Posted on 12/04/2016 11:05:28 AM PST by SeekAndFind
Because market freedoms create an environment for economic growth, thriving businesses and job creation, many people confuse "pro-market policies" with "pro-business" favors.
But they aren't the same thing, and President-elect Trump hurts his own agenda when he conflates the two. He did so at the Indiana Carrier plant Thursday, when he announced a deal to keep some Mexico-bound Carrier jobs in Indiana.
The deal is bad policy because it is loaded with at least $7 million in corporate welfare. It's bad politics because it rhetorically demolishes the crucial distinction between free-market policy on one hand, which benefits all businesses and thus the whole economy, and corporatism on the other, which benefits the big and well-connected.
Trump is fortunate that his vice president-elect, Mike Pence, also happens to be Indiana's governor. Carrier is lucky, too. Pence extended a $7 million tax break to the manufacturer this week. This is a subsidy. It is what Republicans spent the past eight years blasting as corporate welfare and crony capitalism.
House Speaker Paul Ryan in 2012 rightly criticized President Obama's industrial policy, which the president peddled as "investment."
Ryan objected, saying, "It's borrowing money and spending money through Washington, picking winners and losers. Spending money on favorite, you know, people like Solyndra or Fisker. Picking winners and losers in the economy through spending, through tax breaks, through regulations does not work."
Ryan was correct. A tax break for Carrier is not laissez-faire economics. Every other company and family in Indiana has to bear a greater share of the state's tax burden. Every company competing with Carrier for sales, capital and other resources, is at a disadvantage because they're paying for the favor Trump and Pence have given Carrier.
When you pick a winner, you automatically pick a thousand losers: smaller companies who lack Carrier's clout, less-connected companies not close to Pence and so on. The economy loses because corporate welfare means politicians rather than markets are deciding the allocation of money and resources. It's the opposite of free market economics.
There is also moral and political cost. Every corporation big enough to throw around some weight can threaten to leave the country and expect to get some government goodies to placate them. Trump explicitly welcomed other big companies to "negotiate good deals with the different states and all of that." This corrupts both business and government.
If we get four years of this sort of Trumponomics, we'll increasingly see companies with clout playing by one set of rules while the regular guy competes under a stricter rule book.
Pence on Thursday glossed over the $7 million subsidy. He said Carrier was persuaded to stay by Trump's "plans to make America more competitive. To reduce taxes. To roll back regulations."
"These companies aren't going to be leaving anymore," Trump said Thursday, because "we're going to do great things for businesses." He pledged to reduce the corporate income tax from 35 percent to 15 percent.
These promises are indeed great. This is the formula for economic growth: low taxes, low regulation, good schools and good infrastructure. They are "pro-business" by being "pro-market," not anti-market because by being a favor for a particular business.
Liberals will bash Trump and Pence's proposed tax cuts and regulation reform as "corporate welfare" and "crony capitalism." The Left doesn't distinguish between a reform that gets government out of the way of business and an intervention that puts government power in the service of business.
In this case, however, it seems that Trump doesn't either.
With this deal and his victory lap about it, Trump is buying into that pernicious left-liberal thinking that regards broad-based tax cuts and deregulation as special favors for business.
Trump pleasingly has promised tax and regulatory reform. He should stick to those broad, economy-wide changes that benefit everyone. Pleased though he is with his first deal to save a few hundred jobs, he needs to understand that it militates against his larger plans to help the entire economy. We urge him not to repeat this misguided process.
I know. I think I've alluded to that quite clearly. Maybe you should ping The Washington Examiner and other news outlets and let them know.
I am simply pointing out it's not a President's role to do such.
There are no absolutes. Everything has a limit, including freedom for example. We still have laws that constrain many behaviors.
But, when one is simply looking for a way to criticize, that way can always be found by acting as if things should be absolute when they never are.
Horse and buggy media in a Formula One world.
I know. I wasn`t implying that you agreed with the comment from the article.
