The writer is an idiot and takes us for being idiots as well. It hard to know where to start, but let's begin with the obvious. Is saving 1,000 jobs a good thing or a bad thing? Is encouraging an owner to modernize its plant a good thing or a bad thing? Is keeping those jobs and that new plant in this country a good thing or a bad thing? These are all good things, of course. But the writer wants us to believe these obviously good things are bad because "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.".
There are so many unexamined and illogical assumptions in that argument, it is hard to know where to begin, but let's start with who says jobs fleeing to Mexico via NAFTA is a product of laissez-faire, and beside that who cares? Certainly not the workers who now have jobs, as opposed to a writer looking for any opportunity to criticize Trump, and who knows in his bones that he's far smarter than the multi-billionaire real estate developer who somehow managed to win the election from "The smartest woman on Earth".
Next, who says preserving jobs and encouraging economic development make Indiana poorer? It doesn't. It creates wealth, not diminishes it. Those 1,000 workers, are taxed, they spend their wages, buy things, stimulate demand for more products and create more wealth.
You can just go on an on, but I'm tired of writing, and you're tired of reading, so I'll just sum it up by saying once again, idiots!
RE: Is saving 1,000 jobs a good thing or a bad thing?
Of course it is a good thing, however, let’s look at what is NOT seen. What if other companies see this and use the threat of moving abroad to extract their own tax concession?
There are tens of thousands of companies like Carrier, big and small, some will threaten to move, some won’t. Are we then going to favor those that threaten to move with tax breaks and ignore the others that don’t?
Which companies does government pick and choose to favor with tax breaks and which does it ignore?
RE: Is encouraging an owner to modernize its plant a good thing or a bad thing?
Not sure what this has to do with Carrier.... modernizing a plant is the job of the owners and the managers. If they see that it will be to their advantage to do it, they will do it. Why is it government’s job to “encourage” this? Learn to compete or else.
RE: but let’s start with who says jobs fleeing to Mexico via NAFTA is a product of laissez-faire, and beside that who cares? Certainly not the workers who now have jobs, as opposed to a writer looking for any opportunity to criticize Trump
Motives of the writer aside ( and I do not think for a moment that the writer is reflexively anti-trump ), The ethical question is more complicated than the we’d like to let on, too.
Our government runs deficits, which means that a federal tax credit of $1 million given to Smith is $1 million in taxes that eventually will have to be paid — by Jones, and Wilson, and others — with interest.
Carrier is a division of United Technologies (the Otis elevator and Pratt & Whitney engines people), which is first and foremost a government contractor, a firm that derives at least a quarter of its revenue from government contracts, and 10 percent of it from Pentagon contracts alone. It is a company that has competitors — competitors who employ Americans and pay taxes, just as Carrier does. These firms and their employees are put at an economic disadvantage by the subsidies paid to Carrier thanks to Trump and Pence. That means that some of these companies probably will be less profitable, and that they will not hire people they otherwise would have hired.
But you’ll see no press conference celebrating that. This is a case of Frédéric Bastiat’s problem of the seen vs. the unseen. The benefits are easy to see, all those sympathetic workers in Indiana. The costs are born by sympathetic workers, too, around the country, and by their families and by their neighbors. But those are widely dispersed, so they are harder to see and do not hit with the same dramatic impact.
Let’s look at it a little closely.... The initial claim for the negotiations that Trump held with Carrier was that 1,100 jobs would be saved. That was already far from the 2,100 jobs supposedly threatened.
The full total saved, however, was smaller because 300 of the jobs were white-collar positions that were never going to be relocated. The total number of jobs saved was 800, or about 44 percent of the total 1,800 that would otherwise have been lost. Far from all the jobs were saved, although it still means many people would keep working. But at what cost?
The quid for the pro quo of saved jobs was $7 million in tax breaks from Indiana to be paid out over ten years. However, the number should make those who think abut it suspicious.
Let’s break it out:
The breaks come down to $700,000 per year.
Divided by 800 workers, it’s $875 per worker per year.
The total is $16.83 per week per user, or $3.37 per day.
The sum is ridiculously small when comparing labor rates in Mexico. That isn’t enough money to keep a company in the country because labor in Indiana would still be more expensive.
Former Indiana lieutenant governor John Mutz, who sits on the board of the Indiana Economic Development Corporation, told Politico that the driver for the change was more likely fear on the part of Carrier’s parent, United Technologies, that Trump would interfere with part of the $6.7 billion in federal contracts it held.
Other experts disagree and say that no one could steer contracts to or from United Technology and that any attempt to do so would be highly illegal. Instead, they say the carrot must have been a promise to improve the tax and regulatory environment for manufacturers.
How much are jobs worth?
Of course Jobs have an important value for the workers who might lose them. The political value for those in elected office is even higher.
No one in office wants to be associated with job losses. For that reason they arrange subsidies in the form of tax abatements, cost rebates, taxpayer-funded infrastructure improvements, low-interest loans, and other valuable consideration. But the price tags per job are often massive.
A Good Jobs First analysis (see here: http://subsidytracker.goodjobsfirst.org/prog.php?parent=united-technologies ) showed that since 1993, United Technologies has received 819 state and federal subsidies worth a total of $881 million, or about $38.1 million a year for 23 years.
That doesn’t count 10 major loans worth $46 million over the same time. And that’s just one company.
The result is that, on the local, state, and international level, governments bid to keep to gain jobs. They all want the positions so desperately they offer ever increasing competitive largesse that drives down the tax revenue companies are expected to pay.
The value of the deal is questionable even if you aren’t a fan of free market absolutism. Resources needed elsewhere are transferred to large corporations, who will then look for the next round of giveaways.
Good jobs are imperative for a healthy economy. Making them hostage of expected pay-offs is bad policy and ultimately self-defeating.
Trump and Pence would do better by simply implementing what they have already promised ACROSS THE BOARD without favoring any company -— CUT TAXES AND REGULATIONS ON ALL INDUSTRIES TO A POINT WHERE MOVING BECOMES LESS FINANCIALLY ATTRACTIVE.
As the article said -— this looks good from an advertising/marketing point of view. But let’s hope this is the last of its kind that we see.
It depends, of course, on the cost.
If it requires picking Carrier for these favors over all of the other businesses in Indiana then it's a bad thing.