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.
It is utterly amusing to me to see supposed “Libertarians” and self styled “True Conservatives” busy mouthing the Marxist economic dogma that all economic output is property of the State and any time the state takes less it is a “Government subsidy”.
That is the base for this absurd “crony capitalism” argument. This dogma that any reduction in government taxation MUST be “paid for” by increased taxation on others is utterly absurd nonsense completely at odds with our system of Government.
No you foolish children. In our system, the State is granted revenues by the people as a collective good. It is their property granted TO the Government not vice versa. It is up to the voters in IN to render the judgment on their Representatives at the voting booth if this was a wise move or a foolish move for the collective to reduce tax burdens on Carrier in exchange for the collective good of keeping the 1100 jobs.
The other glaring error in this absurd argument is the assumption that the economy is a zero sum game. Thus a reduction here means an addition in taxes there. NO children it does not.
The Five on Fox ran the numbers. By keeping the 1100 jobs the State gets a net gain of $2.5 million in taxes from the 1100 jobs maintained. In addition, the State does NOT have to pay out mandated retraining, unemployment and welfare costs of having 1100 productive highly paid workers taken out of the the work force. The economy is a dynamic force not static as you try to make it be in your “Crony Capitalism” argument.
The final lesson here is, again, we see the reason the “Movement Conservatives” have been the least effective political force in US History.
Letting people keep their OWN money rather then taxing it way from them is GOOD. It is the heart of Conservatism.
We are not going to undo 100 years of creeping socialism by stamping out feet and holding our breath demanding ideologically perfect political dogmas. Yet here we go again with the usual “Movement Conservatives” trying desperately to spin a win as a defeat because it does NOT fit their ivory tower dogmatically pure political fantasies.
That mindset is EXACTLY why “Movement Conservatives” have been the most political ineffective group in US History. They all are so busy whining about everything not being dogmatically ideologically perfect they have accomplished nothing politically since 1980.
Rather the cling to these day dreams of some mythical perfectly ideologically pure fantasy land, it time Movement Conservatives learn to live in the REAL world of poltical incrementalism rather then their ideologically pristine ineffective bubble world.
Then why single out Carrier and let only them keep their money?
The argument isn't so much about fiscal responsibility as it is about the Federal government choosing which companies to favor and which ones not to.
Do you think it's fair to Ingersoll-Rand, who ownes Trane, to have the government give United Technologies a special deal?
Yes, they will get their Yuge tax-cut next year.
Your argument is based on a false premise. You don’t get to manufacture a fraud and demand everyone debate on the basis of your ignorance.
LEARN facts that challenge you emotion based ideologically imprinted dogma, rather then just cling to the dogma like this.
Your argument is totally without any intellectual merit.
Curious if any “Movement Conservative” can comprehend the difference between cutting someone future taxes (i.e. Carrier) and taking money out of the Federal Treasury to make grants and loads to a crony (i.e. GM or Solyndra)?
But of course, this isn’t about fact and principals. It is still about #Never Trumpers clinging to their butt hurt that Cruz lost to Trump in the Primary.
And so will UT, so Carrier is still being favored.
This is undeniable. It may be OK policy and worth it in this case, but it can't be the basis for operating an economy.
But that right, you are still locked in your zero sum fallacy. Still blindly regurgitating this bit of ignorant idiocy.
Every other company and family in Indiana has to bear a greater share of the state's tax burden
Trump isn’t the President yet.
When the author is an economic illiterate trapped in faudlent zero sum economic fallacy while still nursing a raging case of butt hurt that Trump, not Cruz, won the election.
An important distinction...
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