Economist, radio host, and CNBC senior contributor Larry Kudlow appeared on Breitbart News Daily Friday morning to discuss economic issues in the presidential race, including his support for Donald Trump’s economic platform, with some disagreement about the best way to handle unfair Chinese trade practices.

Breitbart News executive chairman and host Stephen K. Bannon asked Kudlow to comment on the rise of “populist, nationalist” economics, as personified by Trump and his supporter Alabama Sen. Jeff Sessions, and the challenge this movement presents to free-trade orthodoxy, which Bannon described as a “fetish” in certain intellectual quarters..

“Well, I may be part of that fetish,” Kudlow said with a chuckle. “Free-market capitalism is the best path to prosperity.”

Kudlow said he found Trump’s platform very agreeable to free-market growth: “He has a very good corporate tax-cut plan, across the board, for large companies and small companies. He’s got a 15 percent rate — we’re about 35 to 40 percent now.”

“So let’s say that became law,” Kudlow continued. “You’d see a movement, a tremendous movement, of capital and labor back to the United States, that’s in China and overseas, because we’d have a more hospitable business tax environment.  You include immediate deductions for new business investment, and you include repatriation, which is all in Trump’s plan, and you’ve got yourself a powerful incentive to move back to the USA.”

Kudlow thought such “incentive economics” were better tools than the tariffs Trump has proposed for punishing businesses that move overseas, preferring carrots to sticks. However, he agreed that stern measures were needed to deal with China, which Bannon described as a “mercantilist society” — the government actively harming foreign competition to give native industries an edge.

Kudlow described China as “our enemy, not our friend,” citing their aggression in the South China Sea, and their willingness to stand behind “some of the worst terrorist dictatorships in the world,” including Iran. He stressed the importance of responding to China’s “counterfeiting of goods, stealing of our intellectual property rights, and cyber-hacking our systems here, both government and industry.”

Having said that, Kudlow added he was “not a guy who likes tariffs,” which he described as taxes that would “hurt the American consumer.” He preferred using international bodies such as the World Trade Organization to deal with unfair practices by China and others… provided America fields a president who can negotiate tough trade agreements and not “give up all the time, which unfortunately has been the case.”

He returned to his theme of incentive economics as the best way to restore American manufacturing and reverse capital flight.

“If you lower marginal tax rates on business, both large and small… if you roll back regulations, for example, let’s go to right-to-work laws, which would make us much more hospitable to investment… those are the things that would help America, and that’s what we should focus on,” he advised.

Breitbart News Daily airs from 6 am to 9 am EST weekdays on SiriusXM Patriot 125. 

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