under President Biden, but Trump shares the Chamber of Commerce liking for cheap labor through heavy legal immigration, whereas Vance is well aware of the damage done to domestic living standards by excessive immigration, legal and illegal. Finally, Vance brings a new element to policy in opposing corporate oligopolies and the trillion-dollar tech behemoths, believing through his venture capital work that most innovation happens in small entities, thus favoring the anti-merger policies of FTC Chair Lina Khan.

Vance and Trump have both recognized the importance of high domestic wages, to improve living standards and turbocharge productivity growth through incentivizing the substitution of capital investment for cheap labor. A guaranteed minimum income is thus a terrible idea, because it de-incentivizes work and allows employers to drive down their wage rates. Conversely moderate minimum wage legislation can be helpful in areas where there are illegal immigrants, because it removes the incentives for employers to undercut domestic labor by employing them. For the U.S. working classes, the 1950s, with very little immigration and high wages, was a Nirvana in which a single man with a high school qualification could support a family with a non-working wife and several children. That is Vance’s ideal; through immigration and other policies it should become a central principle of a Trump/Vance government. The Chamber of Commerce and other cheap labor pro-immigration lobbyists should be booted out of the White House.

The most important area in which Vance could correct Trump is monetary policy. Nearly three decades of artificially suppressed interest rates have left asset prices far too high and productivity growth thoroughly anemic (since artificially low interest rates cause excessively leveraged investment to flow into unproductive assets, notably big-city real estate, loss-making tech “unicorns” and destabilizing stock buybacks). Both excessive asset prices and ultra-low productivity growth prevent the increase in output and income that make ordinary people richer; they also lock younger wage-earners out of the housing market.

Trump’s love of low interest rates reflects his real estate career, which in the early years was over-leveraged and flirted dangerously with bankruptcy. Vance, with his instinct for rural and blue-collar needs, should convince him of his misjudgment. Ideally, they can combine to select Judy Shelton as the next Fed Chair when Jerome Powell’s term ends in January 2026. She understands that while a Gold Standard may not be “practical politics” currently, mimicking it through sound Volckerite Fed policy is the best way to kill inflation and restore growth. The inflation rate target, for the sake of ordinary people with savings and without access to infinite cheap leverage, must be zero not 2%.

Vance can also have a useful effect in democratizing fiscal policy. The greatest benefits of corporate tax rate cuts go to the largest corporations, which additionally benefit from the various available tax haven shenanigans and the expensing (rather than depreciation over a period) of capital investment. They then insult ordinary U.S. taxpayers by continually outsourcing production to the Third World, overpaying their top management through stock options and indulging in grossly excessive stock buybacks. Those buybacks reward only stock option-holding insiders and institutional investors, leaving companies dangerously overleveraged, often destroying value by requiring emergency stock issues at much lower prices in the next downturn. Large corporations’ political contributions and damaging corporatist lobbying infest Congress and the staffers around Trump.

Given the gross U.S. budget deficits, the Tax Cuts and Jobs Act of 2017 gave too much to corporations, reducing their tax rates by a full 14% to 21%. The insult to ordinary taxpayers was doubled when we realize that the individual tax cuts in that package sunset in 2025, whereas the corporate tax cuts do not. The U.S. fisc badly needs more revenue; rebalancing the tax system by moving the corporate tax rate to 25%, still 10% below its pre-2017 level, would be a good way to move towards this. Ending the tax-deductibility of corporate interest payments and prohibiting stock buybacks (as they effectively were before 1978) would provide behavioral incentives to corporations as well as revenue.

In addition, the immediate expensing of capital investment should be ended, though conversely the exclusion of software investment from immediate expensing should be reversed. Software investments, unlike hardware ones, age very quickly and are gone long before the 5-year normal depreciation allowance; differentiating them adversely from “bricks and mortar” investment makes no sense and damages small software companies, generally leaders in innovation.

