Posted on 12/01/2016 1:04:51 PM PST by SeekAndFind
There's no doubt Team Trump is delighted by Carrier's decision to keep in Indiana roughly half of the 2,100 jobs that the maker of heating and air conditioning equipment had planned to shift to Mexico. As Steven Mnuchin, Trump's pick for treasury secretary, told CNBC yesterday, "This is a great first win without us even having to take the job."
Actually, it's their second win. Trump also lobbied/nudged/cajoled Ford into changing its mind about shifting a sport utility vehicle production line to Mexico from Kentucky, not that doing so actually would have cost American jobs. But Carrier, especially, had become a potent symbol of Trump's economic nationalism after video of Carrier's initial offshoring decision went viral. And in response to Carrier's reversal, Trump took a victory lap on Twitter: "Big day on Thursday for Indiana and the great workers of that wonderful state. We will keep our companies and jobs in the U.S. Thanks Carrier."
But how many Trump "wins" can the American economy afford? By themselves, the moves by Ford and Carrier are inconsequential — maybe even to Carrier's workers over the longer term. It's hardly an uncommon practice at the state level to offer incentives to lure corporate relocations or to keep firms from leaving. But the practice has mixed results. For instance, Dell closed a North Carolina plant in 2009 just five years after receiving millions in state tax incentives to open it. Production then moved to Mexico.
But more broadly, this is all terrible for a nation's economic vitality if businesses make decisions to please politicians rather than customers and shareholders. Yet America's private sector has just been sent a strong signal that playing ball with Trump might be part of what it now means to run an American company. Imagine business after business, year after year, making decisions based partly on pleasing the Trump White House. In addition, Trump's hectoring on trade and offshoring distracts from the economic reality that automation poses the critical challenge for the American workforce going forward.
To be fair, exactly why Carrier reversed course is still something of a mystery. Carrier says state "incentives" were an "important consideration," along with Trump's commitment to creating a more pro-business climate in the country. Those would be the carrots. Then there are potential sticks, which may have been far more critical than tax incentives or other potential subsidies. Carrier's parent company, United Technologies, is a large federal government contractor and perhaps views the potential costs of keeping those factory jobs — a small fraction of the company's 200,000 employee workforce — in America as the price of doing business with Trump's "America First" administration. Indeed, one Indiana official, Politico reports, thinks the deal was driven by concerns United Technologies "could lose a portion of its roughly $6.7 billion in federal contracts."
Of course it wasn't so long ago that Republicans were attacking the Obama White House for its "crony capitalism," including the auto bailouts and clean energy investments in firms like Solyndra. Republicans, on the other hand, were supposedly stalwarts for competitive capitalism and vehemently against government "picking winners and losers." Some even said they were "pro-market" rather than "pro-business."
Now, not so much. Which makes you wonder if either party is willing to strongly fight for free enterprise and market-driven economic policy anymore. In her 1998 book, The Future and Its Enemies, Virginia Postrel saw the major dividing line in American politics as less left vs. right than the "dynamists" vs. the "stasists." The former values change and experimentation, as messy as those things can be. Dynamists live in anticipation of the future because they just know it will be a great place. The stasists often are nostalgia-ridden and willing to use top-down control to keep things as they are or try to shape them into familiar forms. Today they fight globalization, tomorrow it might be robots and artificial intelligence in order to "save jobs."
This time, at least, score one for the stasists and the cronyists.
James Pethokoukis, you worry too much. Relax and enjoy the Trump Presidency.
Apparently Mr. Pethokoukis would argue that “good economics” dictates that we send ALL our jobs overseas?
1,100 jobs saved.
A plant that would have closed will undergo over $16 million in renovations.
Supply chain jobs saved—other small companies, restaurants,material suppliers, truckers,service providers of all types.
All because Donald Trump heard a young man’s statement on TV, and then Trump picked up the phone and called Greg Hayes of UTI.
James Pethokoukis = Globalist
The only good job to this clown is a job leaving the United States.
Trump said the single Carrier plant had to deal with 53 new federal regulations, and that was the main reason they decided to relocate. Trump also said that surprised him, and that his administration will gut these job killing regulations along with reducing the business tax rate to “near” 15%.
Donald, you magnificent bastard!
Wow a lib that all the sudden is concerned about ‘shareholders’. What a great guy.
you’re RIGHT. What a dumb@ss.
Jimmy P is a regular on Larry Kudlow’s weekly radio show and was against Trump the entire election. I’m not surprised he’s unhappy about this deal and expect him to continue pouting.
To be fair James, your an idiot.
Trump is going to attempt to bring the whole US into better condition.
I guess kind of like me. I’m too fat. I was ordered by the doctor to go on a sensible diet, because my current one was dragging me down.
If this doesn’t work, then the incentivization will have been in vain.
It may or may not be a good thing. We are exploring new territory here and trump is trying to figure out how to give companies proper incentives and threats. I am all for going down this path because this willingness to rethink jobs and trade is the only thing that kept clinton out of the white house.
It'll be better than: business after business, year after year, making decisions based entirely on the demands of an Obama White House.
economics is indeed the dismal science
(although the first part of that formula is a lot more accurate than the second)
at least Mr. Trump is seeing to it that WORKERS’ JOBS are considered in these decisions...... Under Obama etal, workers’ jobs have NOT been a priority at all...except to export them as fast as possible to foreign countries
workers’ jobs are NOT going to be “minor externalities irrelevent to the decision” anymore. GO TRUMP!
Keeping manufacturing jobs in the USA is somehow a bad thing.
Right.
Donald means business. Pray the Lord for his success. Lefties will be screaming bloody murder that their regime is getting torn to tatters.
Private sector? We’re way beyond free enterprise. Now, we must have populist economics! It’s the wave of the future and way better than letting businesses run themselves.
I don’t know why it can’t be an optimistic science.
Facts don’t matter.
Headlines matter.
Trump won.
Next?
I am glad that Trump made a point of his inspiration of Carrier.
He speaks of a world many know.
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