The state of Indiana had offered the tax incentives long before Trump git involved. Leftists crap pants, film at 11.
Pence was working on this before Trump won. Yea sure being vice president elect holds more power than one senator but it was a state deal.
Another hatchet job by the Washington Compost. Trump didn’t give the tax right offs Indiana did & they were on the table from Pence before Trump got involved.
“The Indiana governor was offering $7 million over 10 years to encourage the company to keep in the state roughly one-third of the 2,100 jobs it planned to ship to Mexico. United Technologies would also get credit from the state for keeping 300 research and headquarters jobs that it didn’t plan to shift abroad.” http://www.wsj.com/articles/indiana-gives-7-million-in-tax-breaks-to-keep-carrier-jobs-1480608461
Good. There are no free man markets.
Nobody is forcing companies to stay in the US. He’s just giving them incentives to stay and consequences if they try to sell their made-overseas products back to Americans.
Ah. Okay. My apologies.
Tax relief (Carrier) is not corporate welfare. Handing the company millions of dollars (Solyndra) IS.
“Trump didnt give them a tax cut. Indiana did.”
Right...and also, Indiana made the offer a year ago, so the money was already on the table. Just on Fox...average salary/benefits per job..$70,775 per .. over $77 million a year. This was a good deal for all!
Is there really freedom in the market? I'm not an expert on the economy, but how can there be economic growth for businesses when they're strapped with government regulations that strip them of the ability to conduct their business freely in this country? if they want to conduct business here, they have to spend millions of dollars to comply with over-reaching government regulations. This cuts their assets, and limits their ability to grow doesn't it? Am I wrong here?
What free markets?
Plus Carrier decided to invest another $16 million, minimum, in the plant.
Expect some incoming flak from the Freepers. But not from me.
I too hope that the Carrier deal was just a PR move and not a policy. As PR it was brilliant. As an on-going policy it would be a huge mistake.
Cut regulations. Cut taxes. That’s enough.
Free market policies haven't been at the forefront since Ronald Reagan in the 1980s. "W" Bush had flashes of free market principles, but they weren't his guiding principles. (To be fair to "W", fighting the GWOT was his guiding principle.)
Free market policies work. See the 1980s -- and even into the 1990s as the inertia of free market policies had not yet been completely slowed by the Clinton-Gore tax increases.
“Every company competing with Carrier for sales, capital and other resources, is at a disadvantage because they’re paying for the favor Trump and Pence have given Carrier.”
Like all those air conditioners made in Japan and China that are sent here after being built with near slave labor. The foreign competition is criminal. I can remember when Japan, facing tariffs on their big-screen CRT TVs and other home electronics were shipping everything through Singapore with big markups (Singapore didn’t tax the stuff) so then they could ship it here to sell without any markup thus avoiding our tariffs. “Free trade” with Asia has never been “free,” so now it’s time to at least make it “fair.”
Kasich was a free marketeer when he was Chairman of the House Budget Committee in the 1990s. My perception is that he has changed, but I admit I don't know the full extent of what he's doing in Ohio.
#1 it’s not an article in the Washington Compost
#2 the Indiana governor was doing exactly what the author says such “deals” do.
“When you pick a winner, you automatically pick a thousand losers: smaller companies who lack Carrier’s clout, less-connected companies not close to Pence and so on. The economy loses because corporate welfare means politicians rather than markets are deciding the allocation of money and resources. It’s the opposite of free market economics.”
Small businesses never win when politicians offer incentives to individual companies, rather than establish a favorable business climate for ALL businesses and let the businesses rise and fall on their own merits. That is, lower taxes, decrease regulations, get rid of Obamacare and other mandates that choke all businesses.
Maybe this was a smart short-term political move, but I share the author’s opinion that it’s not good long-term policy. It’s the kind of thing democrats and RINOs like to do.
When it’s targeted to a specific company and not a sector.
++++
Yes. That should be obvious but somehow it doesn’t seem to be.
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