Vance’s admiration for Lina Khan should also affect antitrust policy, making the default FTC setting the prohibition of corporate mergers. Large corporations are less innovative and less efficient than small ones. Behemoth mergers have been shown repeatedly to subtract value in most cases, benefiting only top managements and imposing massive unrecorded and unreimbursed costs on workforces whose lives are disrupted through merger-caused redundancy.

Trump and Vance can agree on tariffs, which serve two purposes: protecting American labor from Third World sweatshop competition and providing revenue to close the yawning gap in the fisc. They should not be too high or targeted, either against particular countries or in favor of particular industries. As this column has written before, Trump’s proposal of a flat 10% tariff does almost no damage to world trade or economic efficiency, while providing revenue and protection against the worst sweatshop dumping. The much higher targeted tariffs that are sometimes suggested can do massive economic damage, provide little revenue and are used by rent-seeking domestic corporations to fatten profits.

Yet more revenue can be provided by a tax reform that will be cheered by Trump and Vance’s working-class supporters: capping the charitable income tax deduction at a low flat level and eliminating the other tax benefits available for charities. Far too many billionaire lifestyles are subsidized through charitable tax scams, which make ordinary people pay 40% of the costs of every charitable dinner they tax-deduct. Tax deductions also encourage billionaires to set up endless “foundations” and college endowments, most of which become conduits subsidizing globalist, communist, climate change and other subversive causes to the detriment of working people. Tax benefits for charities are the most important way in which elites bring political power to bear against the interests of working people; they should be limited to middle-class support of their churches and local good causes.

Finally, Trump’s proposal to abolish tax on tips is attractive, and geared towards relatively poor working people. The difficulty (to which I don’t currently see an answer) is to prevent it being abused – a new administrative complexity and enforcement bureaucracy should NOT be the solution to this.

On public spending, a traditional conservative Republican approach is best, albeit without cutting Social Security and Medicare (Medicaid is rife with fraud and could usefully be slashed). Numerous government departments, such as the Departments of Education and Energy and the Environmental Protection Administration, serve no useful purpose, do immense economic and social damage and should be abolished. Agriculture subsidies should also go – tariffs achieve the same purpose, while producing revenue instead of cost. Trump’s 2017-21 deregulation policy should be pursued again, with even greater vigor. Through such changes, the main burden of balancing the budget can be placed on the spending side, where it belongs. Argentina’s Javier Milei, who has balanced the grotesque Argentine budget in seven months, should be the inspiration here – perhaps he could provide some useful tips!

On immigration, Trump’s proposal of mass deportation of the 10 million illegal immigrants that have arrived during the Biden administration is attractive, especially as it will deter further arrivals. The Wall should also be completed probably on both the southern and northern borders – Paul Ryan as House Speaker had one job in 2017: to fund the construction of the Wall; he completely failed and should suffer historical infamy for the damage done by that failure. In addition, the legal immigration system should be tightened a lot. The 1924 Immigration Act, while imperfect in some details, provided American people with the world’s highest living standards until a few years after it was reversed in 1965; we should return to it as far as possible. In particular, the H1B and H2B visa scams, which provide a captive “indentured servitude” workforce for tech sweatshops and agriculture must be abolished, thereby raising domestic tech wages, the percentage of college students who study STEM subjects and agricultural mechanization.

The Heritage Foundation has produced a “2025 Project” of proposals, which Trump has disowned as it has become an object of hatred for the left. The proposals herein move in a different direction; they could perhaps be termed the “1827 Project” in honor of Lord Liverpool, who first established the principles on which sound economic governance is based.

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(The Bear’s Lair is a weekly column that is intended to appear each Monday, an appropriately gloomy day of the week. Its rationale is that the proportion of “sell” recommendations put out by Wall Street houses remains far below that of “buy” recommendations. Accordingly, investors have an excess of positive information and very little negative information. The column thus takes the ursine view of life and the market, in the hope that it may be usefully different from what investors see elsewhere.)