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 $6.7 billion in federal contracts."
Of course it wasn't so long ago that Republicans were attacking the Obama White House for its "crony capitalism," including the auto bailouts and clean energy investments in firms like Solyndra. Republicans, on the other hand, were supposedly stalwarts for competitive capitalism and vehemently against government "picking winners and losers." Some even said they were "pro-market" rather than "pro-business."
Now, not so much. Which makes you wonder if either party is willing to strongly fight for free enterprise and market-driven economic policy anymore. In her 1998 book, The Future and Its Enemies, Virginia Postrel saw the major dividing line in American politics as less left vs. right than the "dynamists" vs. the "stasists." The former values change and experimentation, as messy as those things can be. Dynamists live in anticipation of the future because they just know it will be a great place. The stasists often are nostalgia-ridden and willing to use top-down control to keep things as they are or try to shape them into familiar forms. Today they fight globalization, tomorrow it might be robots and artificial intelligence in order to "save jobs."
This time, at least, score one for the stasists and the cronyists.
So... how’s that 15$ min wage working out?
The glow of Trump on the horizon has a lot to do with it. They know the bureaucratic B.S. and would love to see that stricken off of their agendas.
It’s a wonderful way of getting rid of businesses that can’t afford that much. Other than this? Not so hot.
Disregard markets, disregard profits, disregard competition and do what’s popular with the masses using statist approach to economics. I believe that would be the idea. This deal looks good for America and American workers. But the principle is not capitalism; it’s not property rights. It’s not possible without the state stepping in to make sure it happens. Applaud this model if you wish and remember that the consumer gets screwed and less efficient plants and capitalist flourish through connections to the US government, not by the market where the price wins.
Ha ha ha. Trying to present this as a loss.
The Week is suffering massive butt hurt.
How stupid do you sound? The country became an industrial power house behind a wall of tariffs and protectionism. But since the gloBULList Free Trader took over we are on a disastrous track to de industrialize the USA. Patriots will never let that happen. Take a hike bub.
Federal and State Tax Revenues
Incrementally higher costs for Carrier products
Multiplied by a factor of 1 these will hardly be noticed.
Multiplied by a factor 10,000 your pocket book will start to notice.
Is it worth it?
Maybe. Probably. Most Freepers believe so. Full or at least fuller employment is a benefit to a society that cannot simply be measured in dollar and cents terms.
But a certain benefit of keeping the jobs at home (despite the somewhat higher prices we will pay) is the fun of watching the Dems suffer the angst that results as they watch the Trump political stock grow. And grow. And grow.
It's your bed Dems. You made it. Sweet dreams.
What’s statist? Donald says “hold the fort, for help is coming.” If Donald was just beating on them by force to stay (as he facetiously said about the Oreo manufacturer) we would have a different picture.
The problem with the existing paradigm was that the state was trying to get more and more milk out of a group of fewer and fewer cows.
As greenies say, that is not sustainable.
So you are under the impression Carrier was going to LOWER their price of the Mexican made products? What rube you are. Since when is a tax cut a cost? When did Conservatives go off the rails?
It will be interesting to see how many business in the state will want the tax cut.
If Trump isn’t going to impose the tariff, I would announce a move to Mexico and cut my taxes.
We do not know the details yet.
I’m for freedom. Free markets. Free people. If you want governments to pick winners, then you’ve more in common with Hillary. That’s why she gets paid off.
Apparently the “tax break” is worth in the neighborhood of $7K per job. $7 million, 1,000 jobs. (This is just preliminary yakking, I have not examined the deal in depth)
If anyone thinks that a group of $50K/year employees are not going to spend $10K/year on average locally, they are delusional. That’s *after* taxes on the employees.
Solyndra cost $550 MM and produced at its peak 1250 jobs of which not one currently exists. That would be $440K per no-longer-existing job.
Somebody needs to STFU. Or as BJ Clinton once said, “don’t let perfect be the enemy of the good”.
Let’s also ignore, while we’re at it, the effect of getting this movement going. Throw 200-300 other Fortune 1000 companies into the mix and you’ll have 300-400K jobs brought back to the US.
Yeah, I know, that would suck.
I’m sorry. I’m not sure what your point is.
James Pethokoukis I bet a box of donuts this fruitcake thought Solyndra was wonderful.
Corporate taxes are pass-thru items.
So, according to this jackass, a State giving tax incentives to keep a business is the same thing as the United States Government giving away BILLIONS of dollars of actual cash UPFRONT to failing companies?!?
Wow, I would have thought that such a stretch would be hard, even for a Leftist Liberal...apparently, I was wrong!
RE: James Pethokoukis I bet a box of donuts this fruitcake thought Solyndra was wonderful.
I know for a fact that he is one of its most staunches critics. I hear him on the radio every Saturday on the Larry Kudlow show.
Maybe you’ve got your sight blocked by the presumption that the movement that brought in Trump had to be statist somehow? Rather than simply state-preserving?